American Cellular Telecoms & Sustainability April 19, 2008
I read a story today of a gentleman having came to San Francisco, and was unable to find a prepaid SIM card for his phone. This presented a big problem for him because he needed cellular service, but didn’t want to buy a new phone, nor pay overseas roaming fees. Prepaid SIM cards though, are difficult to find. American telecoms either sell service contracts combined with subsidized new phones (most often the case), OR monthly plans to customers with unlocked phones (seldom). For more information, please see Stopwatch Marketing by John Rosen and AnnaMaria Turano, p.76-82.
While I understand the economics and customer ‘lock-in’ strategy, I have two major contentions with this traditional business practice. One: It isn’t customer-oriented because people are not being given the freedom of handset model/maker choice; (Aside: Hey Alltel! This is a huge differentiation opportunity if you don’t already offer it).
Two: If new phone sales are subsidized through service plan changes, promotional upgrade offers, and new carrier signups, could that perhaps mean that Americans are more inclined to upgrade to new phones and dispose of old ones, in comparison to other countries?
As a result, Americans are not only subject to shorten their cell phone’s life cycle through great advertising and a personal desire to own a better phone, but ALSO through national carriers’ product marketing & sales models. What if an individual wants to sign up with a new carrier because they’ve moved, are seeking a better rate, the previous provider’s customer service sucks…whatever the reason? If they are happy with their current phone, but it came from a previous carrier, it is the owner’s responsibility to try and seek out someone to unlock their phone (if possible), and then come back.
According to my own personal experience, and from Stopwatch Marketing’s authors, the cellular service shopping experience is best characterized by reluctance (because of service plan complexity), and by a fast moving perception of time spent. With these factors at hand, it is no surprise that many individuals would see the option of purchasing their phone through non-traditional channels, or having phones unlocked through independent resellers, as too burdensome.
This presents an industry business model design with substantial negative externalities: a potentially higher per capita volume of cell phone e-waste in the United States, in comparison to other countries.
. . .
What do you think?
I was just thinking about this same issue. I am very interested in trying Sprint’s $99 unlimited everything plan that I see advertised (despite every Sprint customer’s bad service reviews) but when I go on their website, there are no phones that excite me enough to make the upgrade. The very fact that there are no viable alternatives to the current American cellphone business model (even though it’s proved profitable all over the rest of the world) should be proof positive of price fixing or some other shady dealings. Why there has been no more public outcry leading to federal investigations is beyond me.
Just as I pray for a la carte cable service, I await the day when I can make my cell phone service perfectly match my phone.
@swandiver - Thanks for stopping by! What you’ve pointed out is exactly how American telecoms’ business models restrict freedom of choice, and force individuals who care about the mobile make/model, to inconvenience themselves through additional time-consuming activities.
This is completely unfair to marginalize millions of people like us, just because their business model doesn’t $#!@*& support it! Solely because of the environmental implications, I’m leaning toward some sort of regulation to force change. At least voluntary guidelines or recommendations from the FTC, FCC, and EPA - Now!