Why Letting AT&T Buy T-Mobile Sucks for All of Us

Letting AT&T buy T-Mobile sucks.  Even more insidious are the rumors that regulators have already given this a wink-wink approval.  Why does this suck?  For many years, we Americans lived in a mobile telecommunications backwater.  Large portions of the industrialized world had better, more advanced telecommunications systems than we did and even emerging markets were leapfrogging over our infrastructure and approach.  Then along came Apple.  Regular readers here know I’m no fan of Apple’s business practices but give credit where credit is due.  Apple knew it had something big and knew that it could strong-arm one of our carriers into playing business by its terms.  So committed was Apple to this approach that it was willing to go with AT&T when we all knew, and have come to see more and more, that its network sucked.

Apple begat Android and for a brief period of time, we lived in a world where capabilities and platforms and ecosystems ruled, not carriers with their focus on profits at the complete expense of user experience.  We were already seeing how much carriers hated that world.  Have you seen the crapware loaded on your phone these days, crap that can’t be removed?  Look at Skype on Verizon’s Android.  I can download Verizon’s version of Skype (and not uninstall it after that), which not only just works on 3G, it requires that you turn off WiFi (so that no other applications can access WiFi while you’re Skyping).  I’ve never understood this but I’m guessing that Verizon is scared enough of Skype as a competitor that they want to give it minimal functionality.  This also means that I can’t use WiFi for Skype internationally, even while Verizon’s CDMA technology is deployed only in a few other countries around the world.  Oh by the way, I can download Skype’s version of Skype, but that works only over WiFi.

Get used to it.  This is the world we’re going to see.  We’re likely to see a trifurcation of the app store world.  Trifurcation?  Yes, we’ll probably see app stores emerge from the carriers since they’ll each impose their own requirements for apps to be certified for their networks.  At the very least, since both networks are likely to impose data caps, each with their own byzantine pricing structures, you’ll have to download the app that’s best optimized for the network pricing model.  (You’re going to love that one, app developers.)  And trifurcation?  Well, the cable companies have already banded together to offer unified WiFi in many markets (e.g., TimeWarner and Cablevision in New York City), to better compete against mobile/telco Internet/TV incursion.  We’ll likely see an app store emerge from there, with apps that are designed around a very different model, whereby you do your high bandwidth transactions when connected to WiFi, in an online/offline synchronize model as opposed to the mobile model of perpetually available bandwidth.

This is not progress.  This is not innovation.  In fact, it will stifle innovation and inhibit the deployment of broad-based mobile applications and infrastructure.  What can we do about this?  Not much, I’m afraid.  I’d love to say “write your congressman and write to the FCC,” but I’m not so young and naïve as to believe that would help much.  What would I like to see the regulators do here?  For starters, I’d love to see them disallow the deal on anti-competitive grounds.  If you believe the scenario I outline above is possible or even likely, this clearly is a combination in restraint of trade.  If they won’t do that, at least impose these regulations on the merged entity:

  • Limitations on data caps for a period of 3-5 years.  Anyone with an unlimited plan at the time of the merger gets to keep that as long as they maintain a data contract with the carrier.
  • A prohibition on a carrier app store.
  • Limitations on the crapware installed on phones and/or the ability to remove it, at least after 90 days of phone ownership.
  • Serious notifications of potential data overage where there are data caps.  We’ve only recently gotten that protection for call overages — long overdue, and prompted by European regulators, not ours.  In data, it’s much more insidious because we don’t always know when/how much data we’re using.  There should be onerous requirements on the carriers here, such that we can effectively meter our usage.  And there should be rollover of unused data.

I wish I believed any of this would happen, but I don’t.  Instead, I think we’re about to enter a period where the ironically named Long-Term Evolution (LTE) is actually a major step backwards on the evolutionary scale.  We’ll have faster speeds…and much less ability to exploit them in interesting and game-changing fashion.  It’s a shame that AT&T, who was once broken up by the regulators, is so adept at the regulatory game that it is about to win via acquisition what it could never win the open marketplace.

Verizon to Randomly Punish Heavy Data Users

Apparently, Verizon is going to begin throttling the data speeds of the top 5% of heaviest data users.  While I am sympathetic to the need to manage capacity on their network, this approach is just wrong on so many levels.

  • Most importantly, you have no knowledge or ability to control your situation.  If they said “over 500 gigabytes will get you penalized” (and gave you tools to understand your consumption; for now, this requires third party tools), I would be somewhat sympathetic (though probably not happy).  Now, however, you only know you’re offending after the fact.
  • This also creates a situation whereby if we all start conserving data access, to avoid being in the top 5%, we’ll reduce data usage and yet the top 5% will still get penalized.
  • I think Verizon is going after the wrong party.  I’m guessing the biggest issues are with high-bandwidth consumption sources like streaming video.  Hmmm…like their Vcast video service.  So, basically they’re selling you access to video services (for which you pay a premium) and then when you actually use the service, they say you’re doing it too much and cutting your service.  I don’t pay for any Verizon premium (high bandwidth) services like their GPS solution or their video packages but if I did, I’d be screaming bloody murder.  (How much do you bet that under the covers they’re actually going to exempt their own services from counting towards bandwidth consumption?  Next to scream, then:  Netflix.)

If Verizon has a data capacity issue, here’s how I would solve it:

  • Set pre-defined limits so that we know the playing field.
  • Give us tools so that we know when we’re approaching those limits and, more importantly, what our offending apps are.  I don’t know which of my apps are bandwidth hogs under the covers.
  • Figure out how to throttle speeds selectively.  If you throttle my low-bandwidth applications, like Foursquare check-ins or text emails, I probably won’t even notice the difference.  For me, no notice.  For you in aggregate, maybe enough of a difference that you don’t have to pursue these other painful approaches.

Congratulations!  You’ve bought a smartphone.  You paid big for the phone.  You pay big for the data package.  Now go in the corner.  You actually use all of the things we sold you.  Who told you to listen to us?!



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