FCC investigates wireless carrier competition

[AppleInsider]

The Federal Communications Commission signaled this week that it will look into major U.S. wireless carriers in an attempt to increase competition, innovation, and consumer protection in the market.

"Wireless mobility has become central to the economic, civic, and social lives of over 270 million Americans," an FCC press release stated. "We are now in the midst of a transition from reliance on mobile voice services to increasing use of and reliance on mobile broadband services, which promise to connect American citizens in new and profound ways. A robustly competitive mobile wireless market will be essential to realizing the full benefits to American consumers and channeling investment into vitally important national infrastructure. The FCC is seeking to ensure that competition in the mobile wireless market continues to bring substantial benefits to American consumers."

The commission released a number of official notices of inquiry this week, announcing investigations designed to look into wireless innovation and investment, mobile wireless competition, and additional opportunities to protect and empower consumers in the communications marketplace. The news comes just a week after Apple, AT&T and Google all responded to an FCC inquiry over the absence of the Google Voice application from the iPhone App Store.

The FCC is taking a hard look at mobile providers and their business practices, suggesting the agency could take a more hands-on approach with the U.S. market's four major carriers: AT&T, Verizon, T-Mobile and Sprint. Earlier this year, the commission was asked to look into matters involving Skype and the iPhone, and the availability of Apple's phone in smaller, more rural markets. However, the FCC has not yet mandated any industry changes, nor has it suggested any regulation is guaranteed.

The commission's mere interest, though, is a good sign for companies like Google, Vonage and Skype, BusinessWeek reported. Those companies offer alternative phone and communication services that aim to compete with major wireless carriers. Christopher Libertelli, senior business director at Skype, he believes the FCC is asking the "right questions to maximize innovation."

For its inquiry into protection of consumers, the FCC will look into the information available to consumers as they choose a provider, choose a service plan, manage the use of their service plan, and decide whether and when to switch providers. It is also asking for comments on mandatory information disclosure, compared with other industries, like nutrition labels on food.

The mobile wireless competition inquiry aims to enhance the FCC's understanding of the industry in three ways: what analytic framework and data sources "most clearly describe competition;" reviewing market segments not covered thoroughly in previous reports; and "vertical relationships between 'upstream' and 'downstream' market segments."

Finally, the FCC's investigation into wireless innovation and investment seeks to explore spectrum availability and use, as well as devices, applications and business practices of each wireless network. The inquiry will look into how wireless services can aid in issues such as health care, energy, education and public safety. The ultimate goal is to form a framework that will serve as a knowledge base for future wireless regulatory issues.

Playing a part in the FCC's interest in the wireless market are exclusive contracts between wireless providers and handset makers, like the agreement between AT&T and Apple for the iPhone. In June, a group of U.S. senators asked the FCC to examine those business agreements to see if they are in the best interest of consumers. The four members of the Commerce Subcommittee on Communications, Technology and the Internet has expressed concern over exclusive deals, after a petition was filed by the Rural Cellular Association, which represents smaller tier II and tier III carriers that provide service to parts of the U.S. where major carriers do not. The association has argued that their inability to provide customers with popular handsets limits competition. Bowing to federal pressure, Verizon Wireless responded by agreeing to allow some exclusive handsets on smaller, rural carriers' networks to promote competition.

[ranson]

I'm kind of disappointed that an attempt to lower prices was not explicity spelled out here. Domestic cell phone fees are completely outrageous compared to the rest of the world.

[fulldecent]

Originally Posted by ranson

I'm kind of disappointed that an attempt to lower prices was not explicity spelled out here. Domestic cell phone fees are completely outrageous compared to the rest of the world.

Price does not matter. Sufficient competition is the key phrase.

[ivan.rnn01]

At least AT&T can't declare "no role" anymore.
Google are smart guys, they know who to chase. (I have just 2 questions for them: where is money from and how to get bodies like FCC in your boat).

[Ignomini]

"The inquiry will look into how wireless services can aid in issues such as health care, energy, education and public safety."

In other words, how can Big Brother extract more money from the carriers, which of course means, how much more will cell service cost when they're done?

[al_bundy]

Playing a part in the FCC's interest in the wireless market are exclusive contracts between wireless providers and handset makers, like the agreement between AT&T and Apple for the iPhone. In June, a group of U.S. senators asked the FCC to examine those business agreements to see if they are in the best interest of consumers. The four members of the Commerce Subcommittee on Communications, Technology and the Internet has expressed concern over exclusive deals, after a petition was filed by the Rural Cellular Association, which represents smaller tier II and tier III carriers that provide service to parts of the U.S. where major carriers do not. The association has argued that their inability to provide customers with popular handsets limits competition. Bowing to federal pressure, Verizon Wireless responded by agreeing to allow some exclusive handsets on smaller, rural carriers' networks to promote competition.

if you want the good phones then you should build out a 3G network in your coverage area. i've heard a lot of these carriers either don't have 3G or charge obscene per megabyte rates for data

[mcarling]

The first step the FCC should take to ensure competition is to outlaw locked handsets.

[MacTripper]

FCC investigates wireless carrier competition

Good, it's about time.


Carriers should compete for our service just like any other and shouldn't have a monopoly on a device at the exclusion of other carriers.


$600 for the iPhone, $30 a month for voice and say $15 a month for data for two years.

That totals $1680. Yet people are paying closer to $2400.


Me? I'm paying around $480 for two years for voice and phone.

Sure a smart phone costs more, but almost $2000 more? Come on! that's a new Mac!


Apple will do well to open up to other carriers as well, they will sell more iPhones and then sell more Apps and gain market share.

It's the carriers who are playing hardball and ripping people off wholesale, it's because they are getting their arses kicked by phone companies like what I use.

[bigmc6000]

Originally Posted by mcarling

The first step the FCC should take to ensure competition is to outlaw locked handsets.

We've beaten this one quite a bit but having an exclusivity agreement actually creates competition. You think the pre would even a shot in hell if Sprint had the iPhone? Having those agreements actually encourage both competition and innovation.

The end result, as with most things the Fed looks at, will be an increased price to consumers - joy...

[Peruchito]

after how many years of this crap do they finally decide to at least investigate? thats right, it took the iphone to change everything.

[samab]

Originally Posted by ranson

I'm kind of disappointed that an attempt to lower prices was not explicity spelled out here. Domestic cell phone fees are completely outrageous compared to the rest of the world.

If you actually read the OECD report, you will know that it is the rest of the first world that has outrageous cell phone fees.

Here is the actual OECD report:

http://browse.oecdbookshop.org/oecd/...t/9309031E.PDF

Do you know why the report is garbage --- when you go to page 297 and page 298 --- you will find that OECD use the AT&T Wireless Nations 450 Messaging 200 for both medium and high usage.

Go to page 275:

“It is important to note again that the OECD calling pattern in the basket can be significantly different than common calling profiles in a specific country. For example, the high-usage OECD basket includes 1,680 outgoing voice calls per year while users in the United States average 9,600 minutes of voice calls (combined incoming and outgoing) per year. In this case the basket provides the cost of buying exactly the calls and messages in the OECD basket rather than what may be considered a ‘typical’ bundle in the market.”

The average American (4800 outgoing minutes and 4800 incoming minutes per year) talks 3x more than the OECD's "heavy high usage". The average American talks 6x more than the OECD's average "medium usage".

They are basically classifying a Mini Cooper as the size of an average family car.

[bigmc6000]

Originally Posted by MacTripper

Good, it's about time.


Carriers should compete for our service just like any other and shouldn't have a monopoly on a device at the exclusion of other carriers.


$600 for the iPhone, $30 a month for voice and say $15 a month for data for two years.

That totals $1680. Yet people are paying closer to $2400.


Me? I'm paying around $480 for two years for voice and phone.

Sure a smart phone costs more, but almost $2000 more? Come on! that's a new Mac!


Apple will do well to open up to other carriers as well, they will sell more iPhones and then sell more Apps and gain market share.

It's the carriers who are playing hardball and ripping people off wholesale, it's because they are getting their arses kicked by phone companies like what I use.

Only the ignorant pay huge phone bills today.

They do compete - obviously. You pointed it out in your post how they compete. You chose a service that gives you a non-smart phone because you didn't like the price of the smart phone - that's the regular phone competing with the smart phone (and possibly another carrier).

Apple not only wanted to make $ off the iPhone they needed to make $ off the iPhone so they went to Verizon and they said no go so they went to AT&T who said sure. Apple has now used those massive profits to continue to make the iPhone better and since Apple got the guaranteed money from AT&T they pushed forward with the iPhone and now, because of the success of the iPhone other companies are making iPhone competitors (which are also carrier exclusive because, just like Apple, they need money as well).

You can't have 1 without the other.

[samab]

There are plenty of competition in the US cell phone service market.

The largest Japanese carrier, DoCoMo, owns over 50% of the Japanese market.
The largest Korean carrier, SK Telecom, owns over 50% of the Korean market.
The largest French carrier, France Telecom, owns 45% of the French market.
The largest German carrier, T-Mobile, owns 40% of the German market.

The largest US carrier, Verizon Wireless, owns 31% of the US market.

The only industrial country where there is even less market concentration is UK where their largest carrier, O2, owns 27% of the UK market. But there are constant news report of T-Mobile UK getting out of the UK market --- which will mean that whoever buys them out will become the top UK carrier with about 40% of the UK market.

[al_bundy]

Originally Posted by MacTripper

Good, it's about time.


Carriers should compete for our service just like any other and shouldn't have a monopoly on a device at the exclusion of other carriers.


$600 for the iPhone, $30 a month for voice and say $15 a month for data for two years.

That totals $1680. Yet people are paying closer to $2400.


Me? I'm paying around $480 for two years for voice and phone.

Sure a smart phone costs more, but almost $2000 more? Come on! that's a new Mac!


Apple will do well to open up to other carriers as well, they will sell more iPhones and then sell more Apps and gain market share.

It's the carriers who are playing hardball and ripping people off wholesale, it's because they are getting their arses kicked by phone companies like what I use.

Only the ignorant pay huge phone bills today.

every smartphone will cost you the same or more than the iphone with AT&T and Verizon. Sprint and T-Mobile will include texting but their selection of phones is crap except for the Pre. but that is still in beta testing

[ivan.rnn01]

Originally Posted by samab

There are plenty of competition in the US cell phone service market.

Isn't it unexpected a bit, that this perfectly developed market needs involving authorities to regulate it exactly as in socialist countries (France, for one), eh?

[mcarling]

Originally Posted by bigmc6000

You think the pre would even a shot in hell if Sprint had the iPhone?

Yes. If Microsoft can sell the crap Zune, then Palm can sell the decent Pre.

Originally Posted by bigmc6000

Having those agreements actually encourage both competition and innovation.

I respectfully disagree. Suppose four smart phone manufacturers and four networks. With locked phones, consumers have four choices. With unlocked phones, consumers have sixteen choices.

[scamander24]

I hope they do something even remotely related to that here in Canada. There is absolutely NO competition here. Unlimited plans don't even exist here. The largest plan here is about 2000 nationwide minutes at $330 per month, while in America there are unlimited nationwide plans at $99 a month. I hope the canadian government does something about the outrageous plans here.

(Did I mention there's no unlimited data here either?)

[samab]

Originally Posted by ivan.rnn01

Isn't it unexpected a bit, that this perfectly developed market needs involving authorities to regulate it exactly as in socialist countries (France, for one), eh?

There are always room for improvement. But to say that the US doesn't have a competitve environment is pure garbage.

But you are like the Bee Gees song, I started a joke --- everybody is laughing at you. The joke is on the French citizens --- who has 3 national carriers, all French owned, zero foreign competitiors entering the French market, all 3 carriers got nailed for price fixing a few years back...

Vodafone (based in UK) and T-Mobile (based in Germany) --- you immediately know that there is a problem when these 2 neighbouring multi-nationals are not operating in the big French country.

French court ordering the end of iphone exclusivity and forced when and how unlocking codes should be given --- those are idiotic regulations that are ineffective. You want the French citizens to benefit --- bring in a fourth national carrier, preferabily a foreign one.

[ivan.rnn01]

Originally Posted by samab

There are always room for improvement. But to say that the US doesn't have a competitve environment is pure garbage.

Nobody says the US doesn't have a competitve environment. But what exactly are you calling improvement? Is it FCC's investigation?

Originally Posted by samab

But you are like the Bee Gees song, I started a joke --- everybody is laughing at you. The joke is on the French citizens --- who has 3 national carriers, all French owned, zero foreign competitiors entering the French market, all 3 carriers got nailed for price fixing a few years back...

No, no, the joke is not on poor frenchies. There was no iPhone at the time. But now we have 3 carriers selling iPhones. We have competitive sets of applications on App Store. We have mobile television (over 3G) from dozen of content suppliers.

Originally Posted by samab

Vodafone (based in UK) and T-Mobile (based in Germany) --- you immediately know that there is a problem when these 2 neighbouring multi-nationals are not operating in the big French country.

This is just not true. Vodafone works in France.

Originally Posted by samab

French court ordering the end of iphone exclusivity and forced when and how unlocking codes should be given --- those are idiotic regulations that are ineffective. You want the French citizens to benefit --- bring in a fourth national carrier, preferabily a foreign one.

Oh, idiots do kindly sometimes. They are allowed to.
And how so? Why are their regulations ineffective? Say, everyone in my team has iPhone, and 40% of us have Orange iPhones, 30% have SFR iPhones and 30% have Bouygues iPhones. We compete!

[samab]

Having the ability to buy the iphone from all 3 carriers at inflated prices are not very good for consumers.

[RichL]

This is happening 25 years too late. The US government should have mandated a single wireless technology (GSM, CDMA, it doesn't matter), banned phone locking and enabled number portability decades ago.

Originally Posted by samab

The only industrial country where there is even less market concentration is UK where their largest carrier, O2, owns 27% of the UK market. But there are constant news report of T-Mobile UK getting out of the UK market --- which will mean that whoever buys them out will become the top UK carrier with about 40% of the UK market.

If one of the current UK operators bought T-Mobile, they would be required under law to hand back T-Mobile's wireless licenses to the government. Thus, another player would be able to join the market.

And that's if they got the go-ahead of the EU competition commission.

[ivan.rnn01]

Prices decrease. Years ago iPhone contracts costed more than 50 per month. Presently you can have it for 39 per month.
Ciao! (I'm projecting a wonderful car ride this weekend! Wish me many miles!)

[Logisticaldron]

Originally Posted by ranson

I'm kind of disappointed that an attempt to lower prices was not explicity spelled out here. Domestic cell phone fees are completely outrageous compared to the rest of the world.

That just isn’t true.

Originally Posted by mcarling

The first step the FCC should take to ensure competition is to outlaw locked handsets.

That will reduce some competition and will stifle a lot of potential innovation. Take the original iPhone for example, Visual Voicemail was barely offered on any phone and it was an expensive option at that. Then you have an unlimited data plan at $20/month, half as much as the average unlimited data plan at the time, and the carrier isn’t ripping the OS apart to make sure you are paying for Google Maps and YouTube and anything else that is deemed too abusive to their network and business model. Every smartphone user in the US has benefited from the iPhone that AT&T was willing to take a chance on, even if you prefer another device.

[Logisticaldron]

Originally Posted by RichL

This is happening 25 years too late. The US government should have mandated a single wireless technology (GSM, CDMA, it doesn't matter), banned phone locking and enabled number portability decades ago.

Damn straight. Poor planning has made us a bad network. Even if the FCC disallows the exclusivity, that really only means that Apple can sell the device unlocked at full price in their stores, AT&T can still offer a subsidy to sign a contract, AT&T does have to lower the rates for those coming on with a pre-paid iPhone and they aren’t going to Force Apple to make the same phone for CDMA-based networks and for T-Mobile’s wonky UMTS frequency.

[samab]

Originally Posted by RichL

This is happening 25 years too late. The US government should have mandated a single wireless technology (GSM, CDMA, it doesn't matter), banned phone locking and enabled number portability decades ago.

If one of the current UK operators bought T-Mobile, they would be required under law to hand back T-Mobile's wireless licenses to the government. Thus, another player would be able to join the market.

And that's if they got the go-ahead of the EU competition commission.

Yet, all the major European countries have been auctioning their spectrum as technology neutral for the past 3-4 years.

There are absolutely no problem with EU competition commission because they have allowed every single country to have their top carrier to be in the 40% market share range.

[samab]

Originally Posted by Logisticaldron

Damn straight. Poor planning has made us a bad network. Even if the FCC disallows the exclusivity, that really only means that Apple can sell the device unlocked at full price in their stores, AT&T can still offer a subsidy to sign a contract, AT&T does have to lower the rates for those coming on with a pre-paid iPhone and they aren’t going to Force Apple to make the same phone for CDMA-based networks and for T-Mobile’s wonky UMTS frequency.

Poor planning for what?

Their whole continent went on a suicide mission with 3G --- which turned out to be disasterous.

If these bureaucrats knew how to pick tech winners --- they would be quitting their jobs and become billionaires as venture capitalists.

[TheSnarkmeister]

Are people buying into this hooey? The Obama administration is all talk and no walk. Nothing of substance is changing, except insofar as to make things worse. I've been saying for over a year now that the only people who would be happy in the end with an Obama presidency would be the Neo-cons (and Neo-liberals, really the same people), and so far I see nothing to contradict that. The government is just getting bigger and more invasive, the corporations more centralized and powerful, the dollar more worthless, and more and more wealth off-shored. If you look at the raw numbers at the macro level, it's been the same pattern for the last three decades, no matter which party was in charge. This is propaganda. Nothing of substance is changing in Washington. If you don't believe me, come here and spend a few days sitting in on Committee meetings and watching Congress. That is, if you can afford it. DC, which was pretty much a a big slum with fancy building a decade ago, is now one of the most expensive cities in the country, with the prices to match --all thanks to the growth of Big government. The Republicans did THAT, just imagine what the Democrats have planned. Relinquishing power back to the people, or even being bothered with the people, is not in the picture. Spin, spin, spin...

[Wiggin]

Originally Posted by mcarling

The first step the FCC should take to ensure competition is to outlaw locked handsets.

+1 hell... +100

If we have a contract that I'll stay with your service long enough for you to recoup the money you paid to subsidize my handset, then there is no reason to lock the handset to your network. None. You'll recoup your cost per the terms of the contract.

They should also be required to spell out what portion of my monthly bill is going towards recouping that subsidy. After they've recouped the subsidy, my cell phone bill should go down by that amount. It's like the carrier is getting an automatic price increase without my knowledge once they've recouped the subsidy. It's also wasteful, both economically and environmentally, because I'm encouraged to throw out my phone every two years and get a new one whether I need it or not.

Finally, I should be able to purchase any phone (or other device for that matter) on my own and get service with any compatible (ie, GSM vs CDMA) carrier. And if they are required to spell out what portion of the bill is for service vs recouping subsidies (which should be $0 if I purchase my own phone), then I don't have to pay the same monthly fee as someone who got a discount on a phone from the carrier.

As far as if a handset maker can chose to only sell their device through a particular carrier, I actually think the FCC should stay out of that one. I think the government should ensure everyone has access to the service (with tranparency in what you are paying for), not necessarily the hardware you use to access that service. You have the "right" (to use the term lightly) to cell phone service. You don't have the right to an iPhone. That probably sounds more harsh than I intend it to, not sure how else to put it. The iPhone is a "want" not a "need", whereas cell service is getting to the point of being a "need" and therefore access for all should be a concern of the government.

[Wiggin]

Originally Posted by bigmc6000

We've beaten this one quite a bit but having an exclusivity agreement actually creates competition. You think the pre would even a shot in hell if Sprint had the iPhone? Having those agreements actually encourage both competition and innovation.

The poster you replied to was I believe talking about locking phones to a particular network, irrespective of any exclusivity agreements. So your RAZR shouldn't be locked to ATT just because that's were you got it from. There should be no technological barriers to taking it to Tmobile.

[webpoet73]

Phones weren't always locked... I remember selling phones (before they became ultra-popular) that I weren't locked to a carrier. I had to manually program the phone to match the carrier (of course, there weren't many choices then... Bell South Mobility was the main one). I am not sure when, but we started getting in phones we didn't have to program. These were locked phones...

I didn't know the implications then, but I knew that selling a phone was much easier since I didn't have to go through pages of technical manuals to program a phone. I am looking at you, Nokia. Frustrating to program.

By the way, then... 45 minutes of phone time was in the neighborhood of 60 - 100 dollars... so, we have come a long way since then, but I am sure there is still some ways to go.

[bigmc6000]

Originally Posted by mcarling

Yes. If Microsoft can sell the crap Zune, then Palm can sell the decent Pre.


I respectfully disagree. Suppose four smart phone manufacturers and four networks. With locked phones, consumers have four choices. With unlocked phones, consumers have sixteen choices.

MS is selling zunes mainly because some people don't want to be using iTunes - not because it's a better product. If the iPod could play anything and everything I would contend Zune wouldn't have even been made (again, this is exclusivity pushing innovation and competition)

The problem with your second argument is that you're assuming all 4 smart phones would even exist. If AT&T hadn't promised to give Apple all the money they were after we might, to this day, be iPhone-less. Now if the iPhone were available on every single carrier from the get go do you think Sprint would have invested their time and money on a Pre - or that ANY carrier would have invested anything on the Pre? No, not likely. So what you want is all the phones to be open right now (screwing the carriers who invested all the money in helping out the manufacturer) but to still somehow financially encourage innovation how?

Hell - the fed seems to want to give money to anybody and everybody except the tax payer so let's have them do it?

Innovation doesn't come from a guy sitting around thinking of good ideas anymore. There is 1 driving factor - money. No money, no innovation, end of story.

If you disallow the locking and exclusivity agreements then 1) the prices of phones will rocket since there will be no subsidies and 2) you'll force manufactures to make multiple units for each network (another bad idea).

Leave it as is - I'm happy with my subsidized iPhone and I have no plans on changing from AT&T - in fact I was with AT&T BEFORE the iPhone.

[anonymouse]

I see this topic has once again brought the astroturfers and anti-government types out in force.

Samab, you really need to get a new argument. This bogus attack on European 3G problems just doesn't hold water in context. Those problems have absolutely nothing to do with the technology selection, but relate to other issues, and are not at all to the point here. Clearly, European regulators haven't learned the correct lesson. And pointing to other purportedly analogous issues in other markets is meaningless unless you actually offer proof that the markets are otherwise analogous, which they are not.

Al_bundy, your assertion appears to be baseless hearsay in the absence of any supporting facts. But, assuming we take it at face value, if small rural carriers (whose coverage areas often overlap the Big 4) can't get access to the "hot" smartphones that everyone wants, they would be investing in technology in a situation where it wouldn't provide returns because without the phones people want, they are relegated to low-margin competition on price and service on dumbphones. In fact, many of them do offer 3G, but can't seriously compete or grow in the current market controlled by the Big 4.

Bigmc6000, your claim that anticompetitive behavior increases competition and innovation, and decreases cost to the consumer goes against all reason, evidence and history. A brazen attempt at obfuscation, but, "that dog won't hunt."


I won't even bother with the posts that simply see this as an opportunity to score points with anti-Obama, anti-government rhetoric. Well, OK, I will point out that your ideology has got us into the general mess the U.S. finds itself in now: I think Paul Krugman sums it up rather nicely:

http://www.nytimes.com/2009/08/24/op...24krugman.html

In fact, it's about time the FCC step up to the plate and put an end to this wireless industry nonsense. Wireless communications, voice and data, have become a mature and essential public service, and there is a clear public interest in ensuring a consumer friendly level playing field on the public airways that these services utilize. So, FCC, it's time to:

• Put an end to locked phones that tie consumers to a single carrier.
• Put an end to the insanity of allowing carriers to effectively lock phones to their networks by deploying incompatible technology.
• Put an end to exclusivity contracts that allow carriers to stifle competition.
• Put an end to carriers disabling and controlling phone features and services.
• Put an end to carriers dictating contracts and services.
• Turn the carriers into pipes who compete on price and quality of service.

Oh, and, while you're at it. Do the same to the wired broadband providers. There's no reason any carrier, regardless of technology, should be allowed to leverage that position to control other markets and services.


I just have two words for all of you who oppose these changes: Number Portability. All these industry arguments against changes that will provide greater competition, increased innovation and lower costs to consumers, are basically rehashes in one form or another of your arguments against number portability. The dire consequences you predicted from that did not ensue and it was, and continues to be, good for consumers.

(My favorite anti-change argument is that ending exclusivity deals or forced contracts will somehow end, or decrease, subsidies on phones. This is utterly laughable. Take, for example, the Razr: Now that it's a completely unexclusive phone, carriers will effectively pay you to take it. How does that compare to when it first came on the market?

OK, so it's not so desirable today in terms of features, but the point, and I believe it remains a valid one, is that when carriers are forced to compete for users of a "hot" phone, they will offer ever greater subsidies to induce customers to sign contracts, especially if the customer has an option not too. That's basic economics, and arguments to the contrary are absurd.)

Might these changes result in decreased revenue for some of the Big 4? Quite likely so. It might even result in a major shakeup of the market and the industry. But the end result will be good for consumers. (And I expect to see Apple roll quite nicely with the punches.) The only ones who benefit from maintaining the status quo are the ones who control the industry now, so it's not surprising to see them pull out all the stops to try to prevent it.

[anonymouse]

Originally Posted by bigmc6000

The problem with your second argument is that you're assuming all 4 smart phones would even exist. If AT&T hadn't promised to give Apple all the money they were after we might, to this day, be iPhone-less. Now if the iPhone were available on every single carrier from the get go do you think Sprint would have invested their time and money on a Pre - or that ANY carrier would have invested anything on the Pre? No, not likely. So what you want is all the phones to be open right now (screwing the carriers who invested all the money in helping out the manufacturer) but to still somehow financially encourage innovation how?

That's some rather twisted illogic there. Let's examine it more closely. The claim is that competition stifles innovation, and that the inverse, stifling competition promotes innovation.

OK, AT&T, in it's incarnation as Ma Bell (which, in fairness to the current AT&T, is not the same company as that which carries the name today, although, today's AT&T is descended from the anticompetitive part of the old AT&T), did a pretty damn good job of stifling competition in all areas related to it's business. Did a thousand flowers of innovation bloom as a result? They most certainly did not.

I don't think further counter-arguments are even necessary.

Then, there's this provocative claim: "If AT&T hadn't promised to give Apple all the money they were after we might, to this day, be iPhone-less." Oh no! Impossible to prove or disprove, but certainly pretty scary, isn't it? Very nice rhetorical effect, very nice indeed, well done!

Oh, but, in reality it's nothing but meaningless words. Meant to scare, certainly -- just like the comments on the Pre -- but without substance. What if Steve Jobs had to go for his liver transplant just as the deal with AT&T was being inked? No iPhone, that's what! What if John Kerry had been elected president? No iPhone, that's what! What if a butterfly had flapped it's wings in the wrong place? No iPhone, that's what!

Clearly, if we want Apple to keep producing great products, we're going to have to rid the world of butterflies. Very dangerous things those butterflies!

[Logisticaldron]

Originally Posted by anonymouse

Then, there's this provocative claim: "If AT&T hadn't promised to give Apple all the money they were after we might, to this day, be iPhone-less." Oh no! Impossible to prove or disprove, but certainly pretty scary, isn't it? Very nice rhetorical effect, very nice indeed, well done!

I know you discredit everything that has a symbiotic relationship, but that doesn’t mean it’s bad for the consumer or for innovation. I’m sure the iPhone would still have been made, but would we have gotten all the extra tie-ins that the AT&T/Apple relationship offered? I don’t see how we possibly could have.

As for the AT&T/Apple pairing stifling innovation we have actually seen the opposite. We’ve seen Visual Voicemail start becoming standard, we’ve seen real webpages being a focus for smartphones, we’ve seen smartphone HW offer more touchscreen devices aimed at getting the higher-end market that was previously dominated by some geeky and business focused devices that the average consumer wasn’t interested in, but now is. Mobile OSes take a dramatic turn focusing on the consumer. Unlimited data access has dropped in prices while the amount of data access has skyrocketed as these devices actually become useful.

You’re also denying all the symbiotic relationships that have helped innovation outside of the mobile industry. Anything can be abused and used to force down an opponent when it’s unnecessary, but these pairings can also use the various strengths of different companies to make a product that is better than no pairing at all. Imagine if Apple only sold the iPhone in their stores with no YouTube, Google Maps, or other services that carriers would want to charge for. If they made a single phone with all the UMTS frequencies for AT&T and T-Mobile and the bands used by Sprint and Verizon. So it now costs more, it’s larger and heavier and with a worse battery life. Big deal, right?

[samab]

Originally Posted by anonymouse

Samab, you really need to get a new argument. This bogus attack on European 3G problems just doesn't hold water in context. Those problems have absolutely nothing to do with the technology selection, but relate to other issues, and are not at all to the point here. Clearly, European regulators haven't learned the correct lesson. And pointing to other purportedly analogous issues in other markets is meaningless unless you actually offer proof that the markets are otherwise analogous, which they are not.

Those who forget the lessons of history are doomed to repeat them.

(1) simlocking laws don't work --- Apple bypass all of them in Europe.
(2) all recent European spectrum auctions are technology neutral --- their one technology policy failed.
(3) exclusivity brings in technology innovation. Nokia is nowhere in the US because they don't listen to their customers who want flip phones in the US, nothing to do with US carriers locking Nokia out.
(4) pricing of plans will make usage impractical regardless of terms and conditions fine print limitations --- so and so iphone carriers allow you to tether, so what --- they only give you 100 MB in data allowance.

(5) nobody wants to spend the billions of dollars in building the next generation of networks just to become dumb pipes --- so that means the US government needs to spend $300 billion on wiring America.

http://blogs.zdnet.com/BTL/?p=22702

[anonymouse]

Originally Posted by Logisticaldron

I know you discredit everything that has a symbiotic relationship, but that doesn’t mean it’s bad for the consumer or for innovation.

[...]

You’re also denying all the symbiotic relationships that have helped innovation outside of the mobile industry. Anything can be abused and used to force down an opponent when it’s unnecessary, but these pairings can also use the various strengths of different companies to make a product that is better than no pairing at all.

I don't recall stating that symbiotic relationships are always bad. What I have asserted is that, in the current marketplace, wireless companies are using these relationships, and other tactics, for the dual purpose of limiting consumer freedom and maximizing consumer costs, and leveraging their control of the public airwaves into control of various services not necessarily related to the business of carrying data wirelessly. It's possible, that if most of the other industry abuses were ended, that these relationships, in that environment, might not have an overly negatively impact on consumers and other competitors. That's worthy of study, but assertions of dire consequences by the wireless industry may most often be dismissed as self interested and disingenuous, just as their predictions regarding number portability proved to be.

There are plenty of symbiotic relationships in general computing and in Internet related services that are beneficial. The difference is that these do not generally involve locking consumers in with forced contracts or provisions that one can only use certain hardware to access them, or other restrictions generally harmful to consumers. Viewed in that context, the wireless industry and it's symbiotic relationships are, to use a term favored by Darwin, monstrosities: "freakish" variations from the norm.


It's also clear that the wireless industry has settled into a comfortable position of avoiding certain types of competition that are favorable for consumers, and has adopted a policy of competing only in ways that allow them to restrict consumer freedom and increase consumer cost.

One of the things being investigated by Congress and the FCC, as we all know, is the increasing cost of SMS messages. The wireless carriers engage in much hand waving on this issue, but the reality is that there is, at the least, a tacit understanding among them that they will not compete on price for this service.

How can it be that prices on such a commonly used service, with almost zero overhead to the carriers, have actually gone up? Surely, if one of them offered SMS at $0.05/per message, customers would be eager to switch to this carrier to cut their own costs. Yet, we see quite the opposite happening: costs have actually increased from $0.10 to $0.20 per message.

The carriers understand very well that if one of them starts lowering SMS costs, this will, in the long run, result in decreased revenue for all of them. So, it isn't necessary for them to have a formal or even informal agreement to keep these costs high. (Which is not to say that they necessarily don't have such an informal agreement. It would be difficult to prove either way.) All that's necessary is for their to be a tacit understanding in the industry that, as long as they all "play by the rules" they maximize profits.

It's also clear that this industry practice causes consumer harm by inflating costs beyond what they would be in a "free market". So, while not strictly illegal (remember monopoly control and manipulation of markets was not, at one time, illegal either) these practices go against the public interest, and the intention of anti-trust laws. If the cause of this is over solidification of the market among a few large companies, there is a compelling public interest in "shaking up" that market, especially when that market depends on a public resource.

[anonymouse]

Originally Posted by samab

Those who forget the lessons of history are doomed to repeat them.

Those who don't understand the lessons of history are doomed to make other, perhaps more serious, mistakes. As for those who misrepresent the lessons of history, well...

[samab]

Originally Posted by anonymouse

It's also clear that the wireless industry has settled into a comfortable position of avoiding certain types of competition that are favorable for consumers, and has adopted a policy of competing only in ways that allow them to restrict consumer freedom and increase consumer cost.

One of the things being investigated by Congress and the FCC, as we all know, is the increasing cost of SMS messages. The wireless carriers engage in much hand waving on this issue, but the reality is that there is, at the least, a tacit understanding among them that they will not compete on price for this service.

But compare with the rest of the OECD countries (the 30 richest first world countries) --- American SMS usage is a lot higher than those countries.

The OECD medium usage is 600 outgoing SMS per year (50 outgoing SMS per month) and the high usage is 660 outgoing SMS per year (55 outgoing SMS per month).

The average American uses 400 incoming and outgoing SMS per MONTH (so divide that by 2 and we get 200 outgoing SMS per month). The average American use 4x more SMS than the average of the rest of the richest 30 countries in the world. The average American also talks 6x more than the OECD average basket of voice minutes.

If you want your cell phone as a fashion accessory --- then look at the rest of the world as the example. If you want your cell phone to be a useful tool which you actually use to communicate, the American system works quite well.

Are there room for improvement? Of course, there are always room for improvement. But to declare that the American system is disfunctional --- that's far from the truth.

[samab]

Originally Posted by anonymouse

Those who don't understand the lessons of history are doomed to make other, perhaps more serious, mistakes. As for those who misrepresent the lessons of history, well...

There are no misrepresentation at all.

Europe is a diverse continent of 30+ countries --- some are based on British common law, some are based on French civil law, some are former communist countries with minimal sense of rule of law, some are protectionist, some are socialist-leaning.

It is not a practical "implementation" problem by the regulators --- if all of them failed. It is a systemic problem where they based their policies on flawed assumptions based on flawed theories.

[anonymouse]

1. Your response is not at all relevant to the points discussed.

2. The statistics you quote in your reply do not support the "conclusions" you draw. In fact, they seem largely irrelevant to your point.

Originally Posted by samab

But compare with the rest of the OECD countries (the 30 richest first world countries) --- American SMS usage is a lot higher than those countries.

The OECD medium usage is 600 outgoing SMS per year (50 outgoing SMS per month) and the high usage is 660 outgoing SMS per year (55 outgoing SMS per month).

The average American uses 400 incoming and outgoing SMS per MONTH (so divide that by 2 and we get 200 outgoing SMS per month). The average American use 4x more SMS than the average of the rest of the richest 30 countries in the world. The average American also talks 6x more than the OECD average basket of voice minutes.

If you want your cell phone as a fashion accessory --- then look at the rest of the world as the example. If you want your cell phone to be a useful tool which you actually use to communicate, the American system works quite well.

Are there room for improvement? Of course, there are always room for improvement. But to declare that the American system is disfunctional --- that's far from the truth.