Once a monopoly, always a monopoly?

by David on December 12, 2009

Many people in technology hate the thought of government regulation. We do a better job policing ourselves than to have bureaucrats who don’t understand what we do regulate that which they don’t understand, not to mention if politicians start to make deals about completely unrelated issues to get it passed. This is the first of several posts about tech monopolies. I’ll start with a tech monopoly that is only hurting itself and its customers.

A look back to AT&T

In the 1990′s, the Federal government broke up AT&T, a massive telecom monopoly. Was it the right thing to do? I’d say so. Immediately following consumers were given choice at a lower cost. In addition, AT&T had been holding back technology that had been ready to roll out for a few years. The rest, as they say, is history.

History repeats itself

The Humpty Dumpty that was the old AT&T has been significantly put back together again by SBC which bought several of the old Baby Bells. We still have choice in long distance. We can still choose ISPs (although if you want DSL and are in AT&T’s territory, you are required to have an AT&T phone line… don’t get me started on that one.)

While AT&T doesn’t have a monopoly on much, it does have one: iPhone service.

Reduce your usage

This last week, AT&T’s CEO asked iPhone users (specifically in San Francisco and New York) to cut down their usage. SRSLY?!? According to the Wall Street Journal:

With about 3% of smart-phone customers driving 40% of data traffic, AT&T is considering incentives to keep those subscribers from hampering the experience for everyone else, he said. “You can rest assured that we’re very sure we can address it in a way that’s consistent with net-neutrality and FCC regulations.”

There is a simple solution for that: Send them to Verizon Wireless! Verizon wants iPhone users and iPhone users are begging to return to Verizon and its robust 3G network that can handle all that they do. Oh, but wait a minute… AT&T can’t do that because then 99.9% of all iPhone users will cancel their contracts and go to Verizon leaving AT&T with a ghost town 3G network and plenty of extra bandwidth.

Note to AT&T: Suck it up. Those 3% are also the evangelists who drive up your iPhone subscriber numbers. That is the cost of doing business. Better than trying to fire your best customers, spend the money that Verizon spent on building its 3G network. AT&T’s coverage was bad in LA under every single name it has had from LA Cellular to Cingular to AT&T. It is an interesting strategy to blame your customers for your company’s failings.

According to the New York Times:

Consumer Reports has just released its annual survey of cellphone service, and its respondents collectively agree with me about the rankings: AT&T occupies the bottom and Verizon, the top.

Fire your customers!

Maybe AT&T is looking at how in 2007, Sprint fired a small number of customers who called in for support too often. That is very different from this situation. Those were typical customers using basic phones. The iPhone is a monopoly that AT&T is terrified of losing. Make it a good experience or raise the white flag.

Verizon Wireless

You know I have to write it… THERE’S A MAP FOR THAT!

A note to Cashbaq members

As many of you know, I am the CEO of Cashbaq, a loyalty shopping site that offers cash back, coupons, deals and reviews for 3,000 online stores and services. I have a simple message for you:

PLEASE USE CASHBAQ MORE!

That is the message that most good companies have for users. Of course, if you are using the service in a way it wasn’t intended (i.e. fraud), we don’t want you. Ralph de la Vega, chief executive of AT&T Mobility, should note that the 3% he wants to fire are using the service precisely how it was designed, just more than he wants.

Cashbaq is designed for you to shop at 3,000 online stores and services so go ahead… SHOP MORE!

{ 4 comments… read them below or add one }

Daniel M. Clark December 14, 2009 at 1:13 pm

As much as I hate AT&T for starting down this road of blaming the customers for their own network failings in some areas, I don't see their exclusivity deal with Apple as a monopolistic thing in any sense. By that standard, Verizon is a monopoly because the Droid is exclusive to them. Handset exclusivity it nothing new, it dates back for as long as there's been cell phone companies. Just because people want the iPhone on Verizon doesn't mean that AT&T is a monopoly or that Apple is doing anything wrong.

Reply

thedavidlewis December 14, 2009 at 2:08 pm

Daniel, that is a great point but I am not accusing AT&T of *being* a monopoly in this case. I agree with you. I am accusing AT&T of going back to its roots and *acting like* a monopoly. It feels the same to anyone who wants to use an iPhone (ignoring the $1,000 unlocked iPhone for sale at Buy.com). There is no choice but AT&T for iPhone so it is, in effect, a monopoly. There are other choices for smart/app phones… but do iPhone users want them?

Reply

Daniel M. Clark December 14, 2009 at 9:13 pm

As much as I hate AT&T for starting down this road of blaming the customers for their own network failings in some areas, I don't see their exclusivity deal with Apple as a monopolistic thing in any sense. By that standard, Verizon is a monopoly because the Droid is exclusive to them. Handset exclusivity it nothing new, it dates back for as long as there's been cell phone companies. Just because people want the iPhone on Verizon doesn't mean that AT&T is a monopoly or that Apple is doing anything wrong.

Reply

thedavidlewis December 14, 2009 at 10:08 pm

Daniel, that is a great point but I am not accusing AT&T of *being* a monopoly in this case. I agree with you. I am accusing AT&T of going back to its roots and *acting like* a monopoly. It feels the same to anyone who wants to use an iPhone (ignoring the $1,000 unlocked iPhone for sale at Buy.com). There is no choice but AT&T for iPhone so it is, in effect, a monopoly. There are other choices for smart/app phones… but do iPhone users want them?

Reply

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