Why Our Mobile Phone Pricing Makes Us Look Like North Koreans.

I was reading the Ottawa Citizen business and technology section and the mention of a particular mobile phone and how it was priced really irked me.

The write-up mentioned the Samsung Galaxy Spica (terrible brand name) at Rogers for $85 with a three year contract that carries a minimum monthly charge of $45.  You can see what I was reading here. 

I get why phones are offered on a discount with a contract (so the service provider can make back the difference) but my issue with advertising phones in this manner is that it continues the practice of getting Canadians hooked on what appears to be cheap hardware. 

There are few places left where consumers have been trained to buy phones at discounts.  In most other places, customers purchase the phone at full price and then shop around for the best deal in terms of network service.  A good smartphone (and I hate the term smartphone) costs upwards of $500 dollars if it is unlocked.

I did a bit of digging and found out that in the US, only about 5% of phones are sold unlocked.  Worldwide it is about 50% but as high as 80% in Asia and 70% in Europe.   If it is 5% in the US, I would imagine it is about the same if not less in Canada. 

I think the problem in Canada comes from the fact that when it comes to mobile phones, we are like the citizens of that fateful nation North Korea.  In North Korea, Kim Jong Il has them so brainwashed, they believe they live in the best place on earth.  No, really.

It would then appear that in Canada and US, we have also been lead astray because we have no concept of the true cost of a mobile phone.  We just take what we read as being true. 

How can the media get away without reporting the true cost of the hardware and why do they have to quote it at the 3 year contract discounted rate?  I believe the answer to that is quite simple.  The network operators strike exclusive deals with hardware manufacturers for phone exclusivity.  Because Rogers is the only one offering that phone, you have to get it through Rogers and are then able to quote "their" price with a contract.

Once Canadians get locked into their service provide, it's over.  The network operator can provide you with poor customer service (that we complain about) and you have no choice but to stay with them or pay a penalty for leaving your contract.  I just hope more Canadians decide to stop taking these types of practices sitting down and instead give the operators feedback with their feet.... by walking somewhere else and getting better service or by purchasing unlocked phones. I was glad to hear about Google's plans with the Nexus One to offer it unlocked and I hope that it begins a trend here in North America.  Let's hope for all of our sakes it does!

What Applied then Doesn't Apply Now

I read an article in the Financial Post recently about the Public Mobile launch that caught my eye.  There were two things interesting about the article to me.  The first was that Public Mobile is launching without an operational network and if you sign up early, you can get unlimited in Canada calling.  The second is that Ted Rogers gave some advice to the Public CEO that I think is dangerous to listen to.

The article says:

"Ted said to me," recalled Mr. Krstajic, a veteran in Canadian telecommunications circles and former Rogers Communications Inc. executive, "don't let technical issues with the engineers stop you from selling."

I think that following Ted Rogers' advice in 2010 could be detrimental to the image and therefore future of WIND Mobile.  

Here's why: when the mobile industry was new, it was a novelty and a luxury for most people.  Even as far back as the year 2000, when mobile was starting to gain mainstream acceptance, mobile phones were still something being used by early adopters.  I think that early users of mobile technology were more accepting of issues with networks than they are now.  Just look at what is happening to WIND after their launch. 

Add to this that customers in 2010 are more connected and able to share the nightmare of bad experiences (think about what's been happening AT&T in the last year with their network issues) and you have a recipe for disaster.  

I believe that when it comes to mobile technology, users want a great customer experience and have come to expect it from the handset through to the network.   Even in our home connections are not lightning fast, we still want them to be.  And this means that we want our mobile experience to me quick too.  We don't want to wait for applications to launch and we don't want to wait to get service before we make calls.  

I just think what might have been true for Ted Rogers then isn't so true anymore.  

The article goes on to say that Public Mobile doesn't have network issues and are taking the time to make sure it is 100 percent so it appears as though they get the pressure they are under.  Let's just hope they deliver as our mobile industry is dominated by Bell, Telus and Rogers who together own 95% of the market.