T-Mobile shows how to hurt your customers and decrease profits

I’ve complained before about AT&T’s idiotic crippled implementation of Java, which prevents customers from installing and using any application that needs to access the Internet.  According to Gearlog, T-Mobile is no better:

The V8 is a 500 Mhz, Linux-running powerhouse with two gorgeous screens. I know application developers who would love to write software for it. But as with all of their feature phones, T-Mobile forbids any third party Java applications from being installed on the device. They’re basically trying to sell it as an overpriced voice phone, which is like buying a Voodoo PC to run Microsoft Word, or getting a car with a V12 to drive to the store. It makes no sense. (I gave it an Editor’s Choice anyway, for the voice quality. Go figure.)

T-Mobile’s idiotic, incomprehensible and self-defeating policy only gets stupider with time. I get it: they can’t build a 3G network, so they’re going to pretend data services don’t exist. But the lack of 3G hasn’t stopped the iPhone from taking over the multimedia universe, and T-Mobile has a far better position in Wi-Fi than AT&T does. If T-Mobile stopped arbitrarily barring third party applications from feature phones it wouldn’t make them a data leader, but heck, it’d be a start.

These carriers are still operating with the mindset of a monopolist, in which the customer is beholden to the provider for all services, and any third-party competitors should be blocked.  AT&T and T-Mobile keep their customers from installing Opera Mini, and do everything possible to boost their own for-pay services, such as TeleNav. Comcast’s new TiVo DVR strips out anything that could conceivably take revenue from Comcast, such as Amazon Unbox downloads. It makes perfect economic sense, but it’s terrible for the customer.  They don’t want to hear it, but these companies are infrastructure companies that should supply the capability for customers to use any product or service they choose.  They should be dumb pipes. Instead they’re just dumb.

Verizon Embraces Google’s Android, Kinda

Reports suggest that not only will Verizon Wireless embrace Android, but that Google’s mobile OS initiative played a role in the carrier’s decision to (kinda) open its network:

While Sprint Nextel (S) and T-Mobile (DT) were among the 34 charter members of this Google-led “Open Handset Alliance,” the two biggest U.S. carriers, AT&T (T) and Verizon Wireless, were notably absent. “To get into that press release really didn’t do anything,” says McAdam. “We needed to understand the details of that operating system.”When Verizon executives and engineers examined Android’s software tool kit, however, they were impressed. “Clearly the Android system gives a lot of developers the opportunity to develop applications for a wide range of handsets,” says McAdam. Not only did the company decide to support Android, but McAdam says the new platform was a key influence in adopting open access. “Android really facilitated this move,”says McAdam.

As with all things Verizon, time will tell.  Does this mean Verizon will permit Android handsets on its network via the metered-use, semi-open plan to be introduced in 2008, or will Verizon offer Android to its walled-in masses?  If the former, it’s not even news.  If the latter, it may be good for customers, especially if the OS offers a compelling alternative to the iPhone.

Mashable likes the news and thinks it will encourage AT&T to join the party:

With Verizon’s move, AT&T becomes the only major US carrier that has not yet announced plans to support Android. With the variety of devices and applications the OS will eventually allow the other carriers to offer, it seems like AT&T will ultimately have its hand forced in joining the alliance. The longer they wait, the further behind they will be when devices and apps start making their way to the public next year.

As a GSM carrier, there’s little AT&T could do to stop Android, as using an Android phone on AT&T would be as simple as swapping a SIM.  It seems unlikely that AT&T would put much muscle behind Android, however.  The open source nature of the OS and ease of adding third-party applications goes against AT&T’s business model of removing features and crippling functionality to protect revenue streams like AT&T Music and TeleNav.  It would be too easy to use VOIP on Android, and the specs aren’t going to allow AT&T to remove GPS and Wi-Fi or cripple Java, like AT&T does in its other phones.  Eventually, market pressure will force AT&T to be more open, but not yet.

TechCrunch is far more skeptical:

Talk is cheap when you are trying to come across as all open on the eve of the biggest wireless spectrum auction in a decade. But if it means more support for Android and open networks in general, that is a good thing.

The BusinesWeek story is a big wet kiss that lovingly details Verizon’s seriousness about opening up its network. (The CEO keeps a list with him always of why openness is important to Verizon. Crumpled. In his pocket. The thing is practically near his heart!). Sorry, but the whole thing smells like a well-timed plant. We are still waiting for Verizon to officially join the Open Handset Alliance. And if it really were embracing openness, it wouldn’t treat open devices and open apps like second-class citizens, separate and at a safe distance from its 64 million subscribers.

That’s a lot closer to the truth.  Verizon isn’t really opening its network to new apps and devices.  The garden wall is still intact; they’ve just added a little plot of scraggly corn and pitiful tomatoes outside the wall., for which you can pay through the nose, but which allow the carrier to say “look, produce for the masses!”

Here’s One Justification For Capping Cable Growth

Techdirt wants to know what’s wrong with cable industry consolidation:

Because cable is geographically constrained, from a consumer perspective, all that matters is the market power my provider can exercise locally. If I’ve got three regional cable providers to choose from, it makes no difference whether two of them each hold a 40 percent national share. If I’ve got only one serving my area, the fact that it only controls 3 percent of the national market is similarly irrelevant. And if I’m in the latter boat, declaring that the largest firms with the most resources are forbidden to expand their operations into my neighborhood scarcely seems calculated to increase my access to alternatives. The FCC cites regional consolidation as a motive for the cap, but if cable providers are gunning for such regional monopolies, then won’t they divest first in the regions where they do face competition, and hold on to the areas where they’re the lone option?

There’s a certain element of truth to this, of course.  In determining the price I pay for TV service, it matters little whether Comcast has 5% or 50% national market share.  Comcast just raised my rates for cable service, but left their rates for phone and internet service the same.  They face little competition in the Richmond market for TV service (FiOS is available in limited areas, but not at my house), but compete fiercely against Verizon for telephone and internet customers.  The problem with Julian Sanchez’ thesis, however, is that if freed from the 30% cap, Time Warner or Cox would come into the market to provide cable competition.  They wouldn’t, and in most places they can’t, due to local monopoly franchise contracts.  What the cable companies would do is expand nationally via acquisition of smaller rivals, with TW and Comcast heading inexorably toward a cable duopoly.  They have very little interest in competing against each other, mirroring the situation in telecom in 1996.  Bell Atlantic, while hamstrung in its region, could have offered competitive service in the BellSouth or Ameritech regions, but they had absolutely no interest in doing so, to the detriment of consumers.

So if cable consolidation wouldn’t drive prices down, what’s the harm, given that cable companies already have local monopolies in many areas where IPTV or satellite isn’t an option?  The harm isn’t horizontal market power expansion (going from 30% to 50% of the cable TV market), it’s vertical market power expansion.  Time Warner already produces content through its myriad entertainment properties.   Comcast owns E!, Versus (nee the Outdoor Life Network),  the Golf Channel and G4, along with Comcast SportsNet regional networks in DC and Philadelphia.  Comcast also has partial ownership interests in MGM, United Artists and the Philadelphia Flyers and 76ers.  To the extent these cable giants get even bigger and squeeze out competitors, they have even more interest to play hardball, both keeping competing programming off their networks and refusing to provide their own programming to competitors.

This has already happened several times with regional sports programming.  After the Baltimore Orioles started a network (MASN) to compete with Comcast SportsNet, the cable giant sued, and said that “we think in most sports markets in the country, that it’s more efficient and better for the customer to have a single regional sports network.”  Similarly, Cablevision refused to carry the Yankees’ YES network after the team stopped selling cable rights to the MSG network (owned by Cablevision).  When the Twins tried to start Victory One Sports, TW and other providers refused to carry it, killing the fledgling network.

So long as multiple cable providers exist, there’s far less incentive for such shenanigans, but if there are only one or two large providers, the incentive to withhold content from competitors increases, and makes it harder for competitors to establish themselves.  Eventually, diversification and technology will win out, but in the short term, that’s one reason to fear consolidation.

AT&T CEO Randall Stephenson: Choose Us, We Suck Less!

AT&T CEO Randall Stephenson doesn’t think of Verizon’s promise to (sorta) open its network:

Stephenson also used the event to scoff at Verizon’s splashy Nov. 27 announcement that it plans to open its network to hardware and software not sold by the company. AT&T, he declared, is “probably one of the most open networks in the world.””We have thousands of people developing into our architecture today. All of the handsets we sell are Java-equipped. Who doesn’t know how to develop into Java, right?” Stephenson said. “If you want to buy a handset on our network without a contract, fine. Just pay retail price for the handset. Right? The only reason we make people sign a contract is if we’re subsidizing it heavily.”

He added, “[All carriers] are all going to be open over time.”

OK, let’s count the errors and misstatements in that excerpt. All AT&T handsets are Java-equipped? Nope.  The iPhone doesn’t have Java at all.  Plus, many of the handsets AT&T sells are crippled.  My Blackjack has Java, technically.  But I can’t run two of the most popular third-party Java applications on it (Opera Mini and Gmail) because the phone asks for permission every time either application needs to send data outbound (i.e. all the time).  May as well not have Java at all.  Applications that I buy from the AT&T store work just fine, of course.

The only reason they make you sign a contract is if they are subsidizing a phone heavily?  Also nope.  The iPhone isn’t subsidized by AT&T at all and you still have to sign a contract.  It’s probably true that AT&T is more open than Verizon (not open at all) or T-mobile (less open, and even more restrictive when it comes to Java).  It’s also probably true that all networks will eventually be open, either by market dynamics or governmental fiat.  Everything else Stephenson says is just blatantly untrue, and amounts to “choose us – we suck less.”

[via Engadget Mobile]

Cable industry really mad, calls FCC Chairman names

Cable companies have been taking it on the chin a bit of late, with Comcast under heavy fire for “traffic shaping” (a/k/a screwing around with BitTorrent rather than building adequate infrastructure), the Chairman of the FCC pushing a la carte pricing, and the FCC killing exclusive contracts with apartment building owners. Now the cable lobby is striking back.

“We’re not going to fundamentally wreck business models and hurt customers to appease the chairman of the FCC,” McSlarrow told reporters during a conference call yesterday. “If one looks at the commission’s agenda . . . the issues that have been teed up have been designed to hurt the cable industry. If I were in that position,” meaning the chairman, “that’s not the way I would conduct myself.”

There a many nuggets hidden away in that single paragraph. Note the implicit argument that the FCC has a duty to protect the cable industry’s business model. Note that the FCC’s attempts to help consumers are characterized as being designed to hurt the cable industry. Note the argument that the FCC Chairman shouldn’t be running around hurting the cable industry (remember who your true masters are, boy!). Note the threat at the end. It reads like the pathetic whining of a bully that isn’t getting his way for the first time.

The mission of the FCC was laid out in the statute that created it in 1934: “to make available, so far as possible… a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.” Nothing in there about protecting cable business models, but explicit reference to protecting consumers from inadequate service and unreasonable charges. The FCC’s baby steps in this area make the industry mad, and if the cable industry is mad, consumers are probably happy.

That’s not to say that a la carte pricing would be a good thing for TV viewers. Like virtually every cable customer since, well, ever, I’d love to jettison two-thirds of the channels Comcast delivers to me, and subscribe only to the channels I watch. I’d love to adjust the channels I subscribe to seasonally (get rid of ESPN U when it’s not basketball or football season, for example). But the system was clearly built on a foundation of bundling lesser-watched channels with popular ones. True a la carte pricing would kill some channels because demand would be so low as to make them economically untenable. Maybe that’s a good thing – if they can’t survive, maybe they shouldn’t. But that’s the reality, and it’s therefore incredibly unlikely that a la carte pricing would be attractive. Like everything else, cable companies would look at the change and raise rates.

The real answer ultimately is not additional regulation, but additional competition. The 1996 Telecommunications Act was intended to kick-start competition, but the facilities sharing requirements, which supposedly would have permitted upstarts to compete without building redundant infrastructure, instead just gave the incumbent monopolists loopholes and mechanisms to litigate their competitors to death. Only now are we seeing any real competition, with Verizon laying fiber and the satellite companies launching satellites. Eventually, this should improve cable service quality and drive prices down (although duopolies are sometimes little better than monopolies). Ubiquitous broadband and internet programming will help, too.

via CrunchGear

AT&T rolls out 3G in Richmond

At some point yesterday, I noticed that my Blackjack was showing this:

Up to now, I had to got to Alexandria to get 3G service from AT&T.  This is great news, as I really miss having the high-speed service when I return from DC.  The 3G penetration seems to be pretty good, too. I have 3G in my house and in my office.  It would have been nice to have during the playoffs, when I used MLB’s mobile site to keep track of the scores.  Now I may even using WM5’s internet connection sharing feature around town when Wi-Fi’s not available.

With that said, AT&T still sucks.  Here’s my current list of gripes:

• Still no WM6 upgrade for the Blackjack.  The delay is completely ridiculous, and with the BJ2 coming out, there’s no reason to think AT&T will release it any time soon. Yes, there are leaked ROMs, but no thanks.  And I won’t drop more cash on a BJII just to get Office Mobile and HTML mail.
• Coverage is still weak.  I often take the Amtrak from Richmond to DC, and frequently have no signal at all between Ashland and Fredericksburg.  The coverage map says I should have a signal, but I don’t.  Meanwhile, my fellow travelers who are on Verizon and Alltel chat away (I don’t want to talk on the train, but I would like to get online).
• The data plans are still too expensive.  AT&T insists that the Blackjack is a PDA, not a smartphone, so you have to go with a PDA Connect plan, which starts at $45 for unlimited data.   The Smartphone Connect plan is only $20 for unlimited data.  AT&T’s price is roughly comparable to Verizon, which charges $45 for unlimited data or $80 for data plus 450 minutes. With T-Mobile, you pay $40, but that also appears to include unlimited T-Mobile hot spot usage, which you’d pay an additional $20 to $40 a month for.

I’d really love to drop AT&T, but even a prorated ETF would cost too much.