On America, Cellphones and American Telecom Carriers

by Aayush Arya Aug 26, 2008


I don’t understand this. Isn’t America supposed to be the most developed country in the world? Or, at least, a member of the top echelons of developed countries? Why is it then that Americans are subjected to a widespread practice of locking customers to the carriers by releasing handsets exclusively partnered with them? Why is the ringtone industry such a hugely successful one, with people having to pay a couple of bucks for thirty second clips of songs (when the song itself is available for $0.99 or less)? And why, oh why, do you have to pay for incoming text messages?

Here’s the situation in India:

1. Except for RIM (which chose to partner exclusively with Airtel first and then with both Airtel and Hutch, now acquired by Vodafone, for the Blackberry), no other handset vendor sells phones locked to carriers on the GSM network in India. The iPhone is another exception and I hope and pray this doesn’t turn into a regular practice. Even the CDMA consumers are now being offered a lot of choice, with SIM based CDMA phones being released.

2. I, for one, don’t know anyone who’s ever paid for a single ringtone. You buy the songs, rip them onto your computer and copy them to your phone. After that, you’re free to set any of them as your ringtone. Why should you have to pay again for a song, one that you’ve already paid full price for and legally purchased once, just to be able to have it play when someone calls you?

3. On a phone bought anywhere in West Bengal, even in the smallest town of the large state, you enjoy free incoming calls throughout the state, wherever you may be. As for SMS, not only do we enjoy free incoming SMS throughout the country, most carriers have ridiculously low rates for sending text messages too, some even as low as free.

The Telecom Regulation Authority of India (TRAI) strictly forbids any carrier from selling phones locked to contracts in the country. If some carrier were to get inspired by the States and started charging for receiving SMS messages, 'specially all those junk advertisements, there would be mass outrage—not just a lone tech columnist resignedly expressing his annoyance and surprise on an online publication. In a country like the U.S.A., where people can probably sue a stray dog for trespassing on their property and make some money out of it, it’s a wonder that people put up with such treatment.

Most subscription based services in the U.S. seem to be based on the idea of making it cheap and easy for the customer to opt in, very expensive to keep the subscription (whether or not it is used), and extremely cumbersome to opt out. It seems that all such services have been designed keeping the shortsighted customer in mind and, surprisingly enough, they seem to be raking in the money with no end in sight.

My question, therefore, is simply this: why is it so? Why put up with this madness? Obviously, customers in the U.S.A. willingly and happily give in to the temptation of the low price of entry (in some cases, even free) of subscription services and thus, the carriers keep coming out with even more expensive options, leeching their customers like its their birthright. The RIAA is another example of an entity that treats its customers like honeypots they can keep raiding as and when it strikes their fancy. Is there something I’m missing here or is India really better in this particular aspect of modern life and the developed world?

[Disclaimer: This is not a tirade against U.S.A. or its citizens. I’m just an outsider, trying to make sense of the business practices prevalent in the country. If I’m wrong about anything, please feel free to correct me. At least this one time, I’d love nothing more than to be proven wrong. Please do not use this as an excuse to launch a flame war, particularly against other countries and their citizens.]



  • Agreed.  For example, I have a broadband wireless account with Verizon (my contract expires October 22, 2008) that requires me to pay about $60/month for services that are practically not usable.  For my trial period of two weeks in October 2006, my PC card ran about as fast as my DSL connection, perhaps on occasion a bit slower.  However, once my trial period expired, the speed was reduced to something perhaps slower than dial-up.  This is not an exaggeration.  After perhaps 70 hours (again no exaggeration) of customer/technical support, the issues continue.  I can barely send email, it takes 5-10 minutes to download a 2 minute YouTube video, if the download is even successful.  The new iPhone firmware has yet to download successfully (after tying up my bandwidth for upwards of 5 hours on each occasion).  Pulling up an email can take 2-3 minutes, even if it is a short email with no extraneous content.  Essentially this is highway robbery.  However, I would be at fault if I broke contract.  Needless to say, I shall be canceling my service on October 23rd.  Why would Americans put up with this?

    bluegirl had this to say on Aug 26, 2008 Posts: 19
  • Also agree. I’ve had cellphones since their availability. The current business model relies upon passive customers. Our culture has devolved, as the result of no regulation and focused advertising, into sea of disconnected individuals. The perfect customers. Until ‘something’ shocks ‘us’ into unity, the corporative-entities will continue to lead ‘us’ around like sheep.

    hotep had this to say on Aug 26, 2008 Posts: 13
  • The real answer is that the Federal Communications Commission (FCC) under the Bush Administration has been extremely lax in regulating broadband carriers. Congress has been divided almost equally with the small majority only going to the Democrats less than two years ago. Consumer advocates have never gotten a solid majority of Representatives and Senators to put any teeth in consumer regulation of telephone service including broadband. The big carriers like, Verizon, AT&T;, Warner AMEX, and others spend huge amounts of money on Washington lobbyists to make sure that the consumer gets the lowest possible service at the highest cost.

    Sometimes, deregulation does not produce the greatest value and choice for the consumer. Rampant unregulated consolidation in the communication industry has reduced consumer choice and kept the prices high. Top executive salaries and bonuses in these industries are shameful in relationship to their stock valuations. We get the best government that money can buy.

    flyboy had this to say on Aug 26, 2008 Posts: 30
  • I had a similar issue with Verizon DSL.  Once I had signed the 1 year contract I noticed that I had less than half the promised 3 Mb/s connection speed.  Repeated call finally gave me the answer I needed to hear -
    “The contract says up to> 3Mb/s”

    So the fact that I was getting barely 1Mb/s meant they had fulfilled the terms of the contract. I canceled immediately.

    Khürt Williams had this to say on Aug 27, 2008 Posts: 45
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