Why is it so hard to like the US cell phone industry

Last Thursday in the New York Times, David Pogue had a long article titled The Irksome Telephone Company. In it he pointed out that the US public would be better served by their elected officials if they did not spend so much effort on handset exclusivity (or why does AT&T have exclusive rights to the iPhone?) but concentrated on those areas where the US consumer was being short changed. He identified five areas and I have added one of my own for good measure.

  1. Text messaging fees – now sitting at $0.20 per message (as he points out roughly 61 million times the cost of sending an e-mail over their data network).
  2. Two sided billing – a mobile to mobile call is billed to both the caller and sender. Typically in the rest of the world, only the caller pays.
  3. Subsidy game – most phones are subsidized by long term contracts and consumers pay off the subsidy through their monthly charge. Trouble is the overall bill remains the same even after the subsidy on the phone is paid off.* (see note)
  4. International Roaming – he was talking more about the rip off rates charged for international dialing from the USA, rather than international roaming rates which are also usurious. This is a very profitable part of the mobile operator’s business (it used to be 5% of revenues 20% of profits)
  5. 15 second instructions – why can’t we go straight to voicemail rather than listen to 15 seconds of irrelevant instructions. As he points out when was the last time anyone pressed ‘5’ to page someone.
  6. The never-ending contract – Why is it that you can sign up for service any day of the month and it takes effect almost immediately, yet if you want to make a change to your contract it can only happen at the start of the next month and your contract start date resets to zero?

All these issues seem to have a common thread, that while typically there are workarounds, you have to be quite cell-phone-savvy to work them out. They punish the occasional user, the very ones you would expect the cell phone companies to be cultivating to grow their business.

Collectively, these give rise to the awful brand image of most mobile operators when it comes to their customers, which is why I guess they all sell on the basis of technology and price.

(note) It may be that the subsidy falls victim to the green revolution, the present setup encourages the replacement of phones based purely on timing not on need. We can only hope….

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