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posted by mattie_p on Friday February 21 2014, @01:36AM   Printer-friendly
from the but-think-of-the-stockholders dept.

siliconwafer writes:

"Competition among wireless providers could hurt profits in the wireless industry, according to a report by Reuters. T-Mobile's aggressive price structure, abandonment of contracts, and termination-fee payments have put downward pressure on mobile costs for consumers, and Wall Street analysts are forecasting a reduction in profits in the wireless sector as a result. AT&T in particular is showing signs of stress. While this may be bad news for the wireless industry, it's good news for consumers."

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  • (Score: 5, Interesting) by Fluffeh on Friday February 21 2014, @01:47AM

    by Fluffeh (954) Subscriber Badge on Friday February 21 2014, @01:47AM (#3966) Journal

    I always find it hilarious when I read things like this. T-Mobile goes in all guns blazing, makes great offers for customers (compared to the rest) and yet when it comes to a report outlining who will hurt the most, it is the old guard.

    Could it be that AT&T simply isn't being run/managed as well? Surely given this they should be the ones reaping the highest profit margins? Perhaps it is high time that their shareholders demanded more accountability and required the company to perform better?

    • (Score: 4, Informative) by joekiser on Friday February 21 2014, @02:12AM

      by joekiser (1837) on Friday February 21 2014, @02:12AM (#3987)

      The truth is, T-Mobile USA isn't doing as well as the other major carriers, so they *must* come out with all guns blazing. They have had acquisition offers twice in three years, and even with all of the "uncarrier" business that their CEO likes to speak, he has gone on the record as saying that a merger between Sprint and T-Mobile (which would reduce competition) is good for consumers. Their backs are against the wall. And I say this as a longtime T-Mobile customer, who has been retweeted and "favorited" by John Legere a few times on Twitter.

      T-Mobile itself has seen its share of bad press the past few days as well. The BlackBerry "switch to iPhone" debacle on the surface seemed like an attempt to move customers from a dying brand, but on deeper inspection revealed that T-Mobile is having trouble moving iPhones. T-Mobile took a huge gamble by going all in on the iPhone, and now they are struggling to make the sales they predicted. If they do not meet the sales promised to Apple, they stand to pay a penalty of a few billion dollars. How coincidental that the only other company that went full derp mode on the iPhone, Sprint, is now the company that they may have to merge with.

      But back to the main point, yeah, on the MVNO front, there is a lot of great competition out there.

      --
      Debt is the currency of slaves.
      • (Score: 1) by SMI on Saturday February 22 2014, @07:36AM

        by SMI (333) on Saturday February 22 2014, @07:36AM (#4728)

        Glad to see someone bringing up MVNOs! I personally use PlatinumTel [ptel.com] which is an MVNO for T-Mobile, used to use PagePlus [pagepluscellular.com] (Verizon). Why anyone would pay more to get less and be tied to a contract is beyond me.

      • (Score: 1) by thoughtlover on Tuesday February 25 2014, @10:04PM

        by thoughtlover (3247) on Tuesday February 25 2014, @10:04PM (#6967) Journal

        But back to the main point, yeah, on the MVNO front, there is a lot of great competition out there.

        I agree that many of the carriers' woes are from leasing out their lines while the MVNOs make out like bandits --offering sub-par connectivity for one-half to one-third the price of the Big-3's options, and all without a contract --no, I don't consider Sprint a competitor in the market, anymore.

        How many poor people can get a cellphone contract via AT&T/T-Mo/Verizon that have no or bad credit? None. But they can get one (with ridiculous reconnection fees for late payment) for next-to-nothing via Cricket or StraightTalk (which is Wal-mart, IIRC). You can even get a nicer, used smartphone on Craigslist and plug a StraighTalk SIM in it for less than $50/mo for 'unlimited' talk, SMS, and data --MMS requires a jailbreak to point to the proper proxy; yet another way they keep down their overall network usage.

        It's the MVNOs aggressive pricing models, combined by taking the homeless masses that wanted a cellphone and internet connection (often the only way for poorer segments of the population to do so) that threatened to undermine the profitability of the Big-3.

        New 'a la carte' models that are completely flexible, like Ting, can provide more angst for those old giants... giants, of whom, are destined to fall because of not adapting fast enough to changing tech.

    • (Score: 3, Insightful) by hash14 on Friday February 21 2014, @02:59AM

      by hash14 (1102) on Friday February 21 2014, @02:59AM (#4023)

      But the thing is, "performing better" to the stock owners means, "how much money am I going to get?" And not how much over the next 2 years, it means only within the next quarter, because they don't have the maturity to make a reasonable, long-term investment based on producing a legitimate product.

      So instead of working on actual engineering improvements, they instead come up with these bullshit MBA schemes [arstechnica.com] like, "let's make content providers pay for data too! (because we should just be allowed to collect money for free without doing any real work)."

  • (Score: 2, Insightful) by Appalbarry on Friday February 21 2014, @02:01AM

    by Appalbarry (66) on Friday February 21 2014, @02:01AM (#3975) Journal

    (The sound of millions of Canadians who've heard that line over and over and know that the only winners EVER are the wireless companies.)

    "While this may be bad news for the wireless industry, it's good news for consumers."

    • (Score: 1) by T0T4L_L43R on Friday February 21 2014, @04:14AM

      by T0T4L_L43R (2169) on Friday February 21 2014, @04:14AM (#4067)

      What is this "competition" thing, of which you americans speak?

      • (Score: 1) by GeminiDomino on Friday February 21 2014, @06:08AM

        by GeminiDomino (661) on Friday February 21 2014, @06:08AM (#4117)

        I think it has something to do with Unicorns.

        --
        "We've been attacked by the intelligent, educated segment of our culture"
  • (Score: 3, Insightful) by The Mighty Buzzard on Friday February 21 2014, @02:08AM

    by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Friday February 21 2014, @02:08AM (#3984) Homepage Journal

    Okay, so there is slightly greater than zero competition now. Let's throw a party. Woo fucking hoo.

    Tell you what, give me a call when all four of them are all but cutting their own throats to get your business. As it stands now they're tossing you table scraps.

    --
    My rights don't end where your fear begins.
    • (Score: 1) by JeanCroix on Friday February 21 2014, @02:40PM

      by JeanCroix (573) on Friday February 21 2014, @02:40PM (#4322)
      Exactly. If they're not scared to lose my business yet, I'm a consumer, not a customer. The balance of power in the transaction is still out of whack.
  • (Score: 4, Interesting) by Bob9113 on Friday February 21 2014, @02:16AM

    by Bob9113 (1967) on Friday February 21 2014, @02:16AM (#3992)

    While this may be bad news for the wireless industry, it's good news for consumers.

    Actually, it's only bad for the wireless industry in the short run. Ever since Wealth of Nations [wikipedia.org] it has been pretty well accepted in Western economic theory that competition improves the competitors as well as the consumers and the broader economy in the long run. So it may be bad news for the short-holding equity traders and the exit-strategy VPs, but AT&T, Verizon, and the United States will be stronger twenty years from now.

    • (Score: 3, Insightful) by spiritfiend on Friday February 21 2014, @03:51AM

      by spiritfiend (964) on Friday February 21 2014, @03:51AM (#4058)

      When profits are so high, it's a sign that the market is broken. I don't think that wireless carriers fall into the category of a free market because the barriers to entry are high. There is only so much wireless bandwidth available, and it is all owned by a few players. They collude as much as they compete. Why is it that when one company instituted data caps, the other big players did also?

      • (Score: 2, Informative) by evilviper on Friday February 21 2014, @12:24PM

        by evilviper (1760) on Friday February 21 2014, @12:24PM (#4261) Homepage Journal

        The data caps came along when 3g and iPhone arrived. That unlimited data plan sounded like a GREAT idea when it was half as fast as dial-up on 2G, and only used as much bandwidth as a phone call. When users could suddenly use 50 times as much data and smartphones came along making them WANT to do data-intensive things with their phones, the UNLIMITED model simply blew up in their faces.

        That's not to say they aren't completely gouging their customers on data usage rates, but there is a mundane explanation for the behavior and the timing.

        --
        Hydrogen cyanide is a delicious and necessary part of the human diet.
        • (Score: 2, Insightful) by spiritfiend on Friday February 21 2014, @02:07PM

          by spiritfiend (964) on Friday February 21 2014, @02:07PM (#4295)

          I remember differently. My first android phone, Moto OG Droid, came out in 2009 at least a full year after the iPhone 3G. I had an unlimited data plan on that phone for at least 2 years. You could say that the data caps were put in place for 4G, but in truth a monthly cap that could be reached within minutes made the speed boost worthless. It seems disingenuous to build up this new network if it were not functional. If it were only one company instituting the caps, they would be at a competitive disadvantage.

      • (Score: 1) by Bob9113 on Saturday February 22 2014, @06:30AM

        by Bob9113 (1967) on Saturday February 22 2014, @06:30AM (#4709)

        I don't think that wireless carriers fall into the category of a free market because the barriers to entry are high. There is only so much wireless bandwidth available, and it is all owned by a few players.

        Very agreed, and well put. T-Mobile only moved them from minimal effective competition to limited effective competition. Every little bit helps, and more would be better for everyone.

  • (Score: 5, Insightful) by jim302 on Friday February 21 2014, @02:18AM

    by jim302 (582) on Friday February 21 2014, @02:18AM (#3994)

    T-Mobile has always been cheaper than Verizon and AT&T. All T-Mobile did with their latest moves was remove the service contract and the cost of the phone from their monthly service rates, so people who buy phones from third party sources (used or new) or people who hang on to their phones for longer than 2 years don't get screwed. Those who don't want to pay upfront for a high end smartphone can make monthly installment payments, and when they are done paying off the device, their bill goes down (unlike Verizon, Sprint, and AT&T on a 2 year contract). Unlimited data is nice too, but I don't think it is the biggest factor in T-Mobile's recent success.

    I'm glad to see AT&T react to this by finally giving customers who bring their own device a discount. They are still a lot more expensive than T-Mobile, but they do have a bigger network... especially with HSPA+ and LTE coverage. Hopefully Verizon and Sprint will follow, but they have to get rid VoLTE working and learn how to deal with open devices... and the the Nexus 7 certification BS with Verizon shows that they still have a lot to learn.

    • (Score: 1) by SrLnclt on Friday February 21 2014, @03:08PM

      by SrLnclt (1473) on Friday February 21 2014, @03:08PM (#4348)
      This is exactly why I switched to T-Mobile a few months back. Between 2002 and 2012 I had a whopping 3 cell phones. This may have been my stupidity to not get a shinny new phone every 24 months, but for me the new contract wasn't worth throwing out a working phone.

      Not having to pay the subsidized rate forever is a good thing for people like me, especially with smartphones becoming a mature technology. How many must-have features will be in the next generation of phones that are part of the hardware (so you can't get them with the old version via an OS upgrade or by installing a new app)? I believe smartphone hardware is beginning to plateau similar to when people stopped replacing their PCs and laptops as frequently because the old ones still worked "good enough".
  • (Score: 4, Interesting) by TheloniousToady on Friday February 21 2014, @02:21AM

    by TheloniousToady (820) on Friday February 21 2014, @02:21AM (#3996)
    More competition is good for consumers but it's bad news for some in the wireless industry. I've long held the theory that we will end up with three cell service providers in the US. There seems to be too much competition in the cell business at the moment - though consumers may not see it that way. T-Mobile and Sprint obviously are the weak players, so I predict that one of the two will disappear at some point.

    For example, Sprint's financials [yahoo.com] are terrible, so they're probably headed for merger and/or bankruptcy. T-Mobile's financials aren't available, but they're probably not much better. And even the mighty Verizon and AT&T are the two leading (trailing?) Dogs of the Dow [dogsofthedow.com].

    When a weak player like T-Mobile makes a grab for market share like this, they're playing a dangerous game of chicken. The big boys can ride it out, but it may ultimately lead to T-Mobile's own demise.

    • (Score: 2, Interesting) by unimatrix on Friday February 21 2014, @02:56AM

      by unimatrix (1983) on Friday February 21 2014, @02:56AM (#4021)

      Doesn't seem as though it has done so in Europe. When I lived in Germany 10 years ago I bought my phone and paid for the plan each month. Now my Wife and I are considering going to T-mobile since we have separate plans right now. Given the savings we'll get each month, the phones will pay for themselves in a year. So if we keep them for 2 or more we're money ahead vs. what we're paying now.

    • (Score: 5, Insightful) by WildWombat on Friday February 21 2014, @03:03AM

      by WildWombat (1428) on Friday February 21 2014, @03:03AM (#4026)

      Sprints dismal financials not withstanding I don't think that there is too much competition in the US cell market. If there were more competition we wouldn't have some of the highest prices for service in the world. These high prices don't result in great service either; pretty much everyone here hates their carrier. The high rates and poor service we receive are more indicative of a market largely lacking in competition rather that one suffering from an over abundance of it.

      A couple of links about US cell phone prices vs. the rest of the world:

      http://www.androidcentral.com/us-mobile-data-price s-among-most-expensive-world [androidcentral.com]
      http://news.cnet.com/8301-1035_3-10307726-94.html [cnet.com]

      Those arguing for a free market often site the Adam Smith's 'invisible hand' and how competition results in greater gains for society. This is often used as a reason to forgo regulation of a market. Rarely mentioned, however, are the conditions Smith listed under which this actually happens. Things like there had to be at least seven competitors. Or that the largest couldn't be more than the second largest because it would then gain to much pricing power. We don't see anything like that type of situation in the US. Four players in a market with a ridiculously high barrier to entry doesn't make for a competitive market place at all.

      I certainly hope that the government doesn't allow any more consolidation. Say Sprints finances continue to deteriorate to the point where they are facing bankruptcy. I would rather let them go bankrupt and then have some other company buy their assets and enter the market than allow them to merge with one of the already to large players we already have.

      Cheers,
      -WW

      • (Score: 3, Informative) by No Respect on Friday February 21 2014, @06:57AM

        by No Respect (991) on Friday February 21 2014, @06:57AM (#4136)

        AT&T is unloading all their POTS copper landline systems. Oregon, Connecticut, coast-to-coast basically. The reason? It's not that the landline business is not profitable, it's that they can make MO MONEY on wireless. And not just wireless, 4G and LTE, mind you, the gravy comes from overage charges for data use. Their publicly stated projections for revenue growth are predicated on gouging their customers.

  • (Score: 1) by GungnirSniper on Friday February 21 2014, @02:26AM

    by GungnirSniper (1671) on Friday February 21 2014, @02:26AM (#4000) Journal

    Film at 11.

    Prices generally fall as an industry matures. PCs used to cost thousands of dollars, ISPs used to charge by the hour, and unless there is significant regulatory hurdles, wireless providers will see a similar commoditization as well.

    • (Score: 2, Insightful) by hash14 on Friday February 21 2014, @03:10AM

      by hash14 (1102) on Friday February 21 2014, @03:10AM (#4029)

      But it hasn't been working that way in the communications industries. Yes, the price of physical goods have been going down (phones are becoming cheaper or more powerful, as are computers and other hardware equipment), but the prices of the services almost never fall. Cable TV prices never go down. ISPs never upgrade their infrastructure, they just raise the price on existing speeds, and institute stupid services which bundle TV and phone or antivirus, or best of all, data caps. Wireless phone service hasn't really been moving anywhere in the US either as far as I can tell. Though I would certainly admit I'm wrong if someone can present numbers demonstrating otherwise.

      • (Score: 1) by jonh on Friday February 21 2014, @04:18AM

        by jonh (733) on Friday February 21 2014, @04:18AM (#4070) Homepage

        Competition is a lot stronger with hardware and physical goods than with communication services. For a new company to start selling new hardware, it's "just" a case of paying for the design, manufacture and distribution of said goods, and there's lots of incentive to lower your margins or pass efficiencies on to the consumer as a means of underselling your competitors. To enter the communciations market -- well, assuming you even could get permission to build out the infrastructure required, it's going to be expensive, and you'd need to get access to some reasonable percentage of the population before your new network is seen as attractive to consumers.
        Simply put, your ISP or cable company is a lot less worried about some upstart appearing out of nowhere and taking their customers away, so their primary concern is retaining the customers they currently have.

  • (Score: 2, Insightful) by pk on Friday February 21 2014, @02:41AM

    by pk (2591) on Friday February 21 2014, @02:41AM (#4012) Homepage
    So the wireless companies are competing more than ever, and they are just filling the airwaves with advertisements, and they're all over the television. But the Sprint ads really irritate me.

    If they spent all this money on infrastructure instead of shitty, stupid advertisements... maybe I'd be able to have comparable coverage and speeds as Verizon and AT&T users. Until then, whenever I go on travel, I usually roam, have no signal in town, or have full signal in the absolute middle of nowhere.

    They're going to lose a customer this year if they don't start rolling out the 4G they've been promising forever.

    • (Score: 1) by BradTheGeek on Friday February 21 2014, @01:30PM

      by BradTheGeek (450) on Friday February 21 2014, @01:30PM (#4276)

      I wish this weren't true. I do not subscribe to sprint, but I use them through an MVNO (Ting in my case). From what I understand, total user count on Sprint is very high because of all the MVNO's that use their network, however the network sucks. Calls are normally fine, but in my area and many others there are big signal gaps, very little 4g LTE, and where I live in a 3g area, there are would I would consider bandwidth issues in busy areas. For example at a major event, when there are lots of people using the tower in one small area, 3g is slow to nonusable, and even calls will start to drop on not connect. I have even seen this start to happen on summer days downtown under 'normal' load conditions, with only slightly more than the average number of people about.

      Personally I really love Ting, their customer service and pricing model are great. I just wish they were riding another network.

  • (Score: 5, Insightful) by dry on Friday February 21 2014, @02:47AM

    by dry (223) on Friday February 21 2014, @02:47AM (#4017) Journal

    Why the hell do most industries, especially the ones with high barriers to entry, think that they deserve record profits every quarter? Why not just be happy having a decent return on investment?

    • (Score: 0, Redundant) by Appalbarry on Friday February 21 2014, @03:45AM

      by Appalbarry (66) on Friday February 21 2014, @03:45AM (#4052) Journal

      Damn - never mod points when I need them. This is something I've said many, many times - why are some industries guaranteed a big profit while other have to just compete without help? And what ever happened to making a reasonable profit instead of squeezing every last penny out of your customers?