more on I AGREE djf more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers

[David Farber <dave () farber net>]

Begin forwarded message:

From: Bob Frankston <Bob2-19-0501 () bobf frankston com>
Date: October 23, 2005 11:40:26 PM EDT
To: dave () farber net, 'Ip Ip' <ip () v2 listbox com>
Cc: 'Gerry Faulhaber' <gerry-faulhaber () mchsi com>
Subject: RE: [IP] more on I AGREE djf more on Locked In a Cell: How  
Cell Phone Early Termination Fees Hurt Consumers


I started to answer the question -- but ultimately it's like asking how
many angels can own property on the head of a pin and whether they  
can get
better prices on another pin.

The answer to the "plan questions" is very simple -- monthly or per- 
minute
prices are very much higher -- it's like choosing between paying 50%  
daily
interest or getting locked into a long term plan.

This isn't a real marketplace -- it's a game that doesn't allow  
effective
decision making -- you are placing long term bets on what is less bad  
over
a long term period. It has no relationship to actual costs.

You don't really buy minutes or any unit like that since you can't trade
them or store them. You are buying expensive options from a company that
controls the game. You can't choose your own equipment -- it's as if you
had a buy your car from a gas company and use their gas.

But, ultimately, this is a silly argument since the fundamental  
economics
of funding identical infrastructures that maintain their value by
preventing users from doing handoffs is no different from having five
electrical power companies with their own wires and requiring your
flashlight use the electricity from your carrier.

For that matter why is there this concept of "number portability" -- why
can't we simply have ownership rights on the "numbers". All of the old
arguments for limiting portability are based on 1980's (really 1930's)
hardware in phone switches and we now map 100% of the phone numbers  
-- even
cheaper if we used ENUM with DNS technologies.

The fact that spectrum allocation is a violation of the first amendment
based on pseudoscience just adds another layer of absurdity to this.

Fighting over cell plans is like fighting over who will own you in the
absence of the idea of freedom.

Can anyone give me a rational reason for this whole fake marketplace  
other
than profound and inexcusable ignorance in a lawyertocracy?

A combination of low energy packet relaying with encryption and
edge-maintained relationships will reduce the economic value of this  
whole
system to zero (wired and wireless). Instead of worrying about the small
value of the cell plans, worry about all your money being put into  
buying
infrastructure that cannot retain value in the face of the kind of  
little
protocol tweaks I did with home networking to kill the residential  
gateway.

As an aside, I was at http://www.poptech.org and the last panel was a
discussion among people from various African countries talking about  
using
technology. One example -- after the panel I spoke to the former
communications minister of Ghana and he understands this -- the cellular
build out is wonderful but he understand how meshing technologies are  
the
next step. During the conference I told the few unaware about Skype ...

These are simple ideas and you can't defend against simple ideas.

-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Friday, October 21, 2005 12:29
To: Ip Ip
Subject: [IP] more on I AGREE djf more on Locked In a Cell: How Cell  
Phone
Early Termination Fees Hurt Consumers



Begin forwarded message:

From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
Date: October 11, 2005 9:28:27 AM EDT
To: dave () farber net
Subject: Re: [IP] I AGREE djf more on Locked In a Cell: How Cell
Phone Early Termination Fees Hurt Consumers


OK, this has been a learning experience;-).  Thanks to the the many
informed IPers who responded.  Here's what I've found out (and
another question):

1- The only carrier that offers a month-to-month service for "bring
your own phone" is Sprint, as several IPers have mentioned.  None of
the others do. But in case you didn't notice, Sprint is probably the
weakest of the cellphone companies (even with their merger), so it
would appear that offering a month-to-month with "bring your own
phone" is simply not very important to customers.  Maybe to IPers,
but most of those who reported this dastardly practice do not seem to
have switched to Sprint.  In other words, while you and I may want
the option of month-to-month, it is not important enough to most
customers to be a competitive advantage.  Too bad.

2- It's pretty obvious a multi-year contract is in the interest of
the phone company.  For example, magazines make much more $$ from
yearly subscriptions than newstand sales.  And if customers don't
think it's important enough to choose a carrier based on month-to-
month, it will not happen.

3- Some IPers mentioned foreign phones brought to the US and operated
on month-to-month, but noted they were much more expensive.  Of
course, that was my original point: month-to-month will be more
expensive.

4- I was surprised almost no one discussed pre-paid cell service,
which of course involves no commitment at all, beyond the initial
minutes purchased. This has been a successful business model; e.g.,
Virgin Mobile only does pre-paid.  This is a very different model, in
that there is no credit risk for the firms to bear.

I would think that IPers who object so strongly to multi-year
contracts would opt for pre-paid...or move to Sprint.  I'd be
interested to learn from our correspondents why they do not avail
themselves of these options.

Prof. Gerry Faulhaber

----- Original Message ----- From: "David Farber" <dave () farber net>
To: "Ip Ip" <ip () v2 listbox com>
Sent: Tuesday, October 11, 2005 7:45 AM
Subject: [IP] I AGREE djf more on Locked In a Cell: How Cell Phone
Early Termination Fees Hurt Consumers




> Begin forwarded message:
>
> From: Tom Goltz <tgoltz () QuietSoftware com>
> Date: October 10, 2005 11:42:29 PM EDT
> To: Gerry Faulhaber <gerry-faulhaber () mchsi com>
> Cc: dave () farber net
> Subject: Re: [IP] more on Locked In a Cell: How Cell Phone Early
> Termination Fees Hurt Consumers
>
>
> At 10:47 AM 10/10/2005, you wrote:
>
>
>
> > Re: cell phone contracts.  I think the way this works is that you can
> > get a cellphone at a below-market price from your service provider in
> > return for a one- or two-year contract, OR you can buy your phone
> > elsewhere and get the service without a contract (or maybe a contract
> > of shorter duration).  So this is a trade-off, you get a price break
> > on your instrument in return for a longer contract.  But you don't
> > have to take this; you can still avoid the lengthy contract by buying
> > your own phone at a market price.
>
> My experience has been the exact opposite of what you describe.  I
> have approached several different carriers with existing phones
> that  were compatible with their networks.  Verizon flatly refused
> to give  me service without my signing *exactly* the same 1-year
> contract that  I'd have to sign to obtain a discounted phone.
> Ditto for Cingular  and T-Mobile.  Only Sprint is willing to
> provide service on a month- to-month basis to new customers who
> either already have a phone or  pay full price for the phone.
>
> If the cell phone companies are doing such a wonderful job for
> their customers, why are over 50% of the complaints received by the
> Better Business Bureau cellular related?  If you stop ten random
> people on  the street and ask them how they like their cellular
> service, why  will five of them tell you that they'd switch
> carriers if they  weren't locked into a contract?
>
> Personally, I believe that all of us would be better off as
> consumers  if it was illegal for telecommunications companies to
> require long- term contracts for services.
>
>
>
>
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