My recent post on three-year wireless contract talking points stirred some good discussion among readers. A few commenters furthered the industry points by stressing that three-year contracts are a matter of consumer choice; that they wouldn’t exist if people really didn’t want them, or if they did their research and weren’t so lazy in agreeing to them.
Some other industry talking points naturally came up during the discussion. Perhaps the best way to summarize and counter all of them is with a fictional conversation between a wireless carrier and a consumer. Here’s how it might go:
Customer: Hello. I’d like an iPhone 5, please.
Agent: Okay. That’ll be $179 up front, and you have to sign a three-year deal.
Customer: Whoa, three years? That’s long. What are my other options?
Agent: You can buy it outright for $700.
Customer: I don’t have that kind of money.
Agent: Well then it’s a three-year deal. Take it or leave it.
Customer: Why is the contract so long? It’s only two years in every other country. Down south, you can get the iPhone 5 from AT&T for $199 on a two-year deal.
Agent: That’s because our monthly plans are lower than in those countries.
Customer: But that’s not true – I’ve done my homework. Your average revenue per user is higher than almost anyone else’s.
Agent: Did I say lower? I meant they have more value. It’s because Canadians love their phones and voluntarily use voice, text, data and all the other features.
Customer: You’re saying there’s something special about Canadians, that for some reason we’re more addicted to talking and surfing than Americans, Germans or Singaporeans? That’s weird.
Agent: Well, it’s also because in a lot of countries, people have two cellphones. So add their multiple bills together and they’re higher than your one bill.
Customer: So why do you also have the highest profitability in the developed world?
Agent: Err… how much storage did you want in your iPhone again?
Customer: No seriously, why do you make so much more money than other wireless carriers?
Agent: I can’t answer that, but you say that like it’s bad. First of all, making piles of profit is very American… I mean Canadian. Secondly, we reinvest those profits into our networks and other areas of our business. Have you seen our LTE coverage? Those networks are expensive to build.
Customer: Plenty of other countries have built LTE networks too.
Agent: But do they have the vast land mass of Canada to cover?
Customer: But more than 80 per cent of the population is clustered in a few big cities.
Agent: But they expect coverage in the boonies.
Customer: So you have cell towers in Winisk River Provincial Park?
Agent: Where the hell is that?
Agent: Well, like I said, we’re also investing in other parts of our business.
Customer: You mean like your internet services? Is that why our internet speeds – especially uploads – and usage caps are woeful compared to the rest of the world? Weren’t you just complaining about how your networks are congested? It doesn’t sound like you’re investing much in them.
Agent: I wish you’d stop comparing us to the rest of the world. We’re different, okay?
Customer: I know. You guys sure do pay out a lot of dividends to shareholders.
Agent: What are you, some sort of anti-capitalist communist?
Customers: And how about buying up all those broadcasters and sports teams. That doesn’t come cheap, does it?
Agent: Well like I said, that’s investing in our business, to give customers better options and services.
Customer: It doesn’t have anything to do with withholding that broadcasting and sports content from your competitors, or making it really expensive for them to get it?
Agent: Look, do you want the iPhone or not?
Customer: Oh, right, the iPhone. If I bought it up front without a contract, would you give me a cheaper monthly plan?
Customer: Hmm. You drive a hard bargain. I don’t have $700, so sign me up!