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« Full Analysis of iPhone Economics - it is bad news. And then it gets worse | Main | Serious reply to CTIA Steve Largent - he's cruisin' for a bruisin' »

June 23, 2010

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Antoine RJ Wright

Hey Tomi, you how I feel about this, and I can say for a fact that you are spot on.

There's indeed a change to mobile policy that needs to be done here. And a massive amount of education. Guess it's time for a few of us with a voice here to step up.

John Thacker

" This further creates a fear overall of cellphones, meaning some won't get their first mobile subscription (gifting all their telecoms traffic to your rivals, the fixed landline carriers or worse - to Skype)."

Except that in the UK and other countries where it's "caller pays," people pay more to call cellular phones than they do to call landlines, especially internationally.

That's why, in contrast to your prediction here, I've found that many more people are driven to Skype in foreign countries than in the US.

In addition, while people pay for incoming calls, plans in the USA come with many more minutes than in other countries. If the US model is so bad, why is it Europeans and others that "turn off their phones" and run away from voice calls, preferring SMS? Sure, with the European model, everybody wants to receive calls-- but no one wants to call them (especially with a landline.)

People use SMS less in the USA-- because they use more voice minutes!

One possible reason why-- voice calls are perfectly possible to do while driving, particularly with a handsfree kit, but SMS is pretty much impossible. On the other hand, if you're on public transit, then voice calls are terribly impolite (and impractical if things get too busy) but SMS is preferred.

John Thacker

If you use mobile minutes for incoming calls, but you have twice as many minutes for the same price, then you're not really losing.

"AT&T, Verizon and T-Mobile - why don't you call Sprint out on that nonsense about 4G?"

Because they want to pretend that the initial release of LTE is 4G, when we all know that that doesn't fit the ITU requirements of 4G either. We'll have to wait for LTE Advanced for that.

Another thing-- why did US adoption of mobile phones come slower? Same reason why US adoption of broadband came slower-- because of unmetered local calls and then all-you-can-eat landline long distance. The US (and Canada) were rare in having unmetered local calls, which made dial-up ISPs cheaper compared to in Europe and so retarded the switch to broadband. In the same way, "free" unmetered long distance slowed the switch to cellular phones.

Jonathan Locker

I gotta say, living in the U.S, all of this is exactly right. I never knew how bad we had it until I stayed in Australia for a month. It was like heaven. Plans are so much more customizable to specific users needs. Thankfully, I always have used unlocked Nokias.

Steven Hoober

In answer to your question about who will step out of line first and change the model: No one. Two cases, of many, many, many (some others of which I have too much inside knowledge about and still should not post).

Sprint (then Sprint PCS) for years and years had the audacity to offer first incoming /minute/ free. For the same reason that you outline, to avoid people using it like a pager (as many had with their AMPS phones... or pagers). As far as I know (comparing experimental offers without it, industry-wide research, etc.) it worked great, plus was a differentiator from everyone else. And this started way back in the mid 1990s, when my European friends told me they were still biking to the neighbors because they were charged for local /wireline/ calls, both ways.
But... something. Maybe just perception, maybe stupid accounting, left the perception they were leaving "money on the table." Along with being odd man out (which is apparently bad) it got killed. And has never been heard from again.

Recently, I have on three separate occasions tried to get WiMax service from Clear (Clearwire). Product seems solid, meets my needs, and the price looks good. Who cares if I have to switch to something else in two years. Anyway, they are brand new, so should act that way, right? Wrong. They act like they are another 100+ year old telecom. Confusing, inconsistent, full of jargon even /I/ don't understand. Individual products aren't available "yet" in certain markets, the good price seems to evaporate with punitive-feeling $5 and $10 charges. For things like having the audacity to want to "roam" onto a "3G" (IS95/IS2000 CDMA) network.

What choice?

Fernando Guillan

Tomi, your are spot on with everything you wrote on your blog. I have lived for 3 years in the US and I stand by your words 100%. I lived in the UK for 5 years too and I lived 6 years in Belgium as well, so I do know a little about how things work in other countries when it comes to the telecommunications industry. I live in Spain now. So, yes you are damn right. But I am not surprised about americans behavior, since the vast majority of them ignore what happens in the rest of the world. I you do not look outside your window and you never leave your house, you do not know what is going on somewhere else.
And that is the problem with americans. They still think they are the best at everything, therefore they do not complain about what they are being offered by their carriers because they think it is the best deal they can get.If it is an american product from an american company therefore it has to be the best.That is called ignorance on this side of the pond.To really know if you are the best at something, you have to test yourself against others. That do not happens with the US carriers.
With regard to the "response" you have got from Steve Largent, the CEO and President of the CTIA, which I read carefully. It is totally misleading, and he is back with what he is good at. Which is other none than deceiving the american customers. I also take his commentary and all the facts that he says are backed up by well respected companies as BULLSHIT. Mr. Steve Largent is insulting my intelligence and the intelligence of many other people with his statements. Mr Steve Largent, I ask you to apologize to Tomi and to his readers for such misleading statements as soon as posible if you have a tiny bit of decency.
I you do not apologize, I hope Tomi make things right showing everybody what you are saying is nothing but BULLSHIT. I am very sorry about my manners, but Mr Steve Largent did upset me big time.

Fernando Guillan

Tomi, your are spot on with everything you wrote on your blog. I have lived for 3 years in the US and I stand by your words 100%. I lived in the UK for 5 years too and I lived 6 years in Belgium as well, so I do know a little about how things work in other countries when it comes to the telecommunications industry. I live in Spain now. So, yes you are damn right. But I am not surprised about americans behavior, since the vast majority of them ignore what happens in the rest of the world. I you do not look outside your window and you never leave your house, you do not know what is going on somewhere else.
And that is the problem with americans. They still think they are the best at everything, therefore they do not complain about what they are being offered by their carriers because they think it is the best deal they can get.If it is an american product from an american company therefore it has to be the best.That is called ignorance on this side of the pond.To really know if you are the best at something, you have to test yourself against others. That do not happens with the US carriers.
With regard to the "response" you have got from Steve Largent, the CEO and President of the CTIA, which I read carefully. It is totally misleading, and he is back with what he is good at. Which is other none than deceiving the american customers. I also take his commentary and all the facts that he says are backed up by well respected companies as BULLSHIT. Mr. Steve Largent is insulting my intelligence and the intelligence of many other people with his statements. Mr Steve Largent, I ask you to apologize to Tomi and to his readers for such misleading statements as soon as posible if you have a tiny bit of decency.
I you do not apologize, I hope Tomi make things right showing everybody what you are saying is nothing but BULLSHIT. I am very sorry about my manners, but Mr Steve Largent did upset me big time.

David Doherty

My favorite bits in Steve Largent's "What Planet are you living on":

"my statements are based on credible, third-party information and not on my opinion"...

"I could not let your unfounded and uninformed assertions go unchecked"...

Does this guy not know you are THE mobile industry stats compiler? I'd like to see him point to anyone else who shares anywhere near the same quantity/quality of stats... (99% of which you share completely freely)

"While I recognize that your post is one that is focused on generating marketing leads for your consulting business and selling some books"...

Bit of a petty dig (don't CTIA also sell a few things?) but he's definitely right about the eventual outcome. The landslide success that will be enjoyed by the smart US operator who takes your advice and goes first with 'no more roaming charges inside the USA' and/or 'no more charges for incoming SMS' will provide further testament to your ability to predict mobile industry trends... as the consultant who openly advised on what will probably prove to be the biggest growth opportunity in the 2010 US mobile industry I'd expect the publishers will be chasing you for your next best seller - which will no doubt feature a few quotes from Mr Largent's reply as evidence of the level of apathy that existed in 2010.

Tomi T Ahonen

Hi all who commented

Thank you very VERY much for the kind comments. I will return here to reply to each of you individually, as is our custom here at the Communities Dominate blog. Meanwhile, since Steve Largent of the CTIA has kindly responded in a very 'factual' response at the official CTIA blog, let me first do the formal reply to him and then will return here and chat more with you all. Meanwhile, please do keep the comments coming. I am really appreciating it!

Tomi Ahonen :-)

Paul M

when I visit USA from UK I am amazed at how backward the charging structure is for mobile phone use; here in the UK it's possible to run a phone for a dollar a month if all you want is emergency calls (voucher based pay as you go system where the credit doesn't expire), phones are cheap, operator profits are high, and the customer has a fairly clear idea of how much service costs (even including the eye-watering mobile data roaming).

Tomi T Ahonen

(will do 5 responses now)

Hi Antoine, John (twice, Jonathan and Steven

Antoine - thanks! Yeah, I had been building this rant inside of me for quite some time, and then that FCC report came out and I knew I had to write it..

John - actually, the trend in Europe has been for quite some time already that the cheapest minutes are onto other mobile phones on your own network, significantly cheaper than calls to landlines. But yeah, international calls in any country are driving Skype use from the UK to here in Hong Kong to Israel to Brazil to the USA. No difference there, and I think it has nothing to do with mobile or not, receiving party pays/calling party pays or not - its a factor of international calls being more expensive. Did you know expat and migrant workers tend to be biggest Skype users..

Om your argument 'in the USA people use SMS less because they use voice minutes more' is factually untrue. 2009 was the first year - the CTIA made big announcements about this, when the USA followed the global trend, that the total number of outbound communication attempts were now more SMS than voice calls. Even in the USA. So that argument doesn't wash. The facts are in, all countries, all consumers prefer SMS over voice and very validly the 'cell phone' is no longer primarily a 'phone'. It is now globally primarily a texting device, with voice the optional extra. In India its at the level of 30% of consumers have stopped making any outbound minutes, in the USA its at 11% of consumers have stopped placing any calls at all. Global trend.

Then on unmetered local calls - that sounds reasonable, except that the world's highest penetration mobile nation for almost a decade - Hong Kong - was exactly the same situation. Free local calls on the landline (and now one of the world's best broadband speeds, widest broadband adoption and lowest broadband fees - feeding Skype use). No, if that was true, then Hong Kong would have to linger at the bottom of the charts, not literally the world's highest penetration country for I think it was 8 years in a row. The evidence disproves your hypothesis, I am afraid. That was not the reason. The reason is as I explain in the blog.

John (second comment) - LTE - haha yeah, good point.

Jonathan - thanks! Yeah, for those who have not lived outside of the USA, or for those foreigners who have never lived in the USA, it is difficult to fathom the huge gulf between the US domestic market and all other countries. But those who do experience that, tons of expats both ways in our industry haha - the stories are vivid. Thanks!

Steven - great example yes from Sprint early on, and haha, I hear you, that is so typical today (the WiMax example)

Thank you all for writing

Tomi Ahonen :-)

sp

#80,

You used to be my hero... Not as fast as the other guy running a wide-out pattern but you could magically anticipate where the ball would be. It was like you had eyes in the back of your head. Hands of gold. I enjoyed every minute watching you impress everyone inside the Kingdome. However, today is a new day. And today I have to say that your actions disappoint me. So much so that I will not be sharing stories with my son of the incredible Largent during the Chuck Knox era.

Your comments are ridiculous. Your position is insulting. You are myopic in your thinking and explanations about benefits to consumers and businesses.

So long number 80. I believed in you.

Vezance Xocobs

@Tomi: I love all your articles. First, i used one as a reference for a blog post. now i am using this one as a reference for my college project. you have some amazing stats and info posted here and in the rest of your articles. thanks again.

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Ok, i think i will save this for thenext time I’ll have to argue with Frank (friend of mine) about it! I wasn’t wrong

Polly

I love all your articles. First, i used one as a reference for a blog post. now i am using this one as a reference for my college project. you have some amazing stats and info posted here and in the rest of your articles. thanks again.

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I was reading something else about this on another blog. Interesting. Your position on it is diametrically contradicted to what I read earlier. I am still contemplating over the opposite points of view, but I'm tipped heavily toward yours. And no matter, that's what is so great about modernized democracy and the marketplace of thoughts on-line.

Global Online Shopping

Global Online ShoppingOm your argument 'in the USA people use SMS less because they use voice minutes more' is factually untrue. 2009 was the first year - the CTIA made big announcements about this, when the USA followed the global trend, that the total number of outbound communication attempts were now more SMS than voice calls. Even in the USA. So that argument doesn't wash. The facts are in, all countries, all consumers prefer SMS over voice and very validly the 'cell phone' is no longer primarily a 'phone'. It is now globally primarily a texting device, with voice the optional extra. In India its at the level of 30% of consumers have stopped making any outbound minutes, in the USA its at 11% of consumers have stopped placing any calls at all. Global trend.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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