Technology

Let My Cell Phone Go!

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I don't know what the WSJ's Walt Mossberg's singing voice is like, but in today's paper, he does his best Moses impression with an impassioned plea for government and phone companies to let our cell phones go.

A shortsighted and often just plain stupid federal government has allowed itself to be bullied and fooled by a handful of big wireless phone operators for decades now. And the result has been a mobile phone system that is the direct opposite of the PC model. It severely limits consumer choice, stifles innovation, crushes entrepreneurship, and has made the U.S. the laughingstock of the mobile-technology world, just as the cellphone is morphing into a powerful hand-held computer.

Why, he asks, don't wireless carriers function like Internet providers–connecting any PC, running any software, to their service? Then, for good measure, he paints everyone involved with a Red brush.

That's why I refer to the big cellphone carriers as the "Soviet ministries." Like the old bureaucracies of communism, they sit athwart the market, breaking the link between the producers of goods and services and the people who use them.

To some extent, they try to replace the market system, and, like the real Soviet ministries, they are a lousy substitute.

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  1. I set the over/under on how these restrictions are evidence of the free market at work at 10.5 (not counting this one). I’m taking the under

  2. I heard that over in the UK that even homeless people would have cell phones thanks to the lack of goverment regulation of the telecommunication industry

  3. Of course it’s not an example of free markets at work, Mo.

    It’s an example of how letting big business get its way does not lead to free markets.

  4. To some extent they kind of are, if you don’t count all the interference of the FCC. Part of that is actually a result of the fact that the various cell phone providers were able, in this country, to choose their own wireless protocols. So you’ve got a situation where, especially by 2005, there was a real mishmash of wireless technologies among the main companies. Sprint and Verizon were on fairly similar versions of CDMA, Nextel was on IDEN, and T-Mobile, Cingular, and AT&T were on GSM. So you did have to worry about whether your phone would connect to your service providers’ network. Phone companies only sold approved phones so that they’d know their customer’s phones would work.

    Now, with the GSM providers (now just AT&T and T-Mobile) you should theoretically be able to buy any GSM phone and just get a sim card from your operator. But has anyone ever just gotten a sim card from a US GSM operator?

  5. Mossberg decrys the phone companies and their relationship with the government–and then he wants the government to interfere to “fix” it. I don’t think he learns very quickly.

  6. God help us if the government gets to decide which wireless technology we’ll use because it’s the “best” one.

  7. God help us if the government gets to decide which wireless technology we’ll use because it’s the “best” one.

    There are other ways.

    http://en.wikipedia.org/wiki/Bell_System_divestiture

  8. letting big business get its way does not lead to free markets

    That’s kind of the definition of a free market. “Free” doesn’t mean all private endeavors will please all the people all the time, however. If you want that kind of perfection, you’ll have to wait till you’re in your imaginary heaven.

  9. I vaguely remember buying a mobile phone while I was living in Scotland during college. Over there, every mobile company uses GSM, which makes the equipment more compatible.

    However, they still have locked phones.

    If you want a cheap/free phone with your service, you get a locked one, and usually, a contract. If you want to spend a lot more money, you can buy the phone unlocked and pay full-price (with maybe a small charge for the SIM card).

  10. Ed, I think you missed the boat on that one. The commenter was probably referring to government regulations that aid big business in creating and maintaining monopolies…

  11. government regulations that aid big business in creating and maintaining monopolies

    OK, I’ll put it this way: letting businesses operate without government interference is the definition of a free market. When businesses successfully lobby for beneficial (to them) regulations that thwart competition, that’s not free enterprise. But it is the predictable byproduct of a mixed economy.

  12. You’re paying less than wholesale for your cell phone. You get this steep discount because you sign long term contract with the service provider.

    This was attempted with PCs — you could get a low-cost or free PC if you signed up with certain ISPs. That business model failed.

    The real question is why the general population (and even savy users) accept the one business model for phones (discounted equipment with service contract) versus another model with PCs (full-priced equipment with portability).

    My guess is that the cell phone business model (remember the early bricks) got established before there was widespread adoption of PCs for personal use.

  13. lunchstealer:

    But has anyone ever just gotten a sim card from a US GSM operator?

    I don’t know about the case of regular monthly plans, but you can purchase a SIM card with prepaid minutes from T-mobile, which should work in any unlocked GSM phone. It’s a great option for traveling to the US and avoiding international roaming fees.

  14. It’s an example of how letting big business get its way does not lead to free markets.

    I would say its an example of how the regulatory state will be captured by big business, thus thwarting free markets.

    IOW, what ed said.

  15. carrick –

    I’m pretty sure its because when you buy a cell phone, you can’t use it unless you sign up with a phone company. You’d be stupid not to take the really cheap cell phone with your contract rather than pay full price.

    With a PC, however, you don’t need internet access. Even if you do consider an ISP a necessity, the free computers were of low quality and displayed advertising on your screen at all times.

    If the discounted cell phones required you to listen to advertising before or during each call, you’d have a more similar situation.

  16. carrick,

    One needs, at most, about a week’s worth of courses to build a computer from interchangeable parts…

    One needs a degree in electrical engineering to build a cellphone from relatively specific parts…

  17. What’s the calling people commies equivalent of Godwin’s law?

  18. What’s the calling people commies equivalent of Godwin’s law?

    Political gold!

  19. “The real question is….”

    Other than prepaid, is there another business model?

  20. The best defense against big businesses getting their way is the free market.

  21. The real question is why the general population (and even savy users) accept the one business model for phones (discounted equipment with service contract) versus another model with PCs (full-priced equipment with portability).

    The difference is which party has market power. In PCs, Microsoft has marketing power, so the people who negotiate and sign contracts with Microsoft do choose to deal exclusively with Microsoft, and don’t deal with other OS makers. This is not absolutely true, but it is overwhelmingly true. These people who negoiate (pretty much exclusively) with Microsoft are call hardware makers (OEMs) and hardware sellers (eg, DELL, HP Compaq).

    In cell phones, the companies with market power are the ones that control the telephone networks. They do deal directly with the general public. They do not use hardware sellers as an intermediary, the way Microsoft does. However, like Microsoft, they effectively require exclusivity with the customers they do negotiate with, who just happen to be the end users.

  22. It’s apples and oranges. When the Internet started you just plugged your computer into the already existing telephone line. Everybody had a phone line. So you could have ten competing ISP’s in your area if you wanted to change you just dialed a different phone number. When cell phones started they required expensive and time consuming cell towers to be built. To get their money back the companies locked their customers into their own service.

  23. I would say its an example of how the regulatory state will be captured by big business, thus thwarting free markets.

    I like this way of putting it.

    Some people think the answer to this conundrum is to get rid of the regulatory state, but my guess is that big business would creat a regulatory state faster than we could ever get rid of it. Besides, in the US, you would have to repeal the Commerce Clause, which would be tough.

    To some extent the only anser is to admit that bigness is badness and to thwart the bigness. Which, as I pointed out above, is what we did last time the phone company got too big. And it worked!

  24. Which, as I pointed out above, is what we did last time the phone company got too big. And it worked!

    Hooray! Victory for us, the people!!

  25. Dave, maybe the reason the phone company was “too big” by the seventies the fact that the government had given them a monopoly. The fifty years of exclusionary privilege was remarkably effective at preventing any kind of competition starting up.

    Incidentally, the reason for the monopoly was some guy (whose name escapes me and I haven’t the time to google for it) who went across the country on behalf of Bell and Edison convincing politicians that “public utilities” like telphone and electricity were “natural monopolies” that need to be regulated.

    Yep, that regulation was a real “power to the people” deal, wasn’t it?

  26. Yep, that regulation was a real “power to the people” deal, wasn’t it?

    Yeah, pretty much. I have an easier time imagining the development of telephone and electrical service going worse than it did 1880-1960 than I do imagining it going better than it did.

    I imagine that if it had been private there would have been a lot more strategic leveraging by large landowners, and that that would have cause less efficient provision of services.

  27. Some people think the answer to this conundrum is to get rid of the regulatory state, but my guess is that big business would creat a regulatory state faster than we could ever get rid of it.

    Back when people actually believed the Constitution meant what it said, we managed to have big business without a regulatory state, because the regulatory state is unconstitutional.

  28. Back when people actually believed the Constitution meant what it said, we managed to have big business without a regulatory state, because the regulatory state is unconstitutional.

    Look, I agree that it is unconstitutional to use the Commerce Clause to regulate things that are not interstate commerce.

    I would even concede that it is not always wise for Congress to use the power it has to regulate all aspects of interstate commerce.

    But, it is Constitutional for Congress to regulate interstate commerce, and in this sense, the regulatory state is constitutional.

    I even think that EMTALA is constitutional, although I can see how a reasonable person would think the commerce involved there is not sufficiently interstate.

  29. That’s why I refer to the big cellphone carriers as the “Soviet ministries.”

    They’re also good at turning over personal information to the DHS.

  30. Now, with the GSM providers (now just AT&T and T-Mobile) you should theoretically be able to buy any GSM phone and just get a sim card from your operator. But has anyone ever just gotten a sim card from a US GSM operator?

    Oh, sure — you can switch SIM cards between Cingular/AT&T phones without a problem. And they roam fine onto European networks. If you get your phone unlocked, you can pop in a European SIM. We haven’t done that, though, because we want people to be able to call us on our U.S. number.

  31. I’ve opted to skip cell technology altogether and wait for the Next Thing. People say, “But Ed, how can you live without a cell phone?” I answer, “The same way I can live without a vagina.” It’s easy. Being unreachable has its rewards. So does not having to buy tampons. The end.

  32. I’ve opted to skip cell technology altogether and wait for the Next Thing. People say, “But Ed, how can you live without a cell phone?” I answer, “The same way I can live without a vagina.” It’s easy. Being unreachable has its rewards. So does not having to buy tampons. The end.

    Thank Odin the All Father! I thought I was the last holdout. I perceive cell phones as technical bottled water. Marketing triumphing over value. Hell, I didn’t get an answering machine until 1993. I’ve got one now, leave a message. If I don’t call back, take a hint. I am not so important that I need to be reached 24/7. Most of the world isn’t either. I’m not a luddite, I just don’t see the value.

  33. I’m not a luddite, I just don’t see the value.

    You’re kidding right? You don’t see the value of being able to call for help when your car breaks down? Or calling to find out if you left the folder on the table? Or a thousand other things you might want to know and you could find out a the touch of a button with a cell phone but would be inconvenient to impossible without one? Your imagination needs exercise.

    I understand not wanting to be reachable by other people. So don’t answer, or turn it to silent and you won’t even know. Technology baby, here to serve you.

  34. Warren, I lead a simple life. I’m single, childless and retired. The car thing, maybe. But I do maintenance. I’m guessing a cell phone contract is what?, $20 a month, minimum? To use 5 times a year? They are unreliable in the country, and in the city a pay phone is generally close by. There’s supposed to be a libertarian disclaimer in here somewhere, to each there own and all that. I love TIVO, digital satellite TV and radio, the inter-tubes yes. Cell phones, not so much.

    Full disclosure, I’ve ALWAYS disliked talking on the phone. No, I’m not going to get counseling for it.

  35. I thought I was the last holdout.

    Nope. There are two of us. There’s something to be said for solitude, for quiet time, for the freedom of being out of the reach of your boss and wife (the same thing?). Not to mention the satisfaction of not adding to that sociological scourge–the idiotic, intrusive ringtone. I’m no technophobe, but forcing others to listen to your crappy taste in music in 4-second loops is narcissistic at its best and sociopathic at its worst. Keep it to yourselves, retards.

  36. I thought I was the last holdout.

    I held out until this year, when the owner of the barn where I board my horse got rid of the landline to the barn. I gave in and got a cell phone for emergencies – on a $10/month prepaid plan. I had to use it last week.

    OTOH, there is a lot to be said for the virtue of being unreachable, so it is usually turned off.

  37. I acknowledge the utility of a cheapo emergency device at $10 a month. Why not? Stick it in the glovebox with the flashlight and condoms and hope for the best.

  38. And here’s the argument for the system we have now. Which I find more convincing.

    How the ‘walled garden’ promotes innovation

  39. Yep. “Walled gardens” work for a while, but sooner or later the raccoons are going to get in. I have nothing against walls so long as it isn’t the state that is building them.

  40. “‘Walled gardens’ work for a while, but sooner or later the raccoons are going to get in.”

    I hear Apple is working on a new product for that problem. It’s called iTrap.

  41. Stick it in the glovebox with the flashlight and condoms and hope for the best.

    I AM hoping for the best.

    That’s why I have the condoms in the glove box.

    ;))))

  42. Many of you seem to forget that the US mobile phone market DID used to feature interchangeable phones and carriers. It was way back in the stone ages when everything was AMPS and your carrier was small and regional.

    The current business model beat out the old one because people wanted phones, but didn’t want to shell out $300 or more for one. Carriers found they could offer subsidized phones and recoup the costs via the monthly service (thus the contracts). The cost of entry was low enough to encourage more people to sign up, while keeping monthly service costs reasonable. This trend intensified as phones went digital and kept improving. People wanted new phones to keep up with the latest offerings, and the subsidized phone business plan made it easy to do.

    I don’t see how anyone could reasonably construe this as a market failure.

  43. “Then, for good measure, he paints everyone involved with a Red brush. ”

    It is almost as bad as calling individuals opposed to the breaking of immigration law racists and xenophobes. It’s a good thing Reason never does such a thing. Oh wait…

  44. Can’t let the troll have the last word.

  45. But, it is Constitutional for Congress to regulate interstate commerce, and in this sense, the regulatory state is constitutional.

    Just so. But “interstate commerce” doesn’t mean “everything that crosses, or could cross, state lines.” If this was so, why was an amendment required to institute Prohibition?

    Regulation of interstate commerce was intended to be regulation of the means and methods of interstate commerce, not its content.

  46. Had a prepaid for a while, but I really wasn’t using it–I got more wrong number calls than calls intended for me. So I let the time lapse on it. Eventually, I suppose, I’ll have to get another one, but I’ll wait a while longer.
    I have noticed that poor people/drug addicts tend to be big on cell phones.

  47. Hey, at least we don’t have the Japanese cell phone plan system.

    I paid ~$30 a month over there for 60 minutes of talk time a month. Texting was virtually unlimited. It’s probably a cultural thing.

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