While there seems to be the order in the cartel controlled postpaid wireless space, things are a bit more unruly in the seamier prepaid side of the wireless shell game. The new floor for unlimited monthly voice data and text service will hover around $40/month for the rest of this year, It’s a safe bet next year’s number will be $30 or less. Proof: Sprint’s Virgin mobile unit has already lowered the bar to $40.

For the foreseeable future, postpaid wireless will rely of exclusive deals to sell the coolest new handsets as a tool to prop up ridiculous rates. Meanwhile back in Washington, the feds are distracted by another wave of “net neutrality” talks that are being happily papered over by lobby dollars that distract from the needs of real world users.

If we really want to shake up the wireless  market today, net neutrality is irrelevant. For the moment, wireless regulators need to focus on locked handsets. If handsets are unlocked, the best and brightest of them will be under $200 and usable wireless plans will head towards $20/ month. Even at those rates, there’s abundant profit potential for a lean and mean carrier.

Meanwhile, prepaid will continue to race t o zero even with mundane handsets that are locked and overpriced.

Wimax  based networks have already demonstrated the capability ability to deliver serious bandwidth in fixed applications. For those of us using the mobile version, we’re still stuck in the sub 6MBPS quicksand we had on AT&T’s tired old DSL service. New standards will extend Wimax’s capability to deliver more. This leapfrogs the competing LTE standard capability. Without more competition, service providers will have little reason to extend its benefits to consumers regardless of the technology used. In fact, the wireless marketplace is consolidating. The FCC’s proposed solution is to allocate more spectrum by auction. Without rules governing how much spectrum a single entity control in a market, wireless bandwidth will remain expensive and scarce.

More on Wimax 2

Think not being able to secure customer customer email addresses is a hiccup from two otherwise savvy network / ecommerce operators? Apple has proven itself as a top rate designer and marketer of consumer electronics. AT&T has masterfully managed to use its lock on a popular device to oversell its underpowered wireless net at stratospheric prices.  But wait! It appears neither is really up to the task of running ecommerce and customer care systems.

The fourth-generation iPhone, which features a higher-resolution display, longer battery life and a front-facing camera for video chat, appears to be in high demand. So high, in fact, that when Apple and its partners started taking pre-orders on Tuesday, many anxious customers were unable to reserve one. The phone will be released next Thursday.

“This pre-ordering process is an absolute joke. I’ve tried Apple.com, ATT.com and even calling the store… no luck. #FAIL,” Andrew Dumont of Seattle wrote on Twitter.

Another Twitter user by the name of JoeKLee wrote: “Apple.com and Att.com, I just want to give you guys money. Please fix your websites.”

Other users have said that Apple’s new retail application, which the company introduced Tuesday morning to allow customers to pre-order the iPhone 4 on their existing iPhones, isn’t working. (New York Times)

With demand so high, I doubt this lack of a core customer care competency will deter the hungry masses from buying Apple’s new handset in record numbers. It’s unfortunate for them that we still have a wireless cartel where carriers and devices are locked to one another.  It’s also sad that to so called technology leaders have  managed two huge technology blunders inside of a week.

In this case its Verizon again. The name of the game is a Titanic shuffle of their data rate plan. May sound like small potatoes till you see the hurdle before you as a customer –

First, the details: Verizon has introduced a new data tier at $9.99 per month with a 25MB cap—this is the cheapest data plan now offered by the company and by most US wireless carriers, and applies to all 3G devices. Why does this equate to “upping” the data charges? Because the company is ditching its $19.99 per month plan with a 75MB cap altogether—you must either go with the $9.99 plan for a third of the data or or the $29.99 smartphone plan that applies to WinMo, Android, or BlackBerry devices.

This in a sense is a variant of the give the lantern away but charge for the oil dearly. Only this is charge minimally for low oil but if you want to use the lamp every night you has to pay!

Why can’t stuff be simple? Just charge .001¢ per kilobyte and be done with it. Equitable, quick and customers can check their bills quickly. But then that would not justify the marketees salary would it?

Linky.

Look, I think Verizon has the duty to make a buck for its shareholders. It also in my view has a obligation to play fair with its customer base. Sometimes the two are in conflict. When that happens, sometimes the FCC takes notice –

“Late Friday, Verizon Wireless responded to the Bureau’s queries. The company’s answers, however, are not satisfying and, in some cases, troubling. In particular, I am concerned about what appears to be a shifting and tenuous rationale for ETFs. No longer is the claim that ETFs are tied solely to the true cost of the wireless device; rather, they are now also used to foot the bill for ‘advertising costs, commissions for sales personnel, and store costs.’ Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served.

“I am also alarmed by the fact that many consumers have been charged phantom fees for inadvertently pressing a key on their phones thereby launching Verizon Wireless’s mobile Internet service. The company asserted in its response to the Bureau that it ‘does not charge users when the browser is launched,’ but recent press reports and consumer complaints strongly suggest otherwise.

“These issues cannot be ignored. Wireless communications are an essential part of our lives, linking us to our places of business, our communities, and our loved ones. The bottom line is that wireless companies can truly earn their desired long-term commitments from consumers by focusing primarily on developing innovative products, maintaining affordable prices, and providing excellent customer service. I look forward to exploring this issue in greater depth with
my colleagues in the New Year.

Or so says Mignon Clyburn.

Verizon responded –

* most customers who terminate do so in the first year;
* no matter when a customer terminates a contract, Verizon loses more money than the ETF covers;
* based on those two points, Verizon would lose too much money if it evenly prorated the $350 ETF;
* so by unevenly prorating, Verizon can keep the initial ETF lower than it otherwise would be, but high enough over the life of the contract to adequately offset losses.

Here’s the problem with their logic. If the customers require such high support $$ then adjust you plan rates. Also please explain why we keep hearing in the press about phantom key sequences that activate services without knowledge of the customer. It might explain the additional support costs. Also if most smartphone users quit in the first year then smart money would say you slam them for $350 up to and including month 13 or 14. Then prorate monthly as the chance of leaving has decreased significantly. Eh?

Bottom line? All the carriers thought they were just selling a cell phone with the capability to view short video clips. They never thought people would spend hours watching YouTube clips, short films, etc. They were wrong, got caught flatfooted and so now they are CYA’s themselves all over the place. No sympathy fellas.

Linky.

On of the most used marketing ploys in in the telco suit’s bag of tricks is raising revenue by tinkering with rates, billing or repackaging existing technology into higher priced offerings. That sort of tinkering has evolved into a fine art in the wireless biz, with AT&T as the master.

Recent growth in wireless data use has eroded the quality of service AT&T’s infrastructure has been able to provide to many of its customers. AT&T  has responded with a commitment to invest in upgrades, along with usage based price tweaking that amounts to a price increase for many of AT&T’s wireless data customers. According to a report on Neowin, this so called investment may have been a ruse with the expectation that a price increase alone will reduce usage, therefore improving performance.

As seen in the images below, AT&T’s “commitment to improving their network” claim could not be further from the truth. Since the release of the original iPhone,  AT&T has consistently spent less money on network construction. This seems very strange, considering they beefed up construction right before the iPhone’s initial release. With such a high demand phone,  AT&T should be expected to continue investing in their network, especially considering the fact that the iPhone was upgraded twice already, allowing it to consume more data, and ultimately bring more customers to the carrier.

Since the release of the iPhone, AT&T’s revenue has consistently increased. They now make approximately 80% more revenue from wireless data than they did when the iPhone was initially introduced. This increase doesn’t seem to be slowing down anytime soon, as it has been steadily inclining for the past two years. The post also shows stats regarding the economy’s negative effects on AT&T’s net income. Guess what? There weren’t any. AT&T was able to increase their cash, and cash equivalents on hand by 4.375 billion dollars since the start of 2009. They’ve seemed to keep profits fairly steady, considering the times. (more on Neowin)

As a brief diversion from the firestorm brewing between regulators and wireless carriers, here’s an animated collection of facts on the cell phone. Most is most interesting and disappointing to me is that Americans pay more than anyone in the world to use them.

Fourth place US wireless carrier T Mobile was conspicuously absent when the FCC auctioned off spectrum for new wireless broadband services. Left without the bandwidth necessary to provide true broadband to its entire customer base, the company has needed a survival strategy as traditional cellular begins to decline.

There have been abundant rumors about T Mobile’s parent acquiring Sprint, who is the majority owner in Clearwire. That move does make sense, but there may be a better way. If DT were to invest a little less money in Clearwire, it could solve its bandwidth problem and give Clearwire badly needed cash for faster expansion.

Bloomberg News is now reporting that Deutsche Telekom might decide to pay Sprint, Clearwire and/or MetroPCS for access to the their U.S. wireless spectrum. Such a deal would infuse Clearwire with $2 billion in much-needed cash for network upgrades, while giving Deutsche Telekom-owned T-Mobile access to wireless spectrum that would help with T-Mobile’s 4G plans. (DSL Reports)

A lot more of your monthly wireless spend will be going to Washington DC this year. The biggest players in the wireless cartel want to keep their cartel privileges.

In the most radical neutrality program ever outlined in the US, the new-look FCC is insisting that wireless carriers should account for their open policies in the same way as their wired broadband counterparts.

The proposed policy outlined this week would allow the FCC to monitor cellcos’ policies and rule on how well they conform to guidelines on neutrality. Genachowski also plans to toughen up the rules for the big phone companies such as Verizon and AT&T.

He has reaffirmed the 2005 broadband principles that consumers are entitled to access any legal internet content, and run any apps, from their choice of legal device, and with the right to competition among operators and providers of services, content and applications. These principles will now be formalized by the FCC and extended to mobile broadband.

Genachowski has also added two extra principles. Access providers will be barred from discriminating against particular internet content or apps, and they must be transparent about the network management practices they adopt. (The Register)

If we must have a wireless cartel, regulation is necessary. Unfortunately, many of the practices our new FCC chair seeks to end were originally enabled by regulations. For wireless there is simply too much spectrum licensed to to few providers to have a competitive market. With so much money involved, we can count on any new rules performing less well than advertised. Acts of Congress can and will undo any regs that the cartel cannot manipulate at the FCC level.

We need to rethink and retool how we allocate spectrum. Too little is available to the masses and too much is in the control of a very few companies. If there were robust competition , net neutrality would be a non issue.

I hate being wrong. A little over a year ago, I stated that things could not possibly get worse  at the FCC. I was wrong. While I won’t repeat that mistake I will report that the new butts in the FCC’ boards seats have managed to stoop to a few new lows even before the name plates on their offices have changed. The latest from the agency who has taken the public out of the public air waves? The same FCC  that allowed TWO companies to hold a DOMINANT chunk of the national wireless spectrum now wants to know why there is so little innovation in that market.

The Federal Communications Commission decided unanimously on Thursday to review the state of “innovation” in the wireless industry, a move that could lead to greater regulation of carriers and government intervention in disputes such as one that recently erupted over Google Voice and the Apple App Store.

All five FCC commissioners, including the two Republicans, voted to approve a pair of investigations into the wireless industry. One will look broadly at the state of competition and innovation, and the other, as CNET News reported last week, will evaluate whether truth-in-billing rules ensure subscribers know what they’re paying for on their monthly phone bills.

Thursday’s vote represents only a small first step toward more federal rules. While not all formal inquiries result in new regulations, FCC Chairman Julius Genachowski did stress that his agency should be “relentless” in its pursuit of wireless innovation. CTIA, the organization which represents the big wireless operators in the U.S., has said that the industry is very competitive and innovative.  (Cnet)

One has to wonder if any of the bureaucrats  FCC ever studied economics operated a business.  It’s a simple truth that if you allow a number as small as two businesses to dominate a marketplace they will neither innovate or serve their customers.

Maybe the FCC board only knows this too well. Since the federal bureaucracy is dominated by two political parties, it would hardly want to admit that truth.  Washington DC has become a monument to the sad results of an imagined competition when the field is limited limited to two major parties.

Sadly that truth is fully understood by even the uneducated flea market vendor here in the real world.  Running in inquiry into a cartel is counter productive, especially when it’s operatives preside over the investigation. The pile’s getting so high that  maybe even the willfully uniformed masses will be able to see it.