Originally Posted by nht
Did you really just say this? 'Cause I once wandered into Political Outside and ran away.
Well wander back. The cage doors were left open and the animals are wandering around.
In a free market you charge what the market will support. With luck and foresight, you're profitable. As a consumer I don't "text" anymore. I IM and twitter.
As I noted above, cell service IS NOT a free market. The airwaves and frequencies assigned within them are public property, are limited and cannot be used without permission. This isn't a case of "I think the Big Mac sucks so I'll go down the street and make a Big Mark instead."
If someone tried to get into the cell service provider business without government consent, they would be shut down instantly.
So it isn't about what the market will bare. It is about determining a decent profit margin above what the providers paid to license the spectrum and then calling things above that wrong or inappropriate.
So for AT&T, texting not so profitable for this customer. When there are enough folks that do this, the market will even out.
Possibly and you could have a point if not for the fact that cell companies see this coming and are working to thwart it. There are indeed plenty of providers popping up who have sub-leased bandwidth and are offering unlimited talk and text for $40-50 a month. However what is now happening, and this started somewhat with smartphones, is the main providers are now saying to the providers doing the sub-leasing that they cannot activate said phones on their network.
Now if your phone is unlocked, as for example iPhones are in many other countries, then when you come to the end of your agreed contract, you pop out the sim of the provider you are no longer entranced with and go grab some cheap talk and text packages from someone else.
In the U.S. you basically cannot do this and in the few instances where you can, they are being actively thwarted and shut down. For television, they have shut down the analog hole and the system that was created for allowing third parties access to cable and satellite feeds basically was made worthless. (Was it called cardbus?) So now in the U.S. if you want to record your programs, the DVR is going to be offered almost exclusively by the provider. You pay to "lease" your boxes even when done leasing them. You buy actually equipment upgrades, but are not the owner of said hardware and instead discover you are leasing it.
Such actions are exactly why I have an antenna on my house and nothing else.
The cell industry is doing the same thing right now and you can see the same backward reasoning on it. LTE is supposed to make it four-ten times less expensive to send the same amount of data over the same bandwidth. THAT is why they are sinking money in to it. If they were charging the same exact rates for the same exact data, they they would be making much more profit. Instead there is talk of and in the case of AT&T, actual implementation of tiered data plans. You now go from paying $6 per gig to $12.50 per gig all while the cost of those gigs transmitted is going down for the provider.
Nearly a million people have turned off their cable and satellite this year. The all or nothing choice has resulted in them choosing nothing in terms of paying the provider. I'm sure like in our household Netflix, Redbox and the local library all fill in the space just fine. However you're talking about us spending $15 or so a month for what the providers were demanding constant two year agreements and upwards of $120-130 a month to provide.
The cell bill is becoming the same way. Instead of packages of programming where they "conveniently" just happen to separate what you, the spouse and the kids all want to watch unless you go big, they are now going to be saying, want a phone with a keyboard of a camera above 1.3 mp, well then you MUST HAVE this amount of data, or agree to unlimited texting. Likewise when your equipment costs are done, you're still paying the subsidized cost of them even if taking no new equipment. If you don't like their terms, sorry can't take that equipment with you somewhere else. Too bad for you.
I'm currently on Tmobile where I get 1000 minutes unlimited text and data for $65. My wife is on PagePlus for $45 a month. The 10 and 8 year old boys cost us $5 a month to keep some minutes on their prepaid phones. That is $115 a month for a smartphone and three regular phones, all unsubsidized. That isn't unreasonable nor unprofitable for anyone.
Because Verizon has to sink a huge amount of money into plant and backhaul build outs to support the LTE tower it's also paying for? They spent $55B in the last 10 years...and billions more will have to be spent to get to LTE.
They gotta earn billions just to break even before they're going to pass that 2/3 savings to the consumer...same with their competitors.
The alternative is for providers not to sink as much into capex and that would suck even more...VZW's 2009 capex was $7.1B. AT&T is adding $2B to their 2010 capex taking them to about the same as VZW numbers.
Me, I wanna see LTE...
The point is that all those actions need to have a decent cost to benefit analysis or else they shouldn't be done. If they don't have a return on the action, then no more stringent contact terms, bullshit fees, lies, spin or manipulation will change that fact. Most people, right or wrong, will jump on the family text plans for one reason, it allows them to tell the kids to text instead of talk and allows them to pay less for voice minutes. They see, understand and make the trade off. The parents would have spent $20 for two limited text plans or they can spend $30 unlimited and tell the kids they aren't adding any more minutes (at $20 per increment increase) They spend $10 to save $20. It makes total sense from their perspective.
However now telling those same families that the kid phone with the keyboard needs a $10 data plan, forever, whether they want it or use it or not, and btw even if you take that phone somewhere else to a sub-leasee, we won't let them put it on our network without that cost....
That is something else entirely and people shouldn't be surprised when people find a way around it because they can and will.