Monday, August 4, 2014

A Cellular Call for Change

An important aspect of living in the Twenty-First Century is mobile communications.  Many have severed their ties to landlines.  People use the internet for e-mail, entertainment, information and productivity.  And cellular telephony allows people to take their pocket computers disguised as smartphones everywhere, with the expectation that the devices can be used ubiquitously.

Although the advances in electronics allow for incredible capabilities, the reliability is not perfect and seemingly every option of cellular providers has some disadvantages.

The American mobile telephone market has been dominated by a couple of corporate carnivores spawned from the breakup of Ma Bell in 1984.  Verizon Wireless (comprised of Baby Bells Bell Atlantic and NYNEX) and AT andT Inc (which started out as Southwestern Bell, but gobbled up Bell South, AT and T, Ameritech and Pacific Bell et ali).  

The nation’s third largest cellular telephony provider is Sprint, which started to deliver long distance as part of Southern Pacific (Railroad) Communications in 1978.  Sprint grew through successful  mergers with GTE and Nextel.  The last of the big four cellular companies is T-Mobile which is a holding company for Deutsche Telekom AG.  The US Department of Justice blocked a merger with AT and T in December 2011.  T-Mobile has acquired MetroPCS.  And  Now T-Mobile is in process of acquiring MetroPCS.  The Japanese Softbank owns the majority of Sprint and is looking to also aquire T-Mobile.  

This colorful corporate history of American cellular companies can offer a bit of perspective on the carriers.  Verizon’s and AT and T’s lineage stem from Ma Bell.  It is not coincidental that Lennie Bruce once likened communism to being like a big phone company, as an all powerful Leviathan is not known to be responsive to consumers or have competitive tendencies.  Sprint has cobbled together disparate technologies (CDMA, iDEN) and is trying harder but does not have the leverage to break out of the third place showing.  T-Mobile’s European parent may influence the GSM technology (the international standard technology) and it explains why T-Mobile was the first cellular company to try to stop subsidizing handsets which required a two year contract. 

To compound confusion on choosing cellular providers, there are Mobile Virtual Network Operators (MVNOs) which are companies that do not own radio spectrum or wireless network infrastructure but still can provide service by piggybacking on other cellular network’s overcapacity. In the U.S., these are generally prepaid plans which offer more economical rates without some of the frills that customers locked in a contract have.  For example, Virgin Mobile (a wholly owned subsidiary of Sprint) can offer a generous 1200 minutes a month for $45 with unlimited 3G data (and 2.5 GB full speed 4G data) and texting.  But a similar Sprint plan costs $20 more, but includes free nights and weekend voice minutes and unlimited data and texting.

It is unwise to think that there is only one answer for everyone on choosing a cellular provider.  Cost can throttle choice.  Coverage can vary widely.  People also use their phones differently.  The best advice is to know yourself and investigate thoroughly.

So many people are seduced into being locked into a carrier with the “New Every Two” mentality.  While wear and tear and technological improvements can make this replacement cycle appealing, the shiny new “toy” comes at a cost of another two year commitment and possible changes in contractual terms.  A couple of years ago, AT and T alienated iPhone owners by altering the “all you can eat” data plans.  New customers had a cap.  Some old AT and T iPhone customers  also complained that when they wanted to upgrade that their grandfathered unlimited data plans not convey.  

One other calculus which consumers need to consider is convergence.  Cellular technology can act as a phone, a credible camera, a GPS system, a reading device, a mobile computer etc.  When calling for a cellular change, the savvy consumer will explore how his chosen plan and his handset can take advantage of convergence.  For example a usable hot spot capability can connect a laptop or a tablet making a separate device a redundant expense. 

Verizon has the best voice and data networks, but you pay a premium for that privilege and it is notorious for extras (e.g. texting and data tiers) and some hard nosed business practices.   AT and T used to have an I-Phone monopoly which has ended, but they brag that they have the largest 4G network (though AT and T is storied for complaints about coverage).   The big two’s data advantage might increase as they have leverage over low band WiFi. 

T- Mobile used to be know for their calling circle promotion.  Now they want to be considered the Simple Choice, which is an option to stop subsidizing phones in return no contracts and lower monthly costs.  But their network is spotty outside of major metropolitan areas.  Perhaps the MetroPCS will increase their network’s footprint.   

Even though Sprint completed its acquisition of Clearwire (which provided their 4G WiMax data), Sprint has declared that it will fully convert to the US standard of 4G LTE.  Which means that even the best cared old Sprint handset will need to be replaced to get 4G coverage.  But Sprint has been slow in rolling out the LTE by not making promised deadlines.

Personally, my household has been a contract customer with several of the big four cellular carriers, but we dote on the terms of the contract and will not take the phone upgrade temptation track.  As the market has changed, I am developing an openness to pre-paid models that have lower monthly costs but lack the subsidized phone.  Recently,  I was almost ready to switch, but I noticed that my chosen MVNO had a limited selection of phones which had LTE capability.   While I was willing to wait for LTE to officially arrive shortly in the District of Calamity (sic), the limited phone choice prompted me to investigate further.  

It was a good thing that I studied the details, as the only LTE phone did not provide a hotspot option, which was a deal breaker for me.  I was willing to pay $15 a month for a Hot Spot with 2.5 GB full 4G LTE, as I could drop a NetZero low capacity Hot Spot and get better service.   This plan has not been ruled out but tabled for better choices.

In the cellular industry, things can change pretty quickly.  It may be that Amazon puts out a Kindle Phone in which Amazon acts as a MVNO.  Like the Kindle, Amazon may sell their devices at near cost and bank on the ease of future purchases through Amazon to pull out the profitability.  This option is appealing as Amazon’s customer service has been top rate (unlike certain phone companies) and my prior Kindle ownerships have hooked me into their system.  But opting for Amazon would still require scrutinizing the calling plans and handsets and correlating  hem to my household’s needs. 

Choice is great but it can be confusing and requires some sacrifices.  Then again, there’s always  the  Obama phone.  

But Lifeline program is rife with abuse and Congress is considering cutting back on the program, which has tripled in size since 2009 to cost $2.2 Billion per year.   Considering President Obama’s troubles with surreptitiously seizing phone records of scores of Associated Press employees, cutting back on the Obama phones might be prudent.

No comments:

Post a Comment