Two Countries, Two Vastly Different Phone Bills

[sbolen]

Daring Fireball linked to a really great piece in the New York Times over the weekend about how U.S. Consumers “may overpay by over a quarter of a trillion dollars for worse levels of service than customers in other countries receive.”

 

So why the $41.50-a-month difference in price? Several factors are involved, but an important one is regulatory policy. Britain has forced companies to lease their networks to competitors at cost. The United States has not, allowing a formidable barrier against competitors.

 

“The United States lacks meaningful competition in its cellular market sector, which leads to higher cell plan prices than a growing list of other countries,” said Sascha Meinrath, founder of the Open Technology Institute at the New America Foundation.

[joshnys8913]

Daring Fireball linked to a really great piece in the New York Times over the weekend about how U.S. Consumers “may overpay by over a quarter of a trillion dollars for worse levels of service than customers in other countries receive.”

I agree!

[WillM]

Where are they getting those numbers from? I thought you could get talk text and 2gb for $60 and a subsidized phone?

[QWIKSTRIKE]

Every carrier is stock market based....that is the problem! The premium investor must get his piece of the pie, and then CEO's, and direct subordinates must get their bonuses. We are paying for the big bonus, and investor premiums.

[jbom]

costs money to keep up thousands of towers to cover a country larger than Europe

[irev210]

Every carrier is stock market based....that is the problem! The premium investor must get his piece of the pie, and then CEO's, and direct subordinates must get their bonuses. We are paying for the big bonus, and investor premiums.

 

You are wrong.  You realize that Verizon isn't a charity, right?  Regardless of being a public or private company, it's going to still attempt to be as profitable as possible, right?

 

Verizon makes a ton of money because people who subscribe to verizon feel like they offer a service(s) that competitor(s) do not.

 

It's one of the reasons why was against the merger between Sprint/T-Mobile and why I am always baffled by posts worried about competition driving down prices and how it will not make wireless carriers profitable in the US.

 

We have a lot of fat to trim in the US wireless word.

 

Step 1) Trimming wireless subsidy out of the wireless bill

Check

Step 2) Wait for T-Mobile and Sprint to finish building out their LTE networks

In progress

Step 3) Watch people realize that they can save a bundle switching while still receiving solid service

**fingers crossed that people will figure this out**

Step 4) Watch AT&T/Verizon scramble to match prices

**fingers crossed that AT&T/Verizon lobbying dollars don't stop competition**

Step 5) Watch US customers profit as prices go down

[miguell2]

Where are they getting those numbers from? I thought you could get talk text and 2gb for $60 and a subsidized phone?

You can get talk and text and 2GB of 4G in Italy for ~$25/month, plus data cannot be turned off so long your service is in good standing. That means that the previous technology has to be free and unlimited as long as you keep your account in good standing. So it used to be unlimited EDGE but now it unlimited HSPA where LTE is available.

[Destroyallcubes]

You are wrong.  You realize that Verizon isn't a charity, right?  Regardless of being a public or private company, it's going to still attempt to be as profitable as possible, right?

 

Verizon makes a ton of money because people who subscribe to verizon feel like they offer a service(s) that competitor(s) do not.

 

It's one of the reasons why was against the merger between Sprint/T-Mobile and why I am always baffled by posts worried about competition driving down prices and how it will not make wireless carriers profitable in the US.

 

We have a lot of fat to trim in the US wireless word.

 

Step 1) Trimming wireless subsidy out of the wireless bill

Check

Step 2) Wait for T-Mobile and Sprint to finish building out their LTE networks

In progress

Step 3) Watch people realize that they can save a bundle switching while still receiving solid service

**fingers crossed that people will figure this out**

Step 4) Watch AT&T/Verizon scramble to match prices

**fingers crossed that AT&T/Verizon lobbying dollars don't stop competition**

Step 5) Watch US customers profit as prices go down

People pay more for ATT and Verizon service due to the fact they offer coverage on areas sprint only roams in, or T-Mobile has edge only or no service in. And those areas will still be there. It'll take sprints expansion to be able to truly say they have coverage on a larger scale. The CCA and rural partners will help that greatly. Also a big upsell Verizon and ATT have is also a wireline, and TV service bundles. Sprint should try and work with dish with fixed wireless(however they want) and bundle with dish satellite TV. For some people it would be a huge saver. And would probably benefit sprint. But they just need to be careful with how the do plans and pricing, as well as keeping unlimited from killing their network(if they go the unlimited route). Easy thing would be to throttle, or do a day time data limit, unlimited whatever at night past a certain time.

[QWIKSTRIKE]

You are wrong.  You realize that Verizon isn't a charity, right?  Regardless of being a public or private company, it's going to still attempt to be as profitable as possible, right?

 

Verizon makes a ton of money because people who subscribe to verizon feel like they offer a service(s) that competitor(s) do not.

 

It's one of the reasons why was against the merger between Sprint/T-Mobile and why I am always baffled by posts worried about competition driving down prices and how it will not make wireless carriers profitable in the US.

 

We have a lot of fat to trim in the US wireless word.

 

Step 1) Trimming wireless subsidy out of the wireless bill

Check

Step 2) Wait for T-Mobile and Sprint to finish building out their LTE networks

In progress

Step 3) Watch people realize that they can save a bundle switching while still receiving solid service

**fingers crossed that people will figure this out**

Step 4) Watch AT&T/Verizon scramble to match prices

**fingers crossed that AT&T/Verizon lobbying dollars don't stop competition**

Step 5) Watch US customers profit as prices go down

 

 

Who said anything about running a charity. The last time that I checked Verizon made over 50 GP or close to it. That's loads of money being made. I am not against anyone making money period! The structure of most companies on the stock market is structured to pay bonus, and the premium share holders. When profits are this high they attract investors and the drive to MAKE MORE BONUS DRIVES  INCENTIVES TO EXTRACT MORE OUT OF CUSTOMERS TO REACH THAT GOAL!

 

Am I mad at them for doing this ...no.1 As a consumer you choose to buy or not buy. You have your opinion on this and I have mine we can agree to disagree.

Edited August 27, 2014 by QWIKSTRIKE

[irev210]

Who said anything about running a charity. The last time that I checked Verizon made over 50 GP or close to it. That's loads of money being made. I am not against anyone making money period! The structure of most companies on the stock market is structured to pay bonus, and the premium share holders. When profits are this high they attract investors and the drive to MAKE MORE BONUS DRIVES  INCENTIVES TO EXTRACT MORE OUT OF CUSTOMERS TO REACH THAT GOAL!

 

Am I mad at them for doing this ...no.1 As a consumer you choose to buy or not buy. You have your opinion on this and I have mine we can agree to disagree.

 

I think you just fail to realize that if a company is public or private, the goal is be profitable.  A non-public company isn't just trying to be "sort of profitable" while a publicly traded company's goal is to be "extremely profitable".

 

Verizon extracts as much as they can from their customers.  Regardless if Verizon was a privately-owned company or a publicly traded company, if Verizon could charge $1,000/month per customer, they would.  That's my only point.  The reality is, they can't, so they don't.  They charge as much as they can to get the most out of the subscriber base.

 

It's not like being a publicly traded company gets magical fairy dust incentive to charge more to get a bigger bonus...

 

For example, look at Cargill (a private company) vs. Archer Daniel (a publicly traded competitor).  The privately held company is bigger and more profitable.  If the publicly traded company's goal is to make more bonus and extract more out of customers, why is the privately held company making more profit?

[richy]

As a brit that isn't a fair comparison.  Three are not a bad company but they are far closer to tmobile than Verizon, it would be fairer to compare Vodafone to Verizon. Things may have changed since I escaped but the whole leasing networks used to only apply to voice and text and the UK was years behind the US on unlimited voice and text. I used to carry 3 phones around to have a reasonable chance of a data service. I'm not pro or anti regulation in this context but I worry about the intentions of the author when they compare two very different providers,  they should either know better and don't or they deliberately compared them to exaggerate the effect. 

Three started as a 3g only network when the UK auctioned spectrum for 3g services,  they nearly tanked because of poor coverage and they bet the farm on expensive video calls that no one made.  Luckily mobile data came along.  Iirc they leased all 2g/voice from an existing company. They tended to market themselves as a similar proposition as tmo usa, unlimited etc but forget about coverage.  Last I recall they had made big strides in becoming a more credible national provider but I would hesitate to class them as compatible to Verizon,  at&t, orange, or Vodafone (although they've probably all merged into 1 by now). 

[QWIKSTRIKE]

I think you just fail to realize that if a company is public or private, the goal is be profitable.  A non-public company isn't just trying to be "sort of profitable" while a publicly traded company's goal is to be "extremely profitable".

 

Verizon extracts as much as they can from their customers.  Regardless if Verizon was a privately-owned company or a publicly traded company, if Verizon could charge $1,000/month per customer, they would.  That's my only point.  The reality is, they can't, so they don't.  They charge as much as they can to get the most out of the subscriber base.

 

It's not like being a publicly traded company gets magical fairy dust incentive to charge more to get a bigger bonus...

 

For example, look at Cargill (a private company) vs. Archer Daniel (a publicly traded competitor).  The privately held company is bigger and more profitable.  If the publicly traded company's goal is to make more bonus and extract more out of customers, why is the privately held company making more profit?

 

I don't want to beat a dead horse, but I don't fail to realize that a company strives to make a profit. In fact I started off by saying that I am not against a company making a profit.   You fail to realized how the world works especially when it comes to stock, products and sales. I have been in sales for over 30 years, and completely understand what it means to be profitable. I have made million dollar contracts, and can tell you all about profit margin and the bottom line.

 

You can't make examples of anything until you truly understand the relationship between preferred stock holders, CEO compensation, bonus, profit margin, demand. You don't have a clue and if you did you would understand what I am saying. I bet a stock analyst would agree whole heartedly with my comment. 

 

You asked why do privately held companies make more money, but try to prove a point with out  the knowledge of why  this is. Privately held companies make more money because they don't have to answer to preferred stock holders. When public held companies  trade preferred stock holders like Carl Ichan try to dictate how and what a company should do. In order to satisfy those people companies like Dell bastardized a very good product in the name of bonus and sales. As dell began to trade openly the need for more money  to satisfy the stock holders, and to increase stock value, and profit margins arose so they started selling inferior products under their good name until the consume decided  not to buy their product line any more. "see the rise of Apple;)" Now dell is going private to try to rebuild whats left of a once powerful computer giant.

 

Apple and Steve Jobs are perfect examples of this since the preferred stock holders and board members kicked him out of his own company. Apple did not stock thriving until Jobs returned. I have no time to give you lessons on how the stock market, companies, bonus and compensation packages cause the rise and fall of companies!

 

Let's just agree to disagree respectfully.

Edited August 28, 2014 by QWIKSTRIKE

[Mr.Nuke]

The structure of most companies on the stock market is structured to pay bonus, and the premium share holders. When profits are this high they attract investors and the drive to MAKE MORE BONUS DRIVES  INCENTIVES TO EXTRACT MORE OUT OF CUSTOMERS TO REACH THAT GOAL!

 

Am I mad at them for doing this ...no.1 As a consumer you choose to buy or not buy. You have your opinion on this and I have mine we can agree to disagree.

Not to continue to beat a dead horse, but I too have a couple of issues here. According to the shareholder theory of business the goal of a publicly traded company is to maximize value for all shareholders. The vast majority of the time what is beneficial for what you call "premium" shareholders is proportionally beneficial to any shareholder based on their ownership stake. If a company is more profitable, raises a dividend, etc every shareholder benefits; some just more so than others due to how many shares they own.

 

Secondly, I too think your notion of public vs. private is misguided. The goal of almost any private company/partnership/sole proprietorship is also to maximize profit. Much like a publicly traded company there are still ownership percentages: be it a family controlling it, employee ownership, or an outside entity, distributions of profit occur in some manner, and management incentives are still present. Irev210's point about ADM verus Cargill illustrates this. Kiewit, a large employee owned company in Omaha is notorious for having employees retire as millionaires due to having to cash in shares of the company at retirement. There really isn't the difference you are trying to make. Whether or not a company is publicly traded or not, there are owners and they want to make money.

 

I'd argue some of the things you seem to concern about are actually more prevalent in privately held companies. The reporting requirements are less than the scrutiny a publicly held company is held to. Ownership stakes tend to be more concentrated (A publicly held traded company may be lucky to have one person/institution holding more than 10% of the company). Thus from a management perspective in a privately held company there is just as much if not more temptation than to run things to benefit the owners than a publicly held corporation.

I don't want to beat a dead horse, but I don't fail to realize that a company strives to make a profit. In fact I started off by saying that I am not against a company making a profit.   You fail to realized how the world works especially when it comes to stock, products and sales. I have been in sales for over 30 years, and completely understand what it means to be profitable. I have made million dollar contracts, and can tell you all about profit margin and the bottom line.

Your sales experience has little to do with publicly versus privately held companies.

You can't make examples of anything until you truly understand the relationship between preferred stock holders, CEO compensation, bonus, profit margin, demand. You don't have a clue and if you did you would understand what I am saying. I bet a stock analyst would agree whole heartedly with my comment.

I'm not a stock analyst, but I do hold a degree in Business Administration, concentrating in Finance, with an emphasis in financial analysis (basically a degree for an analyst). That said, I don't think an analyst would agree with your comments. I also think an analyst would point out that a "preferred stock holder" in finance has a completely different meaning than what you are using.

 

Preferred stock, like common stock,  is a form of equity. However it tends to have a lot more similarities to debt instruments than common stock. A preferred stockholder typically has no voting rights. To compensate this they are typically guaranteed a fixed dividend payment (hence the similarity to debt instruments like bonds) that must be paid before common stockholders receive a dividend.

 

You asked why do privately held companies make more money, but try to prove a point with out  the knowledge of why  this is. Privately held companies make more money because they don't have to answer to preferred stock holders. When public held companies  trade preferred stock holders like Carl Ichan try to dictate how and what a company should do. In order to satisfy those people companies like Dell bastardized a very good product in the name of bonus and sales. As dell began to trade openly the need for more money  to satisfy the stock holders, and to increase stock value, and profit margins arose so they started selling inferior products under their good name until the consume decided  not to buy their product line any more. "see the rise of Apple;)" Now dell is going private to try to rebuild whats left of a once powerful computer giant.

 

Apple and Steve Jobs are perfect examples of this since the preferred stock holders and board members kicked him out of his own company. Apple did not stock thriving until Jobs returned. I have no time to give you lessons on how the stock market, companies, bonus and compensation packages cause the rise and fall of companies!

 

Let's just agree to disagree respectfully.

So what you call preferred stockholders, most would call concentrated investors, corporate raiders, etc. Basically an individual or group that makes a significant investment in a company to gain ownership to benefit them. I'd contend such investors are not the norm in publicly traded companies.

 

The big problem with your argument here is particularly in many of the companies in the wireless industry is there isn't the dilution of ownership that is present in other publicly traded companies. Softbank owns 79% of Sprint. DT owns 67% of T-Mobile. While both of those companies are publicly traded, the concentrated ownerships by the "parent" companies effectively moot any outside investor from doing anything. Furthermore, there aren't any corporate raiders in the wireless market making any tirade against said corporate raiders and publicly held companies irrelevant to the topic at hand.

 

That said, I'm with you to an extent. Large concentrates owners can influence companies in such a manner that is beneficial to them and not the company/other shareholders (It isn't the norm). I think a large part of T-Mobile's current strategy over the past 12-18 months has been to prepare for DT's exit. Some of those moves aren't necessarily the best for the company in the long-term or the other shareholders.

 

But if T-Mobile were a privately held company looking to sell themselves, DT's strategy would've been the exact same. Make the company look better in the short-run to sell. That is where I fundamentally disagree with you in the public vs. private debate.

[QWIKSTRIKE]

Not to continue to beat a dead horse, but I too have a couple of issues here. According to the shareholder theory of business the goal of a publicly traded company is to maximize value for all shareholders. The vast majority of the time what is beneficial for what you call "premium" shareholders is proportionally beneficial to any shareholder based on their ownership stake. If a company is more profitable, raises a dividend, etc every shareholder benefits; some just more so than others due to how many shares they own.

 

Secondly, I too think your notion of public vs. private is misguided. The goal of almost any private company/partnership/sole proprietorship is also to maximize profit. Much like a publicly traded company there are still ownership percentages: be it a family controlling it, employee ownership, or an outside entity, distributions of profit occur in some manner, and management incentives are still present. Irev210's point about ADM verus Cargill illustrates this. Kiewit, a large employee owned company in Omaha is notorious for having employees retire as millionaires due to having to cash in shares of the company at retirement. There really isn't the difference you are trying to make. Whether or not a company is publicly traded or not, there are owners and they want to make money.

 

I'd argue some of the things you seem to concern about are actually more prevalent in privately held companies. The reporting requirements are less than the scrutiny a publicly held company is held to. Ownership stakes tend to be more concentrated (A publicly held traded company may be lucky to have one person/institution holding more than 10% of the company). Thus from a management perspective in a privately held company there is just as much if not more temptation than to run things to benefit the owners than a publicly held corporation.

Your sales experience has little to do with publicly versus privately held companies.

I'm not a stock analyst, but I do hold a degree in Business Administration, concentrating in Finance, with an emphasis in financial analysis (basically a degree for an analyst). That said, I don't think an analyst would agree with your comments. I also think an analyst would point out that a "preferred stock holder" in finance has a completely different meaning than what you are using.

 

Preferred stock, like common stock,  is a form of equity. However it tends to have a lot more similarities to debt instruments than common stock. A preferred stockholder typically has no voting rights. To compensate this they are typically guaranteed a fixed dividend payment (hence the similarity to debt instruments like bonds) that must be paid before common stockholders receive a dividend.

 

So what you call preferred stockholders, most would call concentrated investors, corporate raiders, etc. Basically an individual or group that makes a significant investment in a company to gain ownership to benefit them. I'd contend such investors are not the norm in publicly traded companies.

 

The big problem with your argument here is particularly in many of the companies in the wireless industry is there isn't the dilution of ownership that is present in other publicly traded companies. Softbank owns 79% of Sprint. DT owns 67% of T-Mobile. While both of those companies are publicly traded, the concentrated ownerships by the "parent" companies effectively moot any outside investor from doing anything. Furthermore, there aren't any corporate raiders in the wireless market making any tirade against said corporate raiders and publicly held companies irrelevant to the topic at hand.

 

That said, I'm with you to an extent. Large concentrates owners can influence companies in such a manner that is beneficial to them and not the company/other shareholders (It isn't the norm). I think a large part of T-Mobile's current strategy over the past 12-18 months has been to prepare for DT's exit. Some of those moves aren't necessarily the best for the company in the long-term or the other shareholders.

 

But if T-Mobile were a privately held company looking to sell themselves, DT's strategy would've been the exact same. Make the company look better in the short-run to sell. That is where I fundamentally disagree with you in the public vs. private debate.

 

 

"Not to continue to beat a dead horse, but I too have a couple of issues here. According to the shareholder theory of business the goal of a publicly traded company is to maximize value for all shareholders. The vast majority of the time what is beneficial for what you call "premium" shareholders is proportionally beneficial to any shareholder based on their ownership stake. If a company is more profitable, raises a dividend, etc every shareholder benefits; some just more so than others due to how many shares they own."

 

After selling products for major corporations for 25 years, and in sales over 30 years I can tell you that to maximize profit they screw the consumer. They start out doing reputable things, but in the end they always try to make money by screwing unsuspecting buyers. When sales slow on a product they cut the size and charge more to maximize profits, and as a consumer you must have noticed this. One of the largest paper cup MFG let's just call it "XYZ" sells paper cups but sells to Mc Ronalds. To help Mc Ronalds make more money and to boost sales it sells cups  that are 12oz.

 

Mc Ronalds use to sell say 13oz cups with a dotted line  that is filled with fluid up to the dotted line and with ice it is less than 12 oz. Now the 12 oz cups with ice is less than the 12 oz that the unsuspecting consumer buys even though it is labeled 12 with ice its like 8 ounces. Ice maker MFG make ice to nest in a cup that displace more liquid. Now the consumer pays for 12 ounces gets 8 ounces or less for a glass of coke that only cost 5-6 cents for every 12 ounces. Give more ice and less fluid and maximize that 2.00 cup. 

All you can eat places give you all you can drink to fill you up because 12 ounces for .06 cents fills you up and any one can give you unlimited drinks for 2.00 when each cup cost .06.

 

Dell made quality machines but to maximize profits and satisfy stock holder value stopped using quality parts, and started using inferior parts to maximize share holder value now look at them. They are going private because you don't have to answer to board members and major stock holders when selling their product. When Google took a write down on R&D many people were not happy and the stock fell, but Google did what was right for the company and the stock rather than to listen to people that cry like a Carl Ichan....this is rare, ans is how it is supposed to happen as you so eloquently put it!

 

Sprint did the same in the late 1990's they came on like a gang buster but forgot to invest in infrastructure now they are scrambling to change for the better. Contacts by cellular companies change mostly to maximize share holder value and Verizon said this to the shareholders in one of the shareholder meetings. Their goal was "to get unlimited legacy users converted to tiered contracts by 2015 before VOlte is implemented for obvious reasons!"

 

Don't think for a second that big bonus is not on the minds of anyone that is in sales and in fact that is what drives many of the sales at most corporations! That drive usually conflicts with the "the shareholder theory of business the goal of a publicly traded company is to maximize value for all shareholders."

 

 

 

 

Toilet tissue used to be 4x4.5 squares now they are 3.75x3.75 and shrinking. As MFG start cheating consumers by nickle and diming the consumer to maximize profit and make larger bonus they forget that the consumer usually fights back by looking for another brand.

The drive for any company on the stock market is to return values to investors and usually the preferred investor is always 1st in mind period. The drive to earn big bonus, and return value to stock holders go hand in hand but after a certain point the consumer usually gets the shaft in the end. 

Edited August 29, 2014 by QWIKSTRIKE

[sbolen]

I think we're done here. 

 

Mods, lock it down.