A Lack of Value

Previous Trivia Answer: Brazil (which is the answer to just about any World Cup question)

Today’s Trivia Question: What men’s tennis player has won the most Grand Slam titles (14)?

Today, I meant to write about Pirates of the Caribbean: Dead Man’s Chest, a new movie Kath and I saw on the Giant Screen at the Muvico Peabody 22. There actually is a lot to say about this movie, which I really liked and goes a long way to illustrate what is right and what is wrong about today’s mass media culture (of which, this site is but a totally insignificant part). However, I’m forced to put off my thoughts on the movie to address something more annoying: the lack of apparent value provided by mobile communication providers, at least in Memphis. Kath and I went to investigate getting a second cell phone after the movie, and the experience left me shaking my head.

We all know that cell phones are a ubiquitous part of modern life. Everyone has one, even young people who have few other possessions, and many people have careers that depend upon them. Over the past few years in the US, the number of mobile communication providers has been shrinking, as the larger fish have been buying up the smaller fish. There is nothing wrong with that, of course, as it is part of the normal part of doing business. Consumers have come to accept the benefits and drawbacks to consolidation in various marketplaces. In Memphis, this consolidation has slowed somewhat, and there are really only a few providers of mobile communications that people have available to them: Cingular (which is really owned by BellSouth, and now, ATT), Verizon (the monster baby bell), Cellular South, Sprint, and a few other smaller players, such as Cricket.

I’m going to focus on Cingular, as I have the most experience with that company since coming back to live in Memphis in 2002, but I think my criticism actually touches each of the larger companies. And, while I actually like the service they provide, I don’t like the direction things are moving. Yes, my calls actually get through. They very rarely get dropped, and it is almost always a problem with the person I’m calling’s carrier. They provide good billing feedback, and they have a decent website to allow for as much self-service as I would like to do. But, I’m starting to wonder, are we all getting screwed anyway?

Cingular offers two kinds of service: pay-as-you-go service (called Go) and service tied to a time-based commitment (which can expire, but you are still tied to the terms of the previous commitment when it expires). The pay-as-you-go service only makes financial sense for a very limited number of people, and most of the people that use that service are only doing it because of poor credit or a lack of understanding of what they are paying for. But even people in a time-based commitment should really give some deep thought to what they are buying and why they are paying so much for it.

Here is a fact of retail: Most companies selling you products or services make most of their money from the middle of their product offerings. What this means is that, if Company X sells one widget for $10, a slightly better widget at $25, an even better widget for $50, and a top-of-the-line widget for $200, then Company X is going to make most of their money on the $25 and $50 widgets. The $10 widget will be widely purchased, but the profit on it will be so low that it won’t make much money. The $200 widget will make a good profit, but there is only a limited number of people that can afford it over the other widgets, which largely accomplish the same goals.

The mobile communications business is a shining example of this business in action. However, unlike other businesses, when even the savvy mobile communications consumer stays away from products they don’t really need or would be paying too much for, they are increasing getting screwed. It all comes down to how you use the device. If you get the most basic phone, you are committing to essentially $50/month for 2 years (once taxes and other fees are added in), which comes out to $1200, and that is only the case if you don’t go over the limited number of minutes you are given (currently 700 for the most basic plan). Plus the cost of the phone, which is about $50. If that seems like a lot of money to simply be able to have quick conversations with people for the next 2 years, that is because it is. That is a lot to pay for what is, regardless of what people have come to think today, a convenience.

More annoying is the fact that the high-end offerings really don’t offer much beyond what they offered a few years ago. Despite all of the talk of “3G” networks and quick Internet access in the palm of our hand, the reality is that high-end mobile devices continue to be (1) too expensive, (2) too proprietary, (3) too slow, (4) clunky to use day-to-day, and (5) more designed to separate you from your money than offering real value. A Palm Treo 650 with full service from Cingular will cost you at least $90 per month, just for voice and data, which comes to about $2300 for 2 years. Plus you have to buy the device for $350.

Can you check you email from anywhere (well, from most large cities)? Sure, but with a small laptop and a wi-fi connection, you can do it much more easily and be able to better reply and deal with attachments. Can you talk on the phone? Well, sure you can do that with a much cheaper device. Can you surf the web? Sure, but the experience on such a small screen and relatively slow network (when compared to cable and DSL) is painful. A lot of Treo users just don’t bother except for very specific things. Can you keep your addresses and other contact info in the phone? Sure, but you could do the same in a cheap $100 Palm PDA for whole lot less.

In short, the pace of mobile technology, considering both the devices and the speed of the network needed to utilize them, has not kept pace with computer-based technology over the years and continues to fall behind. This is largely because of the increasing control the ever-shrinking mobile communication companies have over the marketplace. These companies dictate what kinds of devices their manufacturer partners will make for consumers. In addition, mobile communication companies maintain a pretty strong grip on how their network is used. You aren’t likely to see a problem with file sharing on a mobile network, largely because it is more efficient to do that on a standard, wired Internet connection, but also because mobile companies don’t have to put up with it. In fact, they don’t have to put up with anything that doesn’t tie their customers to them for a long time, providing them just enough features not to transfer their service to the shrinking number of other providers in the immediate area.

Unlike areas like computers, we are unlikely to see positive disruptive technologies to shake up the marketplace and make mobile communication providers give more value to their consumers. This is why Cingular and other companies turn off the wi-fi capabilities of the Treos they sell: if you use your device on another (better) network and aren’t eating your minutes, you aren’t contributing to Cingular’s bottom line. This is also why, though the branding and retail marketing of mobile devices by mobile communication companies, you aren’t likely to see any kind of truly useful unified device any time soon. You know the kind of device I mean, one that will let you communicate how and when you want, in the way that you want, and provides hooks into other types of technologies (such as GPS) that will allow you to do more with less effort.

The potential exists, technologically, for a reasonably useful and affordable unified device to be made available in about a year. However, I don’t expect them to become widely available in less than 5 years. Too much money can be made in making all of us pay through the nose for upgraded features we really don’t need while we stay in line, waiting for the marketplace to provide the answer to our prayers. But, much like the electric car, it simply isn’t in the best interest of the the shrinking number of companies that sell mobile products and services to give us what we really need, especially if we are more than willing to pay for stuff we don’t need and will reap those companies a bigger reward.

Like most of the times the marketplace fails the consumer, we have only ourselves to blame.

In the end, Kath and I walked away from getting a new mobile phone. We may look again later in the year, but I won’t get my hopes up. We simply need many more people to say, “Enough! I’m tired of paying more and more for the same old thing. Give me something new and better or I’m not going to pay you anything.” Until then, we should all just be prepared to wait.

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