Ten Things Wrong with US Wireless Services (Part I)

wirelessThe internet was invented in the United States and the world’s trendiest phone is sold by an American computer maker. A lot of technological innovations were made by Americans. Still, wireless services in the US are terrible. Here in 3 parts are 10 things that make wireless access in the US so backward compared to the rest of the developed world.

Rates – People wanting to avail of wireless services more than anything else look at a carrier’s subscription rates first. This was the gist of a report submitted by Nielsen on a monthly survey of 25,000 wireless users. The report written on the 1st quarter of 2009 outlines the ten most important factors users gave for selecting a wireless carrier and the top four reasons given – price, availability of a family plan, payment option, and free in-network calling – all have something to do with costing and budgeting.

Despite of the US being one of the top wireless markets in the world, cell phone rates are the world’s most expensive where the average cost of one year’s worth of services is 635 dollars. Americans pay at least 5 times more than what the Dutch are paying. A year’s wireless subscription costs an average of $131 in the Netherlands.

One thing strange about the US wireless market is double billing. Unlike wired calls where the calling party handles the bills, cell phone service providers charges both calling parties for a call.

Slow adaption of new technology – US customers, who are paying the highest service charges in the world, are wondering where all the payment for subscribing to wireless services is going. Dropped calls, lack of service and the absence of wireless signals in rural parts of the US are pretty common. What irks customers the most is that most of the technology used in the wireless infrastructure in the US is a generation or two older than what is used in Japan and Europe. Subscribers wonder if 4th generation services will ever find its way to the US market. In other countries like Japan, cell phones are used to watch TV or are used for over-the-counter credit purchases. By 2010, 4g services will be common place in Japan. As of the second quarter this year, 3g penetration in the US is still 40 percent.

So-called subsidized handsets– Wireless providers lure customers with a 2-year wireless contract where they get a brand new iPhone normally selling at $599, for a subsidized price of $199. But as we all know, if it sounds too good to be true, then something must be wrong somewhere. What is wrong is that there is no way of knowing how much is being paid for the discounted phone and it is designed that way so that subscribers cannot make informed decisions

So, who is paying for the $400 dollars that was discounted out of the original $599 price? Not the carrier and certainly not the phone manufacturers. If there was no subsidy, then it is pretty simple to know how much of the monthly subscription went to pay for the phone and how much was paid for the wireless service. That is food for thought.

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