Cell Contracts - The demise of the industry

Why don't you have the iPhone, the Droid? The answer may well be that you don't like the devices or don't believe your cell use nessesitates such devices (this is debatable), but the more likely answer is you are under contract with another company and aren't willing to spend a fortune to switch.

The current model of cell phones and cell company exclusivity as a way to get you to choose one provider over another (iPhone and AT&T, Storm and Verizon for example), will be challenged shortly. The Nexus One, rumored to be coming out in early to mid January, will be a contractless, unlocked GSM phone. Not the first unlocked GSM phone, no, but many are pointing to it as a first step on Google's part in releasing an Android phone that is more about the device itself and less about the network that it's on. Also, Apple's contract with AT&T is expected to expire, without renewal. As if this weren't enough, Google is trying to buy up the 'White Space' and put into place free wifi. White space being the part of the TV airwaves that is not being used. Google's idea is of course, get the internet into as many hands as possible. They're going to attempt to strong arm the cell industry into becoming free providers of bandwidth... an interesting struggle I would guess, judging from AT&T's inability to keep up with the data demands of iPhone users - paying users. Google makes its money by offering free services connecting consumers to the services they want, adds and product placement is where the money is for Google.

What's holding us back? These subsidies for cell phones, in exchange for the signing of a two year contract, are what is holding us back. This has led people to believe that cell phones are only $100, $200, or $300 dollars, when in actuality they're more like $400, $500, and $600. Realisiticly though, the subsidies are not all that significant. Consider this: a two year iPhone contract amounts to a total of $2,400 of the course of two years... guaranteed income basically. That amounts to barely 2% that they give back to the consumer in exchange for the contract, hardly a deal in my opinion. Not to mention, you can now get netbooks for $50, or free even, by signing up for a two year data plan.

It is in the consumers best intrests for cell phones to become unlocked and available on many networks. If this were the case then the consumer would suddenly have the power to decide which network suites them the best. The iPhone and AT&T is glairingly obvious example. While AT&T rates dead last in customer service, they have a rediculiously limited 3G coverage area, and their network performance has been chalanged as of late, the masses continue to flock to their service, buying the iPhone. There is no question, AT&T has gained significant market share based off of their, currently exclusive, contract with Apple. Questionable though, the amount of people signing up for AT&T because of their high degree of reliability and data speeds.

The iPhone really has significantly impacted the industry. Before the iPhone, cell phone data usage was limited to near zero, even on BlackBerrys and other smartphone. The iPhone makes using the internet on your phone pleasant; so many reasons. You can download music, apps, videos, and all of these things can be done - and could be done - on other devices but the iPhone made all of this easier... YouTube and Pandora are just a click away. The mobile browser on the iPhone and it's similarity to your desktop web experience plays a large role in this dramatic increase in data usage. Since the iPhone came out on AT&T they have seen an outrageous increase in data usage. The new statistic AT&T is using is that 3% of users account for 40% of data consumption. Of course, this is an excuse for AT&T to explain away why they have so many dropped calls, and poor performance even in major cities, not a reason for them to get their act together and fix it. Now there is talk of AT&T offering incentives for iPhone users to use less data. This boggles my mind. You can buy certain amounts of data or unlimited data, and when you actually use the service you've been paying for they freak out?

Suddenly now, the more average consumer is beginning to realize that there is a difference between 2G (Edge) and 3G data speeds. Everyone wants 3G now, why wouldn't you? It's not as if 3G is a new technology really, we're already moving onto 4G. However, AT&T's lack of 3G coverage flew under the radar until people began buying devices that advertised being 3G and then they suddenly realized they didn't have 3G in their area. Verizon's new "There's a map for that" adds point this out. Instead of increasing their 3G coverage, AT&T come sup with a rebutle add campanige and attempts to sue Verizon. Of course the rebutle add campaign doesn't really talk about the meat of the problem, AT&T's 3G coverage, but instead turns to their voice coverage, entirly separte things.

I must say though, I really dislike CDMA. I don't care if Verizon and Sprint have better service, or larger footprints, I want a GSM phone. The rest of the world uses SIM card technology. While we can roam in foreign countries with our GSM phones, until they're all unlocked, we're still behind our European friends who can purchase a prepaid local number SIM card, pop it in their phone and suddenly have cheap connectivity while on vacation.