A blogger made 56 calls to Verizon customer service and asked every rep the same two questions about overage and roaming charges for data. He got twenty-two different answers.
Some people see this as just another example of poor customer service from major corporations, some just laugh at the CSRs for confusing bits with bytes and $0.02 with 0.02¢. But the reps on these calls seem courteous and conscientious, and most people who hear about the 2¢ story need a minute to think about the math.
We see a different problem: cell phone plans are ridiculously complicated.
Rate plans for voice are bad enough. A typical plan has a bucket of anytime minutes, a separate bucket for nights and weekends, a third for in-network calling, an overage rate, special rates for voicemail minutes and calls that don’t get completed, roaming limits for US networks, and a whole other matrix of rates for international dialing and roaming.
Our monthly roundup of what’s broken in the mobile market:
The first iPhone bills arrive and they are up to 300 pages long. AT&T itemizes every kilobyte downloaded. Rumor has it that AT&T will soon fix this problem … by charging for a paper bill.
Three years after they announced interoperability, you still can’t send a picture message from a Verizon cell phone to an AT&T phone and be sure it works.
Clarins’ advanced anti-pollution complex does not protect your skin from cell phone death rays, despite using a Magnetic Defense Complex based on Thermus Thermophillus.
At Skydeck we think a lot of things are broken in the US wireless market. Here are some of our recent favorites:
Rebates aren’t supposed to be easy to get. They are a form of price discrimination. Instead of asking us how much we are prepared to pay, carriers give everyone rebates and only people who are really price-sensitive get round to cashing them. But now AT&T has stopped paying out cash altogether. Instead they send you a Visa debit card: a form of payment that many stores do not accept, is difficult to combine with other forms of payment, and expires after a couple of months. A consumer organization is suing them for false advertising. (Bonus: Seth Godin rant.)
You probably heard about Sprint terminating a few thousand subscribers for making too many calls to customer service. But what about the 200 soldiers they tried to disconnect for excessive roaming … at West Point?
There’s a lot of terms that we don’t like in carrier contracts, and one is the arbitration clause: “whatever happens, you can’t sue us.” In a case brought against T-Mobile, a California court says Oh Yes You Can.
If you work in the Internet industry, you are familiar with the closest thing we have in America to a pure free market: countless competitors, zero barriers to entry, easy access to capital, and prices that drop so fast that sometimes we can’t find anything to do with the capital.
Most other industries are regulated to some extent, with both good and bad results. Take agriculture. Most people favor laws that make their food safe, but only Big Food and a few midwestern States love the Farm Bill. (If reading this in Europe, think Common Agricultural Policy.)
The cell phone market is unusual because it would not exist without enlightened regulation. Very early in the history of radio, people recognized that spectrum is scarce, a shared resource that requires some kind of collective oversight. The system they chose is that the people own it and the government parcels it up and leases it to private companies for different purposes: TV, radio, mobile phone service etc. (1)
The cell phone industry wouldn’t exist if smart regulators hadn’t carved out room for it in 1974. There are more than two carriers in the US because smart regulators made room for more in 1993, and banned the incumbents from the auction. But we are almost out of spectrum suitable for mobile phones.
Next year the government is selling off the electromagnetic equivalent of beachfront property - spectrum that happens to be perfect for cell phone service. It’s available because the government is taking it back from TV broadcasters who no longer need it. Because spectrum is so scarce, this may be the last chance we’ll get for a generation to increase competition in the cell phone market and to experiment with new ways of managing spectrum.
I’m one of those who believes that the mobile phone market ought to work more like the Internet market. I don’t have to ask Verizon DSL for permission to attach a computer to their network; why do I have to ask Verizon Wireless for permission to attach a phone to theirs? In the entirely new market for mobile applications and content, I don’t think that the law should protect companies as big as Verizon Wireless from competition with companies as small as Skydeck. Therefore I support some form of open access rules for the 700 MHz auction. I was honored to be invited to testify to Congress this week on the subject. My testimony is above; the entire hearing is archived here.
Why go to Congress? Because when it comes to mobile data, we don’t get to choose between regulations and no regulations. We can campaign for the regulations that we want or we can stay away from DC and let Verizon and AT&T write regulations for us.
It’s also because the Internet has changed the rules of debate. Ideas that were once discussed only in closed rooms we now debate online. We don’t just speak through canned quotes in press releases, we write blogs. If we’re prepared to say what we think on our blogs, then we ought to be prepared to go and say it in DC. And what we say in DC can now be heard around the world, because of sites like YouTube.
People in the Internet industry never understood the old rules, the game of politics that the telcos have played so well for over a hundred years. But we understand the new rules far better than they do. We should take advantage of that.
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Full Disclosure: Skydeck believes that every company in the wireless data market would benefit from open access rules, so we support those principles as a company. But I did not testify on Skydeck’s behalf. Nothing that we are working on requires a change in the law, and it will be at least four years before a network gets built out and application developers benefit from this auction. We also reserve the right to speak through canned quotes in press releases in the future.
(1) New technologies like software-defined radio could in theory make much more efficient use of spectrum by allowing any transmitter-receiver pair to take up any unoccupied channel. But most engineers doubt that the technology is ready, and dismantling the current system would be like seizing all the property in Manhattan and redistributing it: unlikely.
It’s not complicated, it’s not expensive, and there’s an obvious market for it. So why doesn’t the xPhone exist?
Imagine a mobile phone that worked across every network in the US: a phone that allowed you to make a call from anywhere in America, so long as you could get a signal from at least one carrier. Let’s call it the xPhone.
It’s not hard to build an xPhone. Most new handsets support multiple wireless standards and frequency bands: 2G and 3G versions of GSM or CDMA, Wi-Fi, Bluetooth, GPS, FM radio, soon TV. Now that the old analog and TDMA networks have been decommissioned, to deliver the widest possible voice coverage the xPhone would only need to support the GSM and CDMA bands, and maybe iDEN. It would be quite cheap.
Who would buy the xPhone? Anyone who cares about coverage above all else. That means salespeople and executives and truck drivers and other people who travel a lot on business, but more importantly it means first responders: doctors, firefighters, law enforcement. The xPhone could save lives.
Earlier this month, Sprint threatened Mobile GMaps over its use of restricted network-assisted GPS functionality. Mobile GMaps ran into trouble by working around these restrictions to offer an automatic positioning feature. While Sprint simply acted to enforce its policy, the result is unfortunate for everyone - Sprint included - since restricting the capabilities of applications just causes consumer demand to go unmet.
Under its current policy, Sprint must have a business relationship with a vendor before it can release applications that use the network’s GPS services. Sprint has otherwise generally been open to third-party applications without such requirements, but obtaining a subscriber’s location comes with some legitimate concerns. Two examples, which trouble nearly all carriers, are how to protect individual privacy and how to price location services. These can be addressed, however, and still allow for more open policies. Restricting access to network features does not benefit consumer or carrier, and often winds up being futile.
One of the categories for posts on this blog is ThisIsBroken, a tip-o-the-hat to Mark Hurst’s blog of the same name.
Here are a few examples:
When an operator shut downs an old network, customers sometimes have to buy a new phone. But if your ‘operator’ is OnStar, you have to buy a new car.
Don’t want to subscribe to our long-distance service? Don’t want to pay extra for long-distance calls one at a time? Don’t even know anybody outside your area? Fine, we’ll charge you for not making long-distance calls at all.
And finally, don’t try to get out of a mobile phone contract by pretending that you are dead. Unless you’re on T-Mobile.
Carriers like to tell Congress and the FCC that the wireless market is so fiercely competitive that consumers are perfectly served and no regulatory changes are necessary - apart from changes that the carriers want, of course. Most people in the tech community disagree, but recoil at the idea of going to Washington and engaging in a political process that looks like the opposite of entrepreneurship. The telcos smile at our idealism, hire more lawyers than engineers, and roll all over us.
I went to see FCC Chairman Kevin Martin speak at a meeting of the Churchill Club in Mountain View this morning. In conversation with George Anders from the WSJ, he spoke about the 700 MHz auction, how consumers will be affected by the end of analog broadcasts, leveling the playing field for set-top boxes in the cable industry, the proposed merger between Sirius and XM, sex and violence in the media, E911, and the Skype petition. That tells you how much impact the FCC has on the technology industry. (more…)
Posted by: Jason
Earlier this month, 
Posted by: Mike
Carriers like to tell Congress and the FCC that the wireless market is so fiercely competitive that consumers are perfectly served and no regulatory changes are necessary - apart from changes that the carriers want, of course. Most people in the tech community disagree, but recoil at the idea of going to Washington and engaging in a political process that looks like the opposite of entrepreneurship. The telcos smile at our idealism, hire more lawyers than engineers, and roll all over us.