by Asif Khan
I love T-Mobile. For years, they have been my MOST favorite wireless carrier. Besides being the least expensive and having a great pre-paid plan, they were the only US carrier to deploy a feature called GSM UMA which allows you to make calls over WiFi when no GSM reception was available. If you live in a hilly area like I do with spotty cell reception or if you travel overseas and need to make calls in a pinch, UMA rocks!
So, as you can imagine, I was devastated last year when I learned that my LEAST favorite wireless carrier, AT&T, launched a hostile takeover bid for T-Mobile. One of the rumors was that AT&T was going to kill UMA because it threatened AT&T’s ability to charge its customers ridiculous overseas usage rates.
Monopoly Bad. Duopoly Good?
Thankfully, the FCC killed the deal and forced AT&T to give T-Mo some wireless spectrum and a $4B breakup fee. T-Mobile is now using this cash and spectrum infusion to build up its 4G LTE network and compete on its own. Rumor has it they will bypass the existing LTE technologies and introduce LTE Advanced in 2013, at least a year before any of its competitors. LTE Advanced promises to be twice as fast as 4G LTE. #fingerscrossed
AT&T and Verizon are the dominant wireless carriers in the US. Like Coke and Pepsi or Republicans and Democrats, AT&T and Verizon enjoy a comfortable duopoly position. They provide the illusion of choice while collusively suppressing any real innovation that will disrupt their revenue streams and preventing ankle-biters like T-Mo, Sprint and MVNOs from taking too many of their profitable customers away.
There’s A Better Way
In January, I wrote a post titled 2013 Must-Have Device: Smartphone? Tablet? Or Both? I pointed to the incongruity of smartphone pricing vs tablet pricing and the pricing of voice+data plans vs data-only plans. To outsmart the status quo, I recommended a cheap prepaid phone for voice calls and a 7 in tablet with a month-to-month data plan as your primary smart device. You’ll save money and you’ll quickly realize that a 7in tablet is better than a smartphone for most tasks.
The Apple iPhone was born only six years ago yet it now accounts for more than half of Apple’s revenues and more than 2/3 of its profits. If the iPhone were spun off as a separate business, “iPhone Inc” would have more revenues and profits than ALL of Microsoft!
Now, thanks to Google’s massive Android proliferation, smartphones are quickly becoming a commodity. Yet, most of us don’t realize (or care) how much we’re actually still paying for that smartphone. When we pay $199 down and $100/mo on a two year contract for that new iPhone5 or Samsung Galaxy4, it sounds reasonable but we just agreed to pay $2,600 to AT&T or Verizon. And at least $600 of that goes to Apple or Samsung as mostly profit.
NEXT PAGE: T-Mobile Becomes the Uncarrier