Monthly Archives: October 2009

How to be a Great Wireless Carrier

Wow, so turns out that regular blogging is even harder than regular flossing….  Has been over a year since my first and only post, embarrassing. Will endeavor to actually write down ideas instead of just ruminating….

So, this is a post I’ve been wanting to write for a long time. Not to continue the theme of the only other post on my blog, but…. I am really frustrated with wireless carriers. At&t in particular is doing an unbelievably bad job.

At&t’s network to support the iPhone is awful. Awful enough to prompt a CNET columnist write to write an article about removing the phone from iPhone.  Awful enough for a [albeit crazy] person to threaten to shoot it with his gun in the Apple Store.. Awful enough that 30% of calls being dropped is considered normal???

I have given up on relying on my iPhone as a phone, I have landline alternatives at work and at home and I try to travel with people, like my wife who have working phone service. This is both pathetic and a testament to how amazing a device the iPhone is that it made me completely overlook the fact that it’s most core function doesn’t really work that well.

At&t’s defense has been that they didn’t expect that there would be so much uptake and usage (!?!?) of the iPhone and particularly its data capabilities in cities like New York and San Francisco. Let’s analyze this for a minute – Even if I were to suspend disbelief that one could have dismissed the gargantuan hype surrounding the launches of each iPhone and the corollary obvious conclusions that early adopters, hipsters and Apple fanboys would buy and use these things like crazy in places like SF and NY, the iPhone has been out for almost 2.5 years – hello???

It’s become abundantly clear that At&t (and probably most of the carriers) never intended their “3G” wireless networks to be used the way they advertised them.  After all, before the iPhone, data usage was primarily about push text e-mail on Blackberries and the occasional download of a ringtone or a game.  While carriers would tout the revenue from text messaging as data revenues to justify the exorbitant cost of their “next-generation” networks, text messages (SMS) actually use the plain old voice network.

So At&t was hoping they could trick enough people into paying $30 or more per month for data plans that they wouldn’t really use.  When the usage spiked from iPhone users and made the experience of using voice or data terrible, their response was generally “Gee…”.  Maybe that’s what the G in 3G stands for.  There has been no discernible upgrade to the network in the last 2.5 years, if anything things are getting worse.  Just try using the phone at any gathering of people like a sporting event or concert in any major metropolitan area.

I think that there are a few problems across the wireless ecosystem that are making the wireless carriers behave badly:

1. Dinner Party Conversation /Steve Jobs Envy: executives at wireless carriers (and many other types of companies, like handset manufacturers), yearn for the cult worship and adulation heaped upon Steve Jobs and his ilk. They don’t want to be in the “plumbing” business, but they want to be media companies, to hobnob with musicians, etc. Therefore, there are huge budgets to create media platforms, their own app stores, and other absurdities so that they can have something cool to talk about at dinner parties.

2. Fear of Commoditization: I think that wireless executives wake up with cold sweats in the middle of the night from nightmares where their companies have turned into public utilities like Electric companies and are highly regulated, etc.

3. Paternalism: there is a pervasive attitude amongst carriers that they know what people want and need with regards to their mobile devices and services.

So what should the wireless carriers do?

Focus on being a wireless carrier – Until they have excelled and perfected the core parts of their business, they should refrain from being in any other businesses, i.e. you are not a media company, not a hardware company, not a software merchant, etc.  Apple, Amazon, GE and others have earned the right to diversify by excelling at their core businesses and leveraging their core success into ancillary industries. Carriers have not.

Focus means:

1. Build, maintain and service the best and fastest network around.  People will switch carriers for better service (given other issues below being resolved).  This is a must.  It is not cheap but everything else is meaningless without it. Verizon has done the best job at this amongst the carriers, yet it can do better and it has failed at the other aspects thusfar.

2. Create very simple and flexible processes to get devices launched on your network.  Consumers want the latest devices, make it happen by being easy to work with and NOT insisting on controlling any UI, software, etc. Don’t block applications, don’t get involved with software on the handsets at all…..

3. Pricing/billing – make it simple, create very few plans with simple features that don’t aim to cheat your subscribers out of money through overage, etc.  Be transparent and innovative – try to eliminate contract requirements or be totally clear by renting handsets like cable companies do with set-top boxes.  Make the bills so simple that they are actually correct. Stop adding bogus surcharges that masquerade as taxes.

4. Prioritize customer service – If you do #1-#3, this should be easy as you won’t have a lot of issues. But also start in the stores – compare the average employee in an Apple store to one in an At&t store. Take pride in smart, kickass customer service and retail employees. And don’t outsource this to non-company owned/managed stores/call-centers – this is your business.

Now you might ask where all the money would come from to do this. Here are the answers:

1. Stop spending so many wasteful dollars on marketing.  If you do these steps above, customers will migrate to you in droves, you won’t need to market…. At&t spent $4 billion to change their name to Cingular and then another $2 billion to change it back (that’s not even counting the rest of the At&t brand mess).  Both Verizon & At&t spent over $2 billion in 2008 on advertising.   Unbelievable, right? Top 5 advertisers in the US. Think of how much better that money could be deployed….

2. Stop spending money on wasteful lobbying and legislation to try to obtain competitive advantages – instead, try competing!

3. The efficiency gain from focusing on the four items listed above will make it much cheaper to attract, retain and service customers.

In fairness, some carriers have tried to do some of this:

– Sprint has tried to simplify pricing/billing and open its network a bit.

– T-mobile has been the best about opening its network to devices.

– Verizon has put a lot of effort into their network.

But for the most part, they’re doing most of the wrong things and not enough of the right things. I think it’s abundantly clear that the first carrier to pursue these strategies will reap massive rewards in market share and profitability. Oh – and they’ll definitely get one new customer.

Lots of wireless news even in the last couple of days:

– At&t will allow Skype and other VoIP apps to run over the wireless network on iPhones, not just over WiFi.

My reaction: Wow – so you’re going to address the absurd device inconsistencies regarding one specific type of app, congrats! More telling is the reason given by At&t, ““Today’s decision was made after evaluating our customers’ expectations and use of the device compared to dozens of others we offer.” (via VentureBeat)  You mean when making this initial decision, you thought that people would want these apps blocked? Does that sound logical?

– Verizon will launch Android Phones soon and even allow Google Voice to run on them!

My reaction: this could actually be good news, Verizon trying to show-up At&t by (ironically) being MORE open.  I’ll believe it when I see it though, somehow I foresee a Verizon-skinned Android with VCast and other nonsense all over the place.

So, in conclusion, the wireless carrier industry is still a mess, but hopefully getting better? At a glacial pace… I hope one of them or more wakes up soon.