Why do american cell carriers hold back?
07-11-2006, 12:48 PM
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Why do american cell carriers hold back?
Why do carriers in other parts of the world offer phones like this:
http://www.phonescoop.com/phones/use....php?phone=893
but t-mobile and cingular dont sell them? My friend has one of them from india, unlocked, and its really impressive. I cant see why t-mobile doesn't pick up lots of crazy phones and use it as one of their selling points.
Andrew
http://www.phonescoop.com/phones/use....php?phone=893
but t-mobile and cingular dont sell them? My friend has one of them from india, unlocked, and its really impressive. I cant see why t-mobile doesn't pick up lots of crazy phones and use it as one of their selling points.
Andrew
07-15-2006, 11:17 AM
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A lesson in wireless...
Well, you asked the million dollar question, so here is the answer...it's not short, but it's basically the primer that every cell phone customer should read before they ask a question like that. Now, your question is a good one, but there really isn't a short answer. Well, there is a short answer, and that is "Because U.S. customers generally want free cell phones"...but that really isn't a good answer. There is a slightly longer answer - and that is "MP3 phones don't sell well because people really like their iPods and aren't willing to integrate the two until a better mix of phone and MP3 player comes about. Current MP3 phones have not been accepted by customers due to cost and product issues." Either of those answers may be perfectly satisfactory, and if so, great. If you want the real answer as to why you don't (yet) get the world's best cell phones, clear out a little bit of time and read on...
I have spent my entire career with a wireless carrier (and only the first few years of that working in a store), so I know the answer to this one...I'll give you the "Readers Digest" version of the wireless industry. Again, it's not entirely a direct answer to the question posed, but it will get just about anyone going in the right direction about the wireless industry and why it's always been better overseas...
Here in the U.S. we have always had a great landline phone system so wireless has had a slower adoption in the US. When you have a phone at home and in the office and a pay phone on every corner, an expensive wireless phone is a tough sell. Not a lot of customers = not a lot of network build out (less reason and funds to invest in cell towers outside of major cities and not enough funding or reason to fill in all the coverage holes in metropolitan areas). On the flip side, not a lot of network build out = not a lot of customers willing to invest in wireless. Put all of that together, and it takes a long time to build out a network worthy of expecting customers to invest in something other than basic equipment - let alone expect them to pay for the premium content that these handsets use. Now, overseas, for the most part, their landline networks were junk to begin with, got bombed out during wars and have never been at the level of quality that we have had in the U.S. all along. So, when the population in other countries demand better communications, the modern, now more cost effective solution is wireless.
The U.S. is a big chunk of real estate, so it's hard to cover every square inch with perfect, if any, wireless coverage. Most foreign countries are smaller in square milage and/or have their population (at least the ones that can afford any kind of communications) clustered into smaller, more densely populated geographic areas. So, it's easier to build out a quality network in most foreign countries. Since they are building a smaller network, they will invest in more advanced technology. A more advanced network means more advanced handsets can be offered. Here in the U.S., GSM and CDMA are the currently used networks. Read the newspapers and you'll see that some carriers are now the subject of class action lawsuits because customers that have older technologies are suing to keep those outdated networks online to support their handsets. So, you have a relatively small number of customers fired up by hungry lawyers that are suing to keep out of date technology online - simply because the customer is mad that they will have to buy a new phone. Because the carriers are forced to keep their old networks running, their maintenence costs double or triple, meaning there is less money to invest in new technology or to pay for a new cell site that could have imporved coverage on the outskirts of town (maybe out in the new subdivision that you moved in to, etc?). End result is that funds go to lawyers, not to enhancing the state of the art network.
On top of that, in most other countries, customers are used to paying full price (or close to it) for their phones. Years of subsidies by carriers have tuned customer behaviour to expect a free phone. There is no such thing as a free phone. A "free" phone probably cost the carrier $100-$150 (or more)...but they know you probably won't pay that price, on top of a $50-$100 monthly bill. When you sign a contract, the carrier gives you a deal on the phone to entice you to buy the service. In general, it takes the carrier about 2 years to recoup the cost of that subsidy. Yes, you've "paid" for that subsidy in 2-3 months of billing (if you apply 100% if your billing to the subsidy), but also remember the massive network infrastructure - and growth of that network that customers expect and deserve - that is supported by the customer base and a portion of their montly bills.
Carriers are selling airtime, not phones. Phones are a loss-leader. They'll sell you a phone because you need one to access their network. Generally, the phone will be locked to their network because they "own" a part of that phone and, anyway, that phone was tweaked and tuned for their network and services, so why not protect their investment? Nobody ever complains (at least not in a legitimate manner) when their car engine is factory tuned for 200hp. Regardless of the fact that the engine COULD reliably produce 225hp, the manufacturer set it for 200hp - that is how they chose to sell it and you as a customer chose to buy it. Same goes for suspension, exhaust, etc. They tuned it for, what is in THEIR view, the best customer experience. If you don't like that 200hp, soft suspension, quiet exhaust, etc, you spend a few bucks and modify it. If you don't like that your phone is locked, you can surely find someone that sells an unlocked version. Just like modifying your car may jeopardize your warranty or the quality of the overall experience, you're getting what you want, regardless of the risks. Same goes for an unlocked phone. Anyway, that's a whole other topic...
U.S. customers are so used to the "free phone" offer that it is hard to convince them to spend a couple of hundred dollars to upgrade to a more advanced phone. These are the same customers that will not think twice about buying expensive clothes, plasma tv's or buying an expensive car, then spending even more to modify it - only to trade it in after a few years. Again, wireless customers have been trainined to "behave" this way by the way that the carriers have sold their phones over the years. I'm not making an excuse for their behaviour, it's just the way it is. Unfortunately, that buyer-seller relationship sets up somewhat of a roadblock for high tech phones in the U.S.
Now, regardless of the expressed desire to own something high tech (therefore, more expensive), customers will generally still head for the low price option. It's only recently that customers have started warming up to the idea of more expensive handsets (thank Motorola and the RAZR for that one...carriers that sell this handset love the effect that it has had on their business). Customer wants are changing, so handset lineups are getting more sophisticated, it just takes time. Even at that, there is only a finite (yet growing...) number of customers that will pay premium pricing for a handset and the number of new handsets released outpaces the amount of customers that are willing to pay for said handsets. So, that is the real reason why they have had cool phones "over there" and only basic features "over here" for so long.
At the end of the day, I think the wireless industry here in the U.S. is great and just keeps getting better. Does that mean coverage on your block is perfect or you don't drop a call at a certain point on your commute every day? Nope. But think of what you do get, every day, from your cell phone. How has it changed your life? Your business? Beyond those calls, are you actually taking advantage of all the cool stuff that your phone does? If you actually tried integrating some of those services into your life, the fact that the data package is a few extra bucks a month will become nothing. Besides, you are getting an insane amount of included minutes, plus free nights and weekends, plus mobile to mobile minutes, plus etc, etc, etc. If you really think about it, the whole system is pretty damn incredible. If you have a problem with your network coverage, first, think about where you are. Are you in a populated area or an area that people travel in frequently? Those are the places that get attention first. If you have problems with service and are in a little traveled area or you choose to live well outside of a population center, well, your coverage may not be so hot. Let your carrier know, calmly and professionally, that your service isn't great and you would like them to look into it. The customer services rep at the call center and the sales rep/manager in the store has no direct effect on network quality - but they do have tools to report in network issues. Be nice, report the issue to them and they will be happy to submit a ticket to the network team. Chances are the network team knows where their service needs work, but it's most likely that so other external issue is preventing them from building out in that area. Sometimes, it's news to them, so always report it in. Again, that's for another discussion...
As for the more advanced handsets? Carriers sell what customers want and will pay for. If too few customers step up and buy high-tech handsets and the optional network services that advanced handsets use, less dollars will get spent supporting those handsets and services. So, if you don't prove that you'll buy cool handsets and services, carriers won't stock them on their shelves or support them on their networks.
Give it 6 months or a year and you'll have better choices than you have today...but also, think about how much more advanced the phones are today vs a year ago. They just keep getting better.
ENDNOTES:
Yes, I know that carriers make a profit. Generally, they make MASSIVE profits. They are private companies, not public utilities. If they couldn't make a profit at it, they wouldn't be in business. Generally, that means that you as the customer have to pay a monthly bill and maybe that monthly bill is more than what you want to pay. Mobile phone service is like anything else in life. If you like what they have to offer, you will buy it. Remember, this is a free market economy, so goods and services are only worth what someone (not necessarily "you") will pay for them. Applies to $20,000/$50,000/$100,000 cars, $3,000 tv's, $300 phones and $200 jeans. If you don't like those prices, there is always a low price option. You can get a used car for $500 a 13" tv for $75, jeans for $20 and yes, a fully functioning cell phone for free (or close to it). The ironic thing is that a lot of the low priced phones are the best performing handsets available. When the manufacturer spends all of their time making that model simply a good phone, and not a good Phone/MP3/GPS/Can Opener, the (shocking!) effect is that the phone simply makes damn good phone calls...and isn't that what we really wanted in the first place?
No, I won't discuss details about where I work or any future products or services. Not that I really know anything that you can't find on the internet (trust me - you'll learn as much on the numerous cell phone discussion boards as you will in any private meeting). I'm only going to summarize the history and state of the business that you can find by reading a few books and industry newspapers - I just happen to have lived most of it (and read the books and subscribed to the papers as well!).
All I want to do is enjoy my new Acura and if I can spread a little publically known knowledge in the meanwhile, I'm all for it.
So, you tell me what the best low-gloss cleaner is for the dash on my TSX and I'll clear up the misconceptions that you have about the wireless industry.
Good motoring and I hope that this answer helps...
I have spent my entire career with a wireless carrier (and only the first few years of that working in a store), so I know the answer to this one...I'll give you the "Readers Digest" version of the wireless industry. Again, it's not entirely a direct answer to the question posed, but it will get just about anyone going in the right direction about the wireless industry and why it's always been better overseas...
Here in the U.S. we have always had a great landline phone system so wireless has had a slower adoption in the US. When you have a phone at home and in the office and a pay phone on every corner, an expensive wireless phone is a tough sell. Not a lot of customers = not a lot of network build out (less reason and funds to invest in cell towers outside of major cities and not enough funding or reason to fill in all the coverage holes in metropolitan areas). On the flip side, not a lot of network build out = not a lot of customers willing to invest in wireless. Put all of that together, and it takes a long time to build out a network worthy of expecting customers to invest in something other than basic equipment - let alone expect them to pay for the premium content that these handsets use. Now, overseas, for the most part, their landline networks were junk to begin with, got bombed out during wars and have never been at the level of quality that we have had in the U.S. all along. So, when the population in other countries demand better communications, the modern, now more cost effective solution is wireless.
The U.S. is a big chunk of real estate, so it's hard to cover every square inch with perfect, if any, wireless coverage. Most foreign countries are smaller in square milage and/or have their population (at least the ones that can afford any kind of communications) clustered into smaller, more densely populated geographic areas. So, it's easier to build out a quality network in most foreign countries. Since they are building a smaller network, they will invest in more advanced technology. A more advanced network means more advanced handsets can be offered. Here in the U.S., GSM and CDMA are the currently used networks. Read the newspapers and you'll see that some carriers are now the subject of class action lawsuits because customers that have older technologies are suing to keep those outdated networks online to support their handsets. So, you have a relatively small number of customers fired up by hungry lawyers that are suing to keep out of date technology online - simply because the customer is mad that they will have to buy a new phone. Because the carriers are forced to keep their old networks running, their maintenence costs double or triple, meaning there is less money to invest in new technology or to pay for a new cell site that could have imporved coverage on the outskirts of town (maybe out in the new subdivision that you moved in to, etc?). End result is that funds go to lawyers, not to enhancing the state of the art network.
On top of that, in most other countries, customers are used to paying full price (or close to it) for their phones. Years of subsidies by carriers have tuned customer behaviour to expect a free phone. There is no such thing as a free phone. A "free" phone probably cost the carrier $100-$150 (or more)...but they know you probably won't pay that price, on top of a $50-$100 monthly bill. When you sign a contract, the carrier gives you a deal on the phone to entice you to buy the service. In general, it takes the carrier about 2 years to recoup the cost of that subsidy. Yes, you've "paid" for that subsidy in 2-3 months of billing (if you apply 100% if your billing to the subsidy), but also remember the massive network infrastructure - and growth of that network that customers expect and deserve - that is supported by the customer base and a portion of their montly bills.
Carriers are selling airtime, not phones. Phones are a loss-leader. They'll sell you a phone because you need one to access their network. Generally, the phone will be locked to their network because they "own" a part of that phone and, anyway, that phone was tweaked and tuned for their network and services, so why not protect their investment? Nobody ever complains (at least not in a legitimate manner) when their car engine is factory tuned for 200hp. Regardless of the fact that the engine COULD reliably produce 225hp, the manufacturer set it for 200hp - that is how they chose to sell it and you as a customer chose to buy it. Same goes for suspension, exhaust, etc. They tuned it for, what is in THEIR view, the best customer experience. If you don't like that 200hp, soft suspension, quiet exhaust, etc, you spend a few bucks and modify it. If you don't like that your phone is locked, you can surely find someone that sells an unlocked version. Just like modifying your car may jeopardize your warranty or the quality of the overall experience, you're getting what you want, regardless of the risks. Same goes for an unlocked phone. Anyway, that's a whole other topic...
U.S. customers are so used to the "free phone" offer that it is hard to convince them to spend a couple of hundred dollars to upgrade to a more advanced phone. These are the same customers that will not think twice about buying expensive clothes, plasma tv's or buying an expensive car, then spending even more to modify it - only to trade it in after a few years. Again, wireless customers have been trainined to "behave" this way by the way that the carriers have sold their phones over the years. I'm not making an excuse for their behaviour, it's just the way it is. Unfortunately, that buyer-seller relationship sets up somewhat of a roadblock for high tech phones in the U.S.
Now, regardless of the expressed desire to own something high tech (therefore, more expensive), customers will generally still head for the low price option. It's only recently that customers have started warming up to the idea of more expensive handsets (thank Motorola and the RAZR for that one...carriers that sell this handset love the effect that it has had on their business). Customer wants are changing, so handset lineups are getting more sophisticated, it just takes time. Even at that, there is only a finite (yet growing...) number of customers that will pay premium pricing for a handset and the number of new handsets released outpaces the amount of customers that are willing to pay for said handsets. So, that is the real reason why they have had cool phones "over there" and only basic features "over here" for so long.
At the end of the day, I think the wireless industry here in the U.S. is great and just keeps getting better. Does that mean coverage on your block is perfect or you don't drop a call at a certain point on your commute every day? Nope. But think of what you do get, every day, from your cell phone. How has it changed your life? Your business? Beyond those calls, are you actually taking advantage of all the cool stuff that your phone does? If you actually tried integrating some of those services into your life, the fact that the data package is a few extra bucks a month will become nothing. Besides, you are getting an insane amount of included minutes, plus free nights and weekends, plus mobile to mobile minutes, plus etc, etc, etc. If you really think about it, the whole system is pretty damn incredible. If you have a problem with your network coverage, first, think about where you are. Are you in a populated area or an area that people travel in frequently? Those are the places that get attention first. If you have problems with service and are in a little traveled area or you choose to live well outside of a population center, well, your coverage may not be so hot. Let your carrier know, calmly and professionally, that your service isn't great and you would like them to look into it. The customer services rep at the call center and the sales rep/manager in the store has no direct effect on network quality - but they do have tools to report in network issues. Be nice, report the issue to them and they will be happy to submit a ticket to the network team. Chances are the network team knows where their service needs work, but it's most likely that so other external issue is preventing them from building out in that area. Sometimes, it's news to them, so always report it in. Again, that's for another discussion...
As for the more advanced handsets? Carriers sell what customers want and will pay for. If too few customers step up and buy high-tech handsets and the optional network services that advanced handsets use, less dollars will get spent supporting those handsets and services. So, if you don't prove that you'll buy cool handsets and services, carriers won't stock them on their shelves or support them on their networks.
Give it 6 months or a year and you'll have better choices than you have today...but also, think about how much more advanced the phones are today vs a year ago. They just keep getting better.
ENDNOTES:
Yes, I know that carriers make a profit. Generally, they make MASSIVE profits. They are private companies, not public utilities. If they couldn't make a profit at it, they wouldn't be in business. Generally, that means that you as the customer have to pay a monthly bill and maybe that monthly bill is more than what you want to pay. Mobile phone service is like anything else in life. If you like what they have to offer, you will buy it. Remember, this is a free market economy, so goods and services are only worth what someone (not necessarily "you") will pay for them. Applies to $20,000/$50,000/$100,000 cars, $3,000 tv's, $300 phones and $200 jeans. If you don't like those prices, there is always a low price option. You can get a used car for $500 a 13" tv for $75, jeans for $20 and yes, a fully functioning cell phone for free (or close to it). The ironic thing is that a lot of the low priced phones are the best performing handsets available. When the manufacturer spends all of their time making that model simply a good phone, and not a good Phone/MP3/GPS/Can Opener, the (shocking!) effect is that the phone simply makes damn good phone calls...and isn't that what we really wanted in the first place?
No, I won't discuss details about where I work or any future products or services. Not that I really know anything that you can't find on the internet (trust me - you'll learn as much on the numerous cell phone discussion boards as you will in any private meeting). I'm only going to summarize the history and state of the business that you can find by reading a few books and industry newspapers - I just happen to have lived most of it (and read the books and subscribed to the papers as well!).
All I want to do is enjoy my new Acura and if I can spread a little publically known knowledge in the meanwhile, I'm all for it.
So, you tell me what the best low-gloss cleaner is for the dash on my TSX and I'll clear up the misconceptions that you have about the wireless industry.
Good motoring and I hope that this answer helps...
07-15-2006, 10:47 PM
#5
fap fap fap
Originally Posted by JJ4Short
Short answer I have gotten a bunch of times is that land lines in a lot of countries are shit so cell phones are way better alternative.
whenever my parents/relatives visit southeast asia they just pick up a cell phone over there and get a prepaid phone card. when they leave they just give the phone to one of their relatives there
07-16-2006, 06:59 AM
#6
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Glad to be here, glad to help, but like I said at the end of my post...
"No, I won't discuss details about where I work or any future products or services. Not that I really know anything that you can't find on the internet (trust me - you'll learn as much on the numerous cell phone discussion boards as you will in any private meeting). I'm only going to summarize the history and state of the business that you can find by reading a few books and industry newspapers - I just happen to have lived most of it (and read the books and subscribed to the papers as well!).
All I want to do is enjoy my new Acura and if I can spread a little publically known knowledge in the meanwhile, I'm all for it."
Getting into details only sets me up to be in the middle of flame wars about service and handsets and requests for all sorts of things that I'm in no position to fulfill anyway. Been there before, not doing it again...
Thanks
"No, I won't discuss details about where I work or any future products or services. Not that I really know anything that you can't find on the internet (trust me - you'll learn as much on the numerous cell phone discussion boards as you will in any private meeting). I'm only going to summarize the history and state of the business that you can find by reading a few books and industry newspapers - I just happen to have lived most of it (and read the books and subscribed to the papers as well!).
All I want to do is enjoy my new Acura and if I can spread a little publically known knowledge in the meanwhile, I'm all for it."
Getting into details only sets me up to be in the middle of flame wars about service and handsets and requests for all sorts of things that I'm in no position to fulfill anyway. Been there before, not doing it again...
Thanks
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