

Inability to Change - hristiank
http://appicurious.com/2011/10/16/inability-to-change/

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zdw
The fundamental problem with most commercial infrastructure providers (which
is pretty much all wired and wireless ISP) is that competition can never be
perfect because of the laws of physics.

There is only so much room to put cables in the ground, or wireless spectrum
to use. Thus, the governemnt auctions these roles off (often at far far below
their actual worth), and companies use their physical monopoly to extract
maximal profit with as minimal infrastructure as possible.

The obvious solution is pro-consumer regulation. Eliminate long term contracts
and make unlocking of phones mandatory after contract expiration. Force all
carriers to have common carrier status, so the physical infrastructure is a
dumb pipe. This list could go on and on...

The problem with this is that anyone in the industry will lobby against this
and they already have the political will against any change, as they're making
a ton of profit via their monopoly status.

~~~
hristiank
You have listed good points here but no matter how much money big companies(in
this case wireless carriers) put behind lobbyists all it takes is just one
company to stray from the pack. Why aren't in the US for example T-Mobile and
Sprint trying to change their standing(# of customers) by actually providing
something users want and need?

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SemanticFog
Why change when you are hauling in billions of dollars per year, and there's
nowhere to go but down? The mobile carriers are going to extract as many
dollars as possible while they still can.

The fundamental problem is lack of competition. When there are only a small
number of providers, none of them have an incentive to slash the price of
texts to a more reasonable level.

~~~
ajross
I don't think this follows. In the US, for example, virtually every metro area
has four national providers. They race against each other to roll out new
devices and new network technologies.

The text charges are more of a historical addiction. Outside the US, voice
charges were historically much higher (because they were priced to compete
with the higher land line rates). So users flocked to SMS as a way to
communicate more cheaply. In the US, voice charges on cell networks were
comparatively cheap. Text was an "extra" that could be sold at a huge markup.
And that revenue is hard to give up.

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hristiank
I would love to hear the HN community thoughts on my article. My new blog is a
work in progress and I am always open to suggestions how to make it better.

Cheers

~~~
com
I think your article hits several issues on the head, and I'd like to drop my
thoughts on what might actually happen...

I have some history in the telco world and while at a gig with one particular
legacy carrier, noticed that when this topic came up in strategy sessions,
there was zero sense of urgency. None. What. So. Ever.

My suspicions are that the rivers-of-gold experience of first vast voice
revenue (tied to big investments that could be written down over a number of
years) and then messaging revenue (which was just money for jam with very low
overheads) has permanently damaged their business culture.

There are a couple of ways out of the bind that they're unable to face:

1\. Innovate out of their situation by offering some value add that can be
priced at value level, and not at cost-plus. Your suggestion of micropayments
is a good one, and could be enhanced by their potential local knowledge of
their market and user behavior to do commercially driven location aware
services like advertising, offers and all those other things. Benefit would be
to keep existing business customers on-board. Chances? Zero to none.
Innovation is a big word in the telecomms world, but it really is just a way
to flush billions down the toilet with not much more than deployed hardware to
show for it.

2\. Try to use their oligopoly situation (like the DSL and cable biz did) to
stifle any new entrants at a regulatory level. This won't work too well
because their new competitors aren't having to do buildouts - they're
bypassing the carrier-customer relationship entirely. Therefore they'll need
to be blocked or starved of bandwidth by the carriers. Chances? In some
markets, like the US, probably 50/50 at this point looking at how successful
industrial lobbying is right now. Net neutrality is their bête noir, and
they'll do whatever they can to destroy any institution that tries to
introduce it, like the FCC.

3\. Avoid this whole shenanigans with innovation and regulators and do what
oligopolies do best: price fix so that their customers do the dirty business
bandwidth starve the innovative services out of the market because they only
have 30Mb per month on the basic plan and it's USD100 for another couple of
hundred Mb. Chances? If all the national providers move in lockstep and avoid
any successful anti-trust investigations, it's easy and cheap. They'll never
recover messaging revenue, but they could avoid other revenue erosion.

My bet's on parallel attempts at strategy 2 and 3.

One metaquestion: is your blog really uncopyrighted? Pretty cool if so.

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gbog
I am not unhappy with my carrier, China Unicom. I have a good 3G for
15$/month, no contracts. I go to the nearest cigarette seller and buy cards to
pay them, and it stops when i stop paying, that's all.

When I see my relative in France talking about their locked contracts, I cry
with them.

~~~
hristiank
I have only limited experience with wireless carriers is Asia from a week
visit to Singapore and Malaysia. So I do not know what the actual situation
there. My experience is mainly with Europe and the US, having lived and worked
in different places in these two regions. 15$/month sounds excellent but is it
for unlimited data? Right now my plan in Bulgaria(Europe) is coupled with my
other monthly services. It all comes down to about 25$/month but it is 2GB
with max speed and anything after that is capped at 128kb. In the states
wireless carriers realized that giving users unlimited data leaves a lot of
money on the table and they decided against it. Only Sprint is holding up
right now but I wonder for how long. Sprint's only competitive advantage right
now is the unlimited data.

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freejack
There's still room for disruption in the U.S. wireless space. Check out our
latest project, <http://ting.com>, which went into private beta last week.
Hopefully its a boat-rocker.

~~~
hristiank
Interesting StartUp. Just read through your website and it sounds promising.

This is exactly the kind of disruption big companies(wireless carriers) need
to get a kick in the ... and realize some things need to change.

