At 13 Nov 2007 18:44:17 -0700 Oxford wrote:
> but they don't cost nearly $80+ a month per user.
I guess that depends on the level of service you want. A 1000 minute
plan with T-Mobile with unlimited
EDGE data can be as low as $46. A 450-
minute iPhone plan with unlimited
EDGE is $59. Heavy users get charged
more to ensure bandwidth isn't oversold, just like a broadband ISP
charges more for higher speeds. Both are methods of bandwidth allocation
based on retail price.
> So someone is skimming
> off the top.
I'll bet their margins are lower than Apple's!
> I see commercials all the time for Cell Phone companies, I
> also see Cell companies in new retail developments where rents per
month
> are $2,400-8,000 a month.
And what does your Apple store pay for rent? What percentage of the new
Nano's price covers the incessant "1, 2, 3, 4" ads I have to endure? Why
after a boatload of free media hype and $200 in price drops do I have to
watch a bunch of lame actors show me they've just used their new iPhone
to do the same stuff I've done on phones for years? (A pilot checks the
weather! A couple accesses a wedding registry website! What did we all
do before the iPhone? Oh, that's right- we used all our other phones!)
> That is just plain WRONG and shows how
> uncompetitive the cell industry has become.
Um, just the opposite. In a competitive market advertising is perfectly
normal, AND cost effective, since it increases sales and profits in
excess of the advertising cost. Jiminy Christmas, Oxy, this is marketing
101 stuff.
> In a healthy market, no
> company can afford advertising and wouldn't have a store front.
"1, 2, 3, 4, why then all the Apple stores?/ 5, 6, 7, 8, why advertise
products so great?"
> They can only sell at the market price, thus the Cell Industry is full
> of fat and inefficiency and I'm determined to set them right.
So I see pricing strategy and marketing get added to the things you
have no real understanding of.
> Yes, and those people would pay $5, $6 more a month for maintaining,
> upgrading the towers.
Nature abhors a vaccum, my dear Oxford. If cell carriers could offer
lower price
points profitably, they would, because it would increase market share and
cripple less efficient competitors. Look at Metro PCS and Leap- they
offer unlimited plans at the $50 or lower price point. They do this by
offering service with poor coverage (compared to the national carriers.)
Fewer towers, less capacity, lower costs equal lower prices. See the
pattern?
In fact, the marketing strategy of cell operators today is "kill 'em with
add-ons." Competition in voice plans is so fierce and so low margin,
texting, data, ringtones, etc. are used to increase, or even to attain,
profits.
> No, I'm very good with numbers
The same guy who confused $0.04 and 0.04 cents? Who believed 1 out of
every 100 people in the UK bought an iPhone in three days? You're good
with numbers, alright- give or take a few zeros in either direction...
> and spotting faults within a market. The
> Cell industry in the US is extremely out of balance in regards to
> normal market behavior.
It's actually quite typical of an infrastructure-intensive service market-
where the cost of infrastructure is high compared to other costs and has
to be spread out among all users, regardless of their usage. The
carrier's actual "per minute" cost isn't fixed, like the price of a can
of soda at a grocery store is. Infrastructure will cost $x
regardless if it's used to 1/8th capacity or 7/8ths.
Usage is controlled by charging more for higher usage, to prevent the
capacity issues the flat-rate carriers like Leap or Metro face.
> It's borderline criminal, but thankfully the Internet
> will bring them back into balance within the next decade since people
> like me are onto their scam and will not quite until Cell fees are in
> the $5, $6 range a month for unlimited access to any other cell phone.
I'll grant you that's an interesting concept, but probably unworkable
from a practical perspective- for starters, you'd have to get various
competitors to agree. Even VoIP has very little inter-company
cooperation- Skype users can't call MagicJack, Vonage or Packet8 users
for free, so why would, say, Verizon agree to let AT&T customers access
their network free of interconnect charges?
Besides, most monthly cell plans include free in-network calling, plus
many cell companies already offer low-cost prepaid plans with free in-
network calling. Verizon and AT&T offer unlimited in-net calling for
$1/day, charged only on the days you actually use the phone.
Your "$5-6" number is way too low, BTW- a few years ago Sprint estimated
their
per-customer infrastructure costs- just customer service, billing and
network, ran around $18. This led to the decision to eliminate a tier or
two of low-usage plans, which at the time started at $15, and migrate
them to prepaid which eliminates billing and some customer service costs.
Again, you're trying to compare VoIP- a parasitic service that gets a
free ride on the network of an ISP, to a wireless service who brings
their own to the table. They aren't directly comparable.
> The cell industry is just a bunch of walkie talkies, there is really no
> "major" expense after the towers are up.
Wow. It's always hard to figure out if you're yanking our chains, or
just that mind-bogglingly naive. What about maintenance, expansion,
upgrades to capacity and bandwidth, handset subsidies, customer service
expenses? What about interconnect charges to the PSTN- their largest
telecommuncation expense next to infrastructure.
> The rest is advertising and employee expense, which aren't needed in a
> well run market.
"1, 2, 3, 4, explain Apple's ads a little more/ 5, 6, 7, 8, I suspect
you'll make me wait..."
Cellular is a very customer service intesive business. Customers want
questions answered by real people, and want to touch and play with
product before they buy. Both require employed bodies.
As to advertising, you already know that answer- that Feist tune plays in
your head as you dream about what Steve Jobs' warm embrace would feel
like...