With the announcement this week of AT&T Wireless increasing its ETFs on smartphones, I got to thinking about telcos again. I’ve always hated them; in fact, I pretty much hate any company that is responsible for moving information from one place to another (I’m looking at you, Comcast). Telcos are large, lumbering organizations that are very customer-unfriendly, offering overpriced services with spotty quality and brainless customer service. I think I’ve figured out why this is, though.
It’s the fault of us, the consumers.
Telcos in the United States (as well as the rest of the world) keep getting bigger and bigger. I remember back when cell phones boomed, the days of the StarTAC and analog connections, 1-line numeric displays and antennas you had to extend. There were a ton of carriers back then, most of them regional. Roaming was the norm, and if you were lucky your carrier had set up a roaming agreement with whatever carrier whose territory you were currently in so you didn’t have to pay a billion dollars a minute just to check your voicemail. Back then, if you had a cell phone you were somebody important, because if you weren’t important then whoever wanted to call you was likely also not important and could just wait until you got home.
Something changed, though, right around 1999 or so, when digital cell phones were really making strides. The technology got cheaper, as it always does, and suddenly it fell into the price range that unimportant people could afford. (They even got so relatively cheap that very unimportant people like myself in high school could afford them. I have no idea why I got one, nobody ever called me.)
But as more and more folks began to enjoy their newfound freedom of walking through the mall and calling their friends (“yeah, I’m totally at the mall right now!”), they found that while showing off how they could call people from the mall was fun, it was even more entertaining to call their friends from a moving vehicle. This spawned two events that can never be undone:
- People began to drive even worse than they had before, because they were too busy pretending to be important by talking on the phone than to pay attention to where the hell they’re going, and
- As people drove around pretending to be important by talking on the phone, they soon found that the farther away from home they drove, the less likely they were to actually be able to make calls, due to the fact that cell towers didn’t exist out in the boonies back then.
(This actually is an interesting catch-22: The further away from home they were, the more important they felt themselves to be when placing calls from cell phones, as if the longer distance make cellular technology all the more special. But the farther away from home they were, the harder it was to get a usable signal. So in an area that would otherwise be the most supremely awesome place to make an ego-boosting cell phone call — say, from the middle of Wyoming back home to Boston — there would be just no way in hell that you could do it because there was absolutely no signal. This, therefore, is why the vast majority of cell phone users in the late 90’s/early 2000’s only used their phones to play that Snake game.)
The thing is, people actually wanted to use their phones. Not just for showing off, but for actually doing work and keeping track of their kids and assuaging their paranoia of having a breakdown on the side of the road in the middle of the night under a full moon on Friday the 13th and hearing some seriously weird sounds coming from the nearby woods. Suddenly, the little roaming deals weren’t quite enough — people wanted to use their phones nationwide, which is something that the little regional carriers simply couldn’t handle.
To cut a long story short, the Big Four wireless carriers (Cingular/AT&T, VoiceStream/T-Mobile, Verizon and Sprint) began to buy up the regional ones, and built out networks where necessary. People demanded more and more from the carriers — better quality, newer phones, lower prices — and in the end, they were only able to pick at most two of the three. Some carriers got a reputation for better quality and lower prices, but their phone selection was consistently behind the times (ahem, T-Mobile). Others were cutting-edge and relatively cheap, but their network sucked.
These days, while everyone still wants all three of the above, the telcos have gotten smart and realized that the only thing people really seem to care about is having the newest gadget. It’s all come down to showing off, just like it was 10 years ago. Your friends don’t know or don’t care how much you pay for service, and they don’t know or care how reliable your particular carrier is (that is, of course, unless they’re on the same carrier as you). All they care about is if you can do MyFace or Spacebook or Tweeter or whatever from your latest-and-greatest handset.
People actually do care about network reliability and cost, of course, but for the longest time they were placated by the shiny toys. Telcos remained evil because people never held them accountable; the only time people have left one of the Big Four en masse is Sprint, and they always sucked anyway. But now the carriers are too big to take down like that. Look at how much fuss has been made over AT&T and its network, and yet AT&T still gains new subscribers every month. (Yes, yes, AT&T says it’s investing in its network, but it’s very much a case of too little, too late — they haven’t even lit up 3G everywhere, and yet Verizon is already working on LTE.)
Of course, there’s the run-of-the-mill corporate greed at work here too; shareholders want to make as much money as humanly possible, and they don’t care how it gets done. Customer service takes a hit through outsourcing or lack of training, since it’s the easiest thing to cut back. Prices have remained relatively stable between the cell phone companies, but they’ve gone up every year for the cable companies (which, of course, they blame on increasing costs from the networks themselves — you’d think they could sell ads or something…oh wait).
So what needs to happen to reverse the trend? Take away the shiny toys, of course. If mobile phone development or manufacturing were to suddenly hit a wall and what’s on the market today is all you can get for the next two years before new models come out (or, God forbid, the American public gathered the wherewithal to resist the temptation to upgrade constantly), then all the telcos would have to compete on would be quality and price. Some would of course drop prices like a rock, trying to appeal to America’s newfound thriftiness (because nobody has jobs here any more). I think a good number would take the opportunity to upgrade their networks, though, if not to try to win over new subscribers immediately, but as an investment in the future. Take the ever-accelerating push for newer, faster, better away, and telcos could actually start to see customers as investments themselves. Win them over for life just like how Costco has won me over with its sheer awesomeness, we’ll-do-whatever-is-best-for-our-customers attitude. Telcos could spend just a little more each year on the network and customer service, and take just a little hit on revenue by offering plans that real people can use (I wouldn’t hate AT&T as much as I do if they offered a 300-minute-per-month, unlimited data and texting, free-nights-and-weekends plan for two iPhones for something like $80/month, which I think is very fair to them), and they’d win people over for a long, long time. I didn’t take any business classes, but according to my logic, I’d rather have a customer base that was very loyal earning me a 30% margin than one with lots of churn (and its associated costs) earning 40%.