The March Of Mobile Phone Progress Isn't Always Smooth Or Direct

from the be-patient dept

Fri, Jun 20th 2008 5:32pm — Tom Lee

Tim Wu is discouraged. Writing in Slate last week, the telecom expert lamented the terms he's facing as an aspiring iPhone 2 owner: a two-year AT&T contract thanks to the handset's newfound inability to be unlocked and a move toward a more conventional subsidized handset model. Wu sees this as emblematic of a shift in the mobile industry:

The fact that someone like me is switching to AT&T is a sign of the times in the telephone world. The wireless industry was once and is still sometimes called a "poster child for competition." That kind of talk needs to end.

He's right -- but then, that kind of talk shouldn't have been started in the first place. The mobile market was defined by long contracts, locked handsets and a lack of prepaid options long before Apple arrived on the scene. Now it appears that it'll remain that way long after Apple.

Admittedly, this is a disappointment. Many looked at Apple's choice of a second-rate carrier -- one they could bully around -- as a sign that everything was about to change. Finally a handset manufacturer had arisen that was powerful enough to break the industry's self-serving revenue model and empower consumers! With the recent declaration of the iPhone 2's retreat toward conventional industry shadiness, those counting on Apple's benevolent technological dictatorship have found themselves disappointed (as they have before, and no doubt will again). They were fooling themselves anyway: did anyone really think Apple was going to tolerate phone unlocking forever?

But the outlook isn't all grim. As Wu notes, the Google-led Open Handset Alliance is trying to follow in Apple's footsteps with its own game-changing, must-have handsets -- only this time there seems to be a more expressly ideological slant to the effort. And Verizon's Open Development Initiative, while less than perfect, is perhaps even more encouraging in that it shows the industry has begun to acknowledge the market's need for more flexibility in data services.

And that's the real reason for hope: the march of progress. Anyone who tries to paint the mobile industry as the picture of efficient market competition is either in denial or deeply dishonest. But wireless services will inevitably become more important and more available, whether thanks to WiMAX, revived municipal wifi projects (now without capital costs, thanks to the magic of bankruptcy!), spectrum freed by digital broadcasting, or some other wireless technology. The mobile carriers haven't been great at competing amongst themselves, but you can bet they'll begin responding once consumers have reasonable alternatives.

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Filed Under: competition, markets, mobile phones, monopolies, tim wu

21 Comments

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Who cares?, 20 Jun 2008 @ 5:53pm

I would want an iPhone if Apple was paying me to get it just because I have to use AT&T.

Fuk em both.
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Anonymous Coward, 20 Jun 2008 @ 6:07pm

Whats that AOSmell ?
Walled Garden ?
No thanks
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some old gy, 20 Jun 2008 @ 6:16pm

google needs to hurry up
Android can't come fast enough. I need an open device that I can take from provider to provider. I dont want anything from a provider except a connection and bandwidth. And when one provider decides to try to extort more money from me than I deem them worth, then I expect to be able to walk away and go to a different provider.

Android might deliver that. Maybe.
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Rick, 20 Jun 2008 @ 8:00pm

The Business Model Sucks
The telco industry has the most anti-consumer business models in existance. Only the IRS can be any worse.

It's akin to your cable company owning your TV and regulating what movies you can watch on your DVD player.

While I can see an argument for locking a phone due to a contract and subsidized phones, we should still be able to get the same phone without the subsidies or limitations caused by it being locked. Unlocked phones should be an option available to anyone willing to foot the costs - by not allowing the option, the telcos can do as they choose under the farce of competition in the industry.

Competition is not defined as we own you or they own you and no matter what you pay for, we own it too. That sounds more like communism than consumerism.

It's time to see some consumer groups lobby congress for change. This industry has held onto it's control of us for far too long. I doubt the current administration will allow it, but maybe the next one will actually show us a different kind of government - for the people this time.
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Anonymous Coward, 20 Jun 2008 @ 9:38pm

Please correct me if I am wrong, but does this not present the possibility that the former AT&T may once again reconstitute itself in much the same manner as GE did after it too was broken up many years ago?

It strikes me as odd that antitrust law is used to break up companies, antitrust policies are changed, and then those changed policies are applied to return full circle and recreate what was originally broken up in the first place.

Antitrust law is a strange creature indeed.
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Tim Green, 21 Jun 2008 @ 12:25am

Mobile phone competition
Tom Lee should see the situation in Britain and Europe. Contractless pre-pay mobiles you can "top-up" are very common and the telcos give away the SIMs! Phone unlocking is normal, and some phone+contract sellers prefer selling unlocked phones. Competition is quite vigorous.
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Jake, 21 Jun 2008 @ 3:04am

Re: Mobile phone competition
Indeed. We even have reasonable charges for calling and sending SMS messages between networks thanks to Britain's trading standards organisation raking them over the coals for it; earning a profit from penalty charges of that sort is... depreciated under UK law.
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MikeR, 21 Jun 2008 @ 6:08am

Simple Solution
Then don't buy the blessed thing. I'm tired of people whining about no competition and then line up to throw money at these companies.

Cell phones are NOT a necessity. The most common arguments are the 'I need it in case of emergency' or 'I need it for work'. For emergencies, get a pre-paid. For work, get a life.

PS - I'm in Canada where it is even worse than the US. And I don't own a cell phone and won't until the BS ends.
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My2cents, 21 Jun 2008 @ 10:29am

No cell phone? right!
Mike, you must live in a cave or somewhere. Cell phones are going to (and have) replace hard wired phones. When was the last time yoiu wanted to talk to an empty house? In Los Angeles and now where i line in Arizona, cell phones are omnipresent. School kids, truck drivers, you mane it, they have a cell. Realistically, we have become marketed into a mentality that NOTHING can wait. As overachivers (look it up Mike, it ain't you), we take these things to dinner with our families, on vacations, they are a part of our anatomy. While cell phone companies are well aware of this and exploit it to their advantage, we sheepishly accept it as the norm and pay the price to be part of the popular herd. While I have a cell phone, at least I don't have a crackberry.
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Kiba, 21 Jun 2008 @ 11:29am

Re: google needs to hurry up
The Freerunner is in production now. You will probably be able to acquire a mobile phone that run OpenMoko in about a month.

It is a completely open device as far as I know plus it is great for people who want to mod devices and the softwares. Great for free software freak.
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Anonymous Coward, 21 Jun 2008 @ 12:14pm

Re: No cell phone? right!
You obviously were not in Florida when all the hurricanes hit a while back. Cell towers were down and the phones useless. Conventional phones, on the other hand, continued to work just fine...which proved a real convenience to get hold of emergency services.

One added benefit during our time of crisis was that most drivers actually had both hands on their steering wheels until cell service was restored.
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My2cents, 21 Jun 2008 @ 2:01pm

Re: Re: No cell phone? right!
I stand corrected. Hard wire phones will ramain amoungst us for the times when tecnnology fails us, which will be a while. Meanwhile, old and young alike are used to the concept of calling someone to find out something instantly and hard wire phones (like phone booths) will become a novelity,disappearing from our landscape.
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MikeR, 21 Jun 2008 @ 2:14pm

Re: No cell phone? right!
I'm not a Luddite - punted POTS for cable phone 3+ years - it serves my needs. On vacation I am AWAY. I leave contact info in case, but that's only because my company has a policy not to bother folks on vacation unless there is absolutely no other choice. And they follow that policy.

PS - In the 3+ years on cable phone, unplanned outages have been 2 - 1 total outage for about 1 hour and 1 partial outage for a few hours (couldn't call numbers that where owned by the POTS company).
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Cynic, 21 Jun 2008 @ 4:33pm

Can't remember the title but an old sci fi story I read once painted a picture of the future where the survival of the fittest meant just that...the fit, not the smart. They had cars with fans to blow air in their face to make the drivers think they were going fast, for instance. The few smart people were slaves (they could let the populace die but they couldn't bury them fast enough).

I think I'm in that future, at least in the US. We think we are advanced but it's only a hidden fan blowing air in our faces. Our advanced phone network delivers so little value for so much money per month (especially compared to other areas of the world) that only a majority of stupid people and their (majority elected) stupid government could be satisfied.

Many may not agree with me, but ask yourself if you really think you are getting your money's worth?
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GearsofPeace, 21 Jun 2008 @ 4:42pm

Not Sure, but...
I had AT&T/Cingular/AT&T service before the iPhone, so there was no real transition for me. I find it difficult to believe any of the services (TMobile, Verizon, Sprint) are any better/worse options than AT&T. And I don't really see a problem with a 2 year contract, because I don't see any compelling reason to want to move anywhere else.

I can understand the overall frustration with the telecoms in the US. But I wonder how much of this bitching and whining is just that, bitching and whining :p
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The Waxwing Slain, 22 Jun 2008 @ 4:33am

Re: google needs to hurry up
I dont want anything from a provider except a connection and bandwidth.

Then what you really want is Net Neutrality. Otherwise, all the open source handsets in the world won't help you.
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D Mac (profile), 22 Jun 2008 @ 1:16pm

Nothing changed
1. The iPhone 2 is not coming out. The iPhone 3G is coming out. Those are not the same thing.

2. The original iPhone was sold with the exact same terms. The only difference with the 3G version is that it is being sold much cheaper.

Just because they found out a way to unlock the original version after a while and the haven't found out a way to unlock the 3G version YET doesn't mean anything has changed.
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N, 22 Jun 2008 @ 4:21pm

Re: google needs to hurry up
There's always hope...
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Anonymous Coward, 23 Jun 2008 @ 8:12am

Re: Whats that AOSmell ?
Room with no door.
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