Kent German, CNET's cell phone guru, wants to answer your questions about cell phones, services, and accessories.
Send him a question!
Editor's note: From now on, I'll be alternating On Call columns between answering your questions and discussing hot-button issues for cell phone users.
One of the biggest questions I get about the iPhone concerns why the soon-to-be-released device will be available only with Cingular Wireless/AT&T. Without a doubt it's a very relevant question, as it highlights one of the more unfortunate practices of the cell phone industry: carrier exclusivity. Though it's hardly anything new, particularly in a carrier-dominated market such as the United States, many people don't really notice carrier exclusivity until a high-profile cell phone like the iPhone comes out. While Apple-loving Cingular customers can just wait for the release date (whenever that is), customers at other carriers won't have it so easy.
For carriers, exclusivity contracts are a boon because they'll be the only source of the device for a set period of time. So if they're not a Cingular customer already, wannabe iPhone owners will have to switch. And you can bet many people will do so, even if that means paying an early termination fee. We saw the same thing when Cingular had a six-month lock on the Motorola Razr. People switched just to get the trend-setting slim phone rather than wait for it to come to their carrier. So not only did Cingular get the notoriety of being the sole provider of a hyped device, but it was also able to attract new customers.
On the manufacturer side, I'm not so sure the relationship is as beneficial. Yes, they get a committed vendor that will market and sell their product, but it also means that the exclusive carrier has a lot of say over what the phone will look like and what it can and can't do. If you just have one customer, you're going to be more willing to bend over backwards to satisfy their demands. Though I talked about carriers stifling innovation in a previous On Call column, I think this is another great example of how it happens. For example, T-Mobile got to be the exclusive carrier for the very cool Nokia 5300, but in the process the phone went from being a quadband world phone
to just triband (GSM 850/1800/1900). How is that good for Nokia? I just don't see how it can be.
Should cell phones be offered by exclusive carriers? Talk back to me below.
Of course it goes without saying that carrier exclusivity is even more detrimental to consumers. When one carrier controls the product pipeline it severely limits customer choice, and consumers wind up the real losers. Not only are they forced to buy a handset from just one carrier, they also can end up with a phone that has crippled features like the 5300. It is one thing when another carrier just decided to pass on a phone, but it's quite another when other carriers can't even pick it up if they want to.
As anyone who has eaten an early termination fee (ETF) can tell you, switching carriers before the end of a contract doesn't come without consequences. Granted, anyone jumping carriers just to get a hot new phone is doing so on their own volition, but carriers need to bear some responsibility as well. If Cingular is encouraging people to switch just to get the iPhone, then Cingular needs to keep in mind that customers are paying $250 for Cingular to get their business. It's not like switching long distance carriers where early termination fees don't exist; there are real costs involved to the consumer. So what's the alternative, you ask? Could Cingular (and I'm just using them as an example here) give new customers more incentive, like paying for part of their ETF? Maybe, but I don't think that will ever happen.
On the other extreme, carrier exclusivity also can wind up shortchanging existing customers as well. A friend of mine was just telling me about a recent experience he had with his carrier. As a Cingular customer he was excited to hear that the carrier would be the exclusive provider of the Nokia N75. He rushed to the store and was ready to sign a new contract to get the $199 discounted price, but the store rep told him that deal was available only to new customers. Because he was an existing customer he'd have to pay more. Uh, excuse me? Just how is that good customer service? Here's a guy who's willing to go on contract again but Cingular won't accommodate him. Try as I may, I can't think of a good reason why. So here again, the consumer loses. Because Cingular has an exclusive on the N75 carrier, my friend has no other choice than to pay a higher price. And that's just not right.
Post your comment here
