Fast on the heels of my last blog entry, Rogers today announced they would be increasing the price of their home phone "system access fee" by 30%. Consumers who were willing to sign a contract after being tempted with low rates are out of luck as usual. To make things worse, increasing the system access fee also allows Rogers to advertise the same rates to people as they were before.
This is in sharp contrast to our friends south of the border, who were able to nullify their cell phone contracts after Verizon increased their text messaging fees.
Where is the protection for Canadians?
Thursday, January 24, 2008
Friday, January 11, 2008
The Wireless Industry and the Pitfall of Capitalism
A very interesting article was posted today by Wired Magazine outlining Apple's foray into the mobile phone market. The story chronicles Apple's five year struggle to enter the market and goes on to explain how the iPhone "blew up" the entire industry.
While some may scoff at the iPhone as simply a fashionable product with clever marketing, any Canadian cell phone consumer can tell you the serious flaws currently plaguing the wireless industry. Many of the issues brought up in the Wired article should strike a chord with Canadians, as a serious lack of competition and loopholes in our laws have allowed the major providers to exploit their customers.
The big three -- Rogers, Telus, and Bell -- are posting record annual profits, while intentionally stifling competition and innovation. They have a stranglehold over the hardware manufacturers and are allowed to dictate the exact features (or lack thereof) being brought to the marketplace. While Asian countries enjoy the benefit of the latest and greatest hardware, North Americans have been stuck with phones that are years behind on the technological curve. By only offering the most basic handsets to their consumers, these companies are allowed to greatly increase their margins, while managing to block out the more advanced products.
When the iPhone was first introduced by Steve Jobs almost a year ago, I always maintained that we'd never be seeing the product in Canada. Over the past year, rampant rumours continue to surface in our media about "delays" in the iPhone's Canadian launch, speculating on anything from hurdles in Canadian copyright law to Apple themselves blocking the sale (which clearly makes absolutely no sense). The fact of the matter is that the iPhone represents a scenario where the manufacturer is allowed to directly cater to the consumer, which would effectively cut off Rogers as the middleman and stifle their artificial controls imposed on the marketplace.
This is what has become of our so-called "free market". The whole idea behind capitalism is that producers will compete and continue to innovate themselves in an effort to set themselves apart from the competition. Instead, companies are continually finding loopholes in an effort to trap their customers into buying their services. I have spoken to countless people who have been stuck with a cellular contract they never wanted, simply because they couldn't afford to pay the ridiculous prices for out-of-date hardware. To make matters worse, cell phone contracts are unfairly one-sided, where the provider is allowed to increase their rates at any point in time, while consumers are penalized hundreds of dollars for choosing to cancel their service.
We've gotten to the point where these large companies have free reign to engage in anti-competitive behaviour. They trick and coerce people into signing contracts against their will, and create a monopolized marketplace. The Microsoft business model over the last decade has further proven that it's far more cost effective to buy out the competition rather than competing with them. Larger and larger companies are emerging because of this, and North America is slowly but surely falling behind the rest of the world.
As these monopolies continue to grow, so do the pocketbooks of the lawyers and lobbyists whose mission it is to maintain the status quo. We're caught in a positive feedback cycle, and the only way to get out of it is for the government to interfere immediately.
While some may scoff at the iPhone as simply a fashionable product with clever marketing, any Canadian cell phone consumer can tell you the serious flaws currently plaguing the wireless industry. Many of the issues brought up in the Wired article should strike a chord with Canadians, as a serious lack of competition and loopholes in our laws have allowed the major providers to exploit their customers.
The big three -- Rogers, Telus, and Bell -- are posting record annual profits, while intentionally stifling competition and innovation. They have a stranglehold over the hardware manufacturers and are allowed to dictate the exact features (or lack thereof) being brought to the marketplace. While Asian countries enjoy the benefit of the latest and greatest hardware, North Americans have been stuck with phones that are years behind on the technological curve. By only offering the most basic handsets to their consumers, these companies are allowed to greatly increase their margins, while managing to block out the more advanced products.
When the iPhone was first introduced by Steve Jobs almost a year ago, I always maintained that we'd never be seeing the product in Canada. Over the past year, rampant rumours continue to surface in our media about "delays" in the iPhone's Canadian launch, speculating on anything from hurdles in Canadian copyright law to Apple themselves blocking the sale (which clearly makes absolutely no sense). The fact of the matter is that the iPhone represents a scenario where the manufacturer is allowed to directly cater to the consumer, which would effectively cut off Rogers as the middleman and stifle their artificial controls imposed on the marketplace.
This is what has become of our so-called "free market". The whole idea behind capitalism is that producers will compete and continue to innovate themselves in an effort to set themselves apart from the competition. Instead, companies are continually finding loopholes in an effort to trap their customers into buying their services. I have spoken to countless people who have been stuck with a cellular contract they never wanted, simply because they couldn't afford to pay the ridiculous prices for out-of-date hardware. To make matters worse, cell phone contracts are unfairly one-sided, where the provider is allowed to increase their rates at any point in time, while consumers are penalized hundreds of dollars for choosing to cancel their service.
We've gotten to the point where these large companies have free reign to engage in anti-competitive behaviour. They trick and coerce people into signing contracts against their will, and create a monopolized marketplace. The Microsoft business model over the last decade has further proven that it's far more cost effective to buy out the competition rather than competing with them. Larger and larger companies are emerging because of this, and North America is slowly but surely falling behind the rest of the world.
As these monopolies continue to grow, so do the pocketbooks of the lawyers and lobbyists whose mission it is to maintain the status quo. We're caught in a positive feedback cycle, and the only way to get out of it is for the government to interfere immediately.
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