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| reply to fiberguy
Re: I really wish I had a few billion laying around for said by fiberguy: ... and also not possible becuase he'd be stuck with that network for many years to come while others, who are charging more, would be able to continue to upgrade their networks.. ... "buy your own phone"... People don't want to pay full price for phones, that's why they take the deals with contracts and ETFs attached now as it is. Otherwise, they'd be buying phones at full price knowing they could leave when they want. Consumers already have some of these options available to them, and they don't take them. ... if this kind of service was possible and profitable, which it really isn't for sustainable long term growth, then carriers like MetroPCS could be killing the competition. ... Having customers in contracts and ETFs for discounted phones give the large carriers a good idea for forecasting their revenue. ...Month to month carriers can't do that. I don't see a lot, factually, to disagree with there fiberguy. What I would add though is a questioning of some underlying assumptions.
1. It's not possible for a "dumb pipe" carrier to win because their established, vertical, revenue-forecasted, deep-pocketed rivals would drive them out of business by undercutting the newcomer's pricing strategy during the phase of their business when fixed costs are constantly increasing but revenues have not caught up. In other words, as technology businesses mature, the barriers to entry get higher all the time, which favors incumbents. The cost of capital is so high that it does not make sense to challenge the status quo.
So even if the dump pipes could charge a reasonable rate that allowed for R&D, expansion, and obsolescence, it really wouldn't matter because the established carriers don't have to cover startup costs that they bore when capital was cheaper.
2. Since subsidized, locked phones are the mode, there's no advantage to buying my own phone if I get no break on the monthly rate and I can only use it with one or two carriers. The easiest example of course is the iPhone. I pay $500 or $600 or whatever to own the phone outright. Now I can go to AT&T, no one else, and pay them $30 a month for data and $40 a month for a bucket of minutes. With month-to-month, I can leave any time but then I just have a $500 doorstop. Or I can pay them $70 a month and get the phone for $99. Then I just pay a big early termination fee if I want out of the contract. If I figure my costs over the first two years, I pay more by buying the phone outright.
However if I could buy any phone and take it to any carrier, I could hop around as much as it would make sense to pay setup fees to get lower rates on the services I want.
I agree that the market is divided very cleverly so that carriers cannot (yet) make a business case for doing anything but operating as they do now. In other words, they are making money and they don't want that to change.
So any disruption is likely to help consumers, and to that I say, bring on the dumb pipers. Most will fail but if they give any significant number of people an inkling of how things could be, that's more likely to happen some day.
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