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Smart trumps cheap in phone world
Josh Weiss makes a test call from his newly purchased smart phone
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TEXT OF STORY
Steve Chiotakis: Some telecom heavy hitters report this week. Verizon releases earnings today; Sprint and Qwest on Wednesday. And with fixed phone lines on the decline, the name of the game these days is wireless smart phones. A lot of wireless carriers are still feeling the heat from AT&T and its partnership with the Apple iPhone. Here's Marketplace's Dan Grech.
Dan Grech: There aren't many Americans left who don't have a cell phone. So when a wireless company wants new customers, it has to steal subscribers from a competitor.
Scott Cleland is a telecom analyst with Precursor:
Scott Cleland: The U.S. has probably the most competitive wireless market in the world. Paying the lowest prices. And Americans use more wireless than any other nation in the world.
Wireless companies compete in two directions: the lowest price and the snazziest phone.
Industry analyst Jeff Kagan says despite the recession, smart is trumping cheap:
Jeff Kagan: The smart phone segment of the wireless industry is still exploding. It's the plain old handset market that's actually very soft.
Thanks to an upgraded iPhone, AT&T is persuading people to switch carriers. The company activated 2.4 million iPhone accounts in the second quarter. Still, Verizon Wireless, with its 88 million customers, continues to be top dog.
I'm Dan Grech for Marketplace.
Scott Cleland is a shill and not an analyst. Did you know that he is paid by telecom companies to parade before the media and extol the virtues of -- you guessed it -- the telecom companies?
Competitive? Four companies control 90% of the mobile phone market in the U.S. and a recent OECD survey found services here to be among the most costly. Add to that carriers tendency to shackle phones to a single network, block new applications and innovations, and lock customers into agreements that are difficult and very costly to break. Where's that perspective in this story? Marketplace should put a disclaimer under anything Cleland says.
-- Tim Karr, Free Press
I have to disagree with the statement that the U.S. has such a competitive wireless market. Also, in addition to cheap rates (they are not that cheap in my opinion) and snazzy phones as directions for competition I would throw in better customer service. I specifically stay away from ATT because of a bad reputation dealing with customers.
The wireless industry needs more regulation to curb abuses like double billing and making it difficult to sign up without signing a two year agreement. These two year agreements give the telcos a free pass to skirt customer service. A truly competitive market would be one in which I could walk into Best Buy and buy the phone I want. Then I would choose the wireless company with the best plan. That way no one pays $500 for a phone and does not have to sign a two year contract.
I can assure you that if this were the case these smart phones would be cheaper off the bat, as how many people would actually pony up that much cash for a phone? Perhaps not that many.
