Cellular suckage

In the early days of the US mobile phone industry, the carriers wanted to ensure that they could recover their investment in building out the cellular network as quickly as possible. Faced with a chicken/egg problem, they chose to build the network, make the handsets cheap through subsidies to drive customers to try the service, and take their profits later. It worked, except that now we expect handsets to be cheap even as we expect more features than ever  in our handsets.

I was fortunate enough to play with a Nexus One just after Christmas, and as I tweeted then, “#wantwantwant”.  But reading through the Google Terms of Sale and talking to the contracts department at TMO, I realize that this adventure is far more screwed up than the usual handset subsidy.

Many of us hoped that Google would start to disrupt the subsidy system by selling the phone unlocked and at cost, forcing the carriers to adapt through the pressure that their customers and potential customers could apply. Google didn’t do that, for whatever reason.

OK. I’ve been with T-Mobile for 10 years and have not upgraded my phones at every opportunity, so they’ll take care of me, right? Sorry, Google’s agreement with TMO and their Terms of Sale won’t allow that. T-Mobile has no flexibility to set rate plans or offer discounts because Google controls the phone (except for returns, which are handled by HTC for N * $45 where N is the number of things you screwed up according to the Terms of Sale).

So T-Mobile’s customers are screwed; pay anything less than full price and you must change your plan to an overpriced individual plan before you’re allowed to touch the Google phone. Otherwise, pay $530 or piss off.

I choose to piss off. Maybe I’ll get another Crackberry.

How does this ridiculously restrictive game benefit Google?  They’ve done nothing disruptive, they’ve made it painful to buy the phone, they’ve prevented their partner from doing anything to reduce the pain. And they promise to bill their customers $350 if they try to game the system to make the process end as it should have started (whether TMO pays the subsidy to Google or not).

OK, the evil carrier must have messed it up! Wait, how does it help retention to tell your customers that they can’t have the handset they want unless they throw away the plan they’re used to using and pay more money for less service?

I guess HTC will sell a lot of handsets. I don’t think they screwed up the buying experience though. They would sell even more if customers could buy what they want.

So who benefits from this?