Cell Phone Telecoms Lock In Their Customers - For Now
If you're new here, you may want to subscribe to the RSS feed for this blog. Or you can subscribe to a combined news feed for all SMM publications. Thanks for visiting!
Cell phone Telecoms like the status quo
Like many cell phone customers, you may be irritated from time to time by the fact that your telecom service supplier locks you in. They do this in two ways: by the equipment they provide you with and by the length of their contracts.
The length of the contracts and the associated termination fees has been a visible point of contention for some time. In 2005, an article noted that Cell Phone Customers Are Held Captive by Termination Fees. The following illustrates the problem:
Nearly half of U.S. cell phone customers would switch or consider switching cell phone service carriers to get a lower rate and better service if they didn’t have to pay an average penalty of $170 to cancel their service contract, according to a new economic analysis and survey released by U.S. PIRG (Public Interest Research Group).
It is unlikely the situation is in any way better now.
The handsets supplied by the telecom companies also attempt to lock in customers. Here in Canada it is almost impossible to remove the lock if you are a Telus or Bell Mobility client. Rogers Wireless uses the GSM (Global System for Mobile communications) technology and here the handset can be unlocked to use service from a different Telecom service provider, although this fact is kept somewhat secret.
This packaging of the handset and the wireless service as ‘the product‘ has been used to justify the long-term contracts. Heavily discounting the cost of the handset has the appearance of a reasonable quid pro quo for a lengthy contract.
That was yesterday. Now we have the Apple iPhone and AT&T has decided to change the cell phone service business model. Stephen Bone points out that
AT&T has announced that their plans for an unsubsidized iPhone will require a two-year contract. .. What AT&T may be trying to do is to redefine the business model for the entire American cellular industry. They may want to set a precedent for getting rid of handset subsidies altogether. And the reason for the two-year contract with the unsubsidized iPhone is to establish that lock-in contracts remain a part of the deal.
It would appear that AT&T has opened the Pandora’s box on this approach of multiyear contracts. What benefits do customers get out of such contracts? If AT&T’s service was way ahead of the competition then it might seem reasonable to sign such a contract. However the typical cell phone service Telecom seems to adopt a strategy of being no worse than the others, rather than working on excelling in customer satisfaction. Just remember how poorly Telecoms rate on customer service surveys. Think also on the mixed reaction that many customers have to the walled gardens that Telecoms often maintain.
Given this legacy, it should not be difficult for a new competitor to carve out a major share in this marketplace. All that is needed is to provide a total package that is
- satisfactory to consumers,
- giving good Internet accessibility (no walled gardens),
- with good user experience and
- that does not attempt to hold consumers to ransom with punitive termination penalties.
Which company will be the most likely to grab this share? It should ideally have
- mobile Web experience,
- strong usability experience and
- access to a suitable handset
One name that comes to mind is Google that may well be in the process of launching its Gphone. If they choose to maintain customer loyalty by offering good service rather than locking customers in with long-term contracts, it should be a winning combination.
Related:
Your Call Is Important To Us - Roberto Rocha
Customer Service From Telecommunications Companies
Walled Gardens - The Walls Keep Tumbling Down
StayGoLinks
August 17th, 2007 at 6:02 am
[...] Helping You Run an Internet Home Business home about contact hire me featured home businesses translate: a word, phrase, or page —>>> … Your Text Ad Here … Contact Me for Details … Barry Welford presents Cell Phone Telecoms Lock In Their Customers - For Now posted at StayGoLinks, saying, “The wireless telecoms like to lock in their customers with multiyear contracts and locked handsets. As the mobile Web becomes a reality with devices such as the iPhone, this may bring new competition that may upset their cosy status quo.” [...]
August 20th, 2007 at 9:11 am
[...] Sagar Satapathy presents Working Green: 50 Tips To Reduce Your Office?s Waste posted at Bootstrapper. Ben Yoskovitz presents 10 Questions Venture Capitalists and Angel Investors Are Going To Ask posted at Instigator Blog. Millionaire Mommy Next Door presents Evaluation is Critical for Success. How to Measure Your Progress. posted at Millionaire Mommy Next Door, saying, “I have learned from past experience with my other projects, goals and small businesses that it is crucial to monitor progress using analytical measures. Regular evaluations of any project are important for keeping it on track and in alignment with one’s vision. Today, on my one month blogiversary, I am illustrating this important evaluation process.” Warren Wong presents Make People Comfortable By Greeting Them Right posted at Personal Development for INTJs, saying, “Do you know how to make people comfortable when you meet them? Here’s a couple of tips to make them feel right at home.” Barry Welford presents Cell Phone Telecoms Lock In Their Customers - For Now posted at StayGoLinks, saying, “The wireless telecoms like to lock in their customers with multiyear contracts and locked handsets. As the mobile Web becomes a reality with devices such as the iPhone, this may bring new competition that may upset their cosy status quo.” Don presents 3 Lessons Why You’re A Failure posted at AffiliateWatcher.Com, saying, “Most of the time, people who fail are full of excuses. If you know you’re failing before it happens you may be able to avoid it altogether. See if your profile fits one of these three to find out if you’re on a path to failure.” artThailand presents Wanna buy a website……..? posted at artThailand. Warren Wong presents Seven Mistakes In One Day posted at Personal Development for INTJs. Charles H. Green presents The Dark Side of Trust? Not! posted at Trust Matters, saying, “Harvard claims the key to trust is micromanagement; but the reality is, micromanaging trust can hurt your relationships with your customers and coworkers.” Charles H. Green presents Does Your Customer Trust You? The Acid Test posted at Trust Matters, saying, “Business success often boils down to finding the courage and confidence to put your customers first. Can your business pass this customer trust acid test?” [...]
August 22nd, 2007 at 4:39 am
[...] Some very interesting insight into the North American markets, with posts covering topics from how operators tie in their users (tip of the hat to a fellow Canadian!) to some figures on the US Wireless market in the first half of 2007. Some lighter content from SkyDeck pointing the finger at what’s broken in the industry. [...]
November 8th, 2007 at 3:13 am
[...] Barry Welford presents Cell Phone Telecoms Lock In Their Customers - For Now posted at StayGoLinks, saying, “The wireless telecoms like to lock in their customers with multiyear contracts and locked handsets. As the mobile Web becomes a reality with devices such as the iPhone, this may bring new competition that may upset their cosy status quo.” [...]