Consumer Choice, Meet the Wireless ‘Confusopoly’
Samsung’s Galaxy Tab – the first major Android tablet to compete with the Apple iPad – has emerged. Unlike Apple’s devices, Samsung is offering the Galaxy Tab through a range of carriers, including the Big Four: AT&T, Verizon Wireless, Sprint, and T-Mobile. Although reviews of the device itself have been overwhelmingly positive, it’s already becoming apparent that the major wireless carrier partners are going to do everything they can to hold the device back.
AT&T inexplicably charges $50 more for the same device as any other carrier, perhaps to avoid undercutting the Apple iPad, which retails for $20 less when equipped with AT&T’s 3G network. Meanwhile, Verizon Wireless saddles the device and accompanying broadband service with a startling number of hidden fees, including a $35 “reconnect” fee if you suspend your data service and later wish to resume it (so much for “no contract” service offerings). At least the company is forthcoming enough to include an estimated first month’s bill when purchasing the device – but there’s still a lot of sticker shock with that estimate.
In a hypothetical competitive environment, consumers prefer and choose providers who offer the best services at the lowest prices – consumer choice encourages and rewards good corporate behavior. The Galaxy Tab is technically available with a range of wireless carriers, and maybe, over time, consumer choice will drive competition and better behavior – but right now, there aren't any signs of it. Thus far, all I’m seeing is more of the same outrageous prices and hidden fees. And I’m not surprised; consumer choice isn’t very effective in an environment that lacks standardization, transparency and interoperability.
Without rules to enforce meaningful and standardized transparency and billing practices, and with consumer choice limited by termination fees and restrictions on devices and other factors, the mobile wireless industry operates as a “confusopoly”that prevents the emergence of price competition, preserving profit margins for all participants but reducing incentives for investment and driving up the bills of everyday consumers.
Let’s hope truth-in-billing, data roaming, and the possible emergence of wholesale broadband services can inject a little more sense and competition into this space, since it seems as if more direct helpful reforms (such as ending exclusive deals for devices, or curtailing abusive fees) may be off the table for the time being with this FCC.