I am going to have to start a category on The Ticker called "stupidity in alleged journalism"; if I do, this may well be the first post moved to that category:
And so Americans continue to have a small number of expensive, poor quality cell phone providers. And how much does this cost you? Take your phone bill, and cut it by 80%. That’s how much you should be paying.
The author cites European nations that have much-smaller bills. But those nations don't have massive phone subsidies built into their plan prices and they cover much smaller landmasses and operate at higher subscriber densities per-square-mile covered. This means they have more revenue per square mile covered with signal which in turn means lower operating costs.
I go over this in Leverage in some detail. Virgin Mobile, for example, has a $25 (now $35; the price went up a bit) plan that offers 300 voice minutes, unlimited data and unlimited text messages. It's ideal for many young people and you can use Skype to talk if you want, thereby having "voice" without using voice minutes.
That's $300 a year (or $420 if you missed it when it was a bit cheaper) for service over a landmass much larger than these other geographic areas cited.
Why is it more reasonable?
That's simple -- you buy the device outright and thus there is no implicit subsidy in the price.
Or you can do what I did -- T-Mobile, $45/month, unlimited voice, text, and data, first 5Gb/month at full speed (then throttled to ~150kbps after that.)
How? Again, no device subsidy. I had to "bring my own" handset and pay whatever I wanted to for it up front, slap in a SIM card, and off I go. I get the flexibility of choosing how much I pay for the device and where I get it -- I can buy it new from the carrier, I can use one I have, I can pick one up off Craigslist or eBAY, or I can buy something the carrier doesn't sell. All are fine; if it is technically operable on the network it will function.
Now contrast this with AT&T's "iPhone" service. The iPhone 4s is "allegedly" $199.
That listed "price", incidentally, is a convenient marketing fiction.
The down payment is $199. Let's total up the actual costs.
AT&T's "Nation Unlimited" calling is $69.99/month. I then must add a data pack; the most-comparable is the 3Gb package for $30. And then I must add unlimited messaging for another $20 if I'd like to text people.
That's $119.99 monthly for two years on contract or $75.00/month more, every month, for those two years than I pay on T-Mobile without a device subsidy where I can choose to not try to cost-shift my handset back onto the carrier - a "privilege" for which I get bent over the table and financially abused in spades.
Put another way that iPhone 4s costs $1,800 + $199 up front or $2,000 over two years to own; the rest of the price beyond the $199 up front is simply embedded in your monthly bill and is charged to you for the vanity of owning that device.
Anyone who has one iota of common sense or interest in honest reporting would look at this problem for a few minutes and see exactly this outcome.
There is no "corruption" here as the author of the cited hit piece alleged. There is simply your (as a consumer) vanity or (if you prefer) stupidity; you could have the same service for $45 on T-Mobile (but you bring your own device) or for that matter on Virgin Mobile (Sprint's network) for $55 (again, you bring your own device.)
This sort of distortion is what happens when you have iFanboi cult crap that gets embedded into consumer services -- it pollutes the cost picture for everyone who comes in contact with it, directly or indirectly. AT&T and Verizon (along with Sprint on the contract side) have had their business models trashed by the over $600 embedded per-device cost that they must pay up front to Apple for their vaunted iFanboiToy and as a consequence they finance that back on you, the consumer, who are foolish enough to patronize them!
In short the cellular service itself costs far less than the claimed "cited costs." The reason you're paying so much is that the device is being cost-shifted silently and at a monstrous mark-up -- some 200% in raw profit beyond what's charged to the carrier -- and you're stupid enough to swallow that despite having the option not to even if you don't buy that device from the company in question!
On Sprint's network with Virgin Mobile there is no contract required at all. T-Mobile asks for a 2 year agreement to save $10/month, or $240 over the two year period. I'll take the discount and did, which is why I went back to T-Mobile after being on Virgin for a while.
The cited piece claims that Lightsquared was in some way blown up for political reasons. Not quite. Lightsquared attempted to get cute with existing spectrum they purchased from a former satellite communications company where the original transmission parameters were very low-power (satellites don't have much energy available to them as they must get it from solar panels pointing at the sun) and the earth-station transmissions are point-source and highly-focused (and thus are of little threat to anyone else.) Lightsquared proposed to use much higher power levels and aim them everywhere along the ground (since that's the only way it works for cellular service.) GPS receivers, unfortunately, are on nearby spectrum, they operate on very low power levels (since satellites, which send the signals they listen to, are again power limited) and in addition because of the historical use of these frequencies the GPS companies have been less than diligent in filtering their front ends and have taken other design shortcuts such as leaving their receivers intentionally open so they can interoperate with Russia's GLONASS system as well. The latter is particularly important to companies like Deere (farm tractors, you see.)
So the problem that arose was that Lightsquared proposed to do something that could have dramatically interfered with GPS systems. Exactly what level of risk and interference was presented is difficult to known with any sort of certainty. Lightsquared says it's not an issue, several tests say it was.
If anything it appears that the provisional license and approval given to Lightsquared up front was problematic (if there's corruption it's likely found there, not on the other side), although I would (and have) argued that the GPS manufacturers should not get away with the cost of their bad design practices being shoved off on others, including Lightsquared (just as I argue here that your stupidity in paying $2,000 for an iPhone is not corruption -- it's nothing more than you making a choice to blow an insane amount of money on vanity and, if you're an AT&T or Verizon customer and don't have an iPhone, you're even more stupid as you're paying for the other customer who does!)
In any event the problem isn't as presented by the referenced article. The real problem, if there is one with Lightsquared's detonation, is that the GPS manufacturers were given a pass when they sold their devices for alleged "safety-critical" purposes despite the fact that there is no right to block the use of adjacent spectrum to that which you're licensed within simply because you decided to take shortcuts in your designs or built units for international markets with no guarantee that here in the US some of the frequencies you left open wouldn't be used for some other purpose at a much higher power level at some time in the future.
Simply put American consumers try to demand something for nothing and then people like Matt Stoller put forth hit pieces that are absolute bilge and inflame rather than inform.
Matt ought to know better than to write crap like this, especially since he also had to know I'd eventually find it and comment on it.
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