Friday, July 31, 2009

Broad consumer interests

Via AppleInsider:

The U.S. government regulatory agency will investigate smaller markets where major wireless carriers like AT&T and Sprint, which carry the iPhone and Palm Pre, respectively, do not provide service, according to Bloomberg.

"There are markets in the country where if you wanted an iPhone, if you wanted a Pre, you just couldn’t get it -- from anyone," said Julius Genachowski, chairman of the Federal Communications Commission."So one question is, is that consistent with broad consumer interests?"
Well let's think about this for a second. One possibility is that AT&T and Sprint hate making money, and thus do not offer these data intensive phones in rural locations. Another, perhaps slightly more plausible explanation, is that building the necessary infrastructure to support such phones in sparsely-populated rural would cost more than any subscription revenue they may get.

There are two choices here: Either the cell phone companies can increase subscription fees on its other users and use it as a subsidy for rolling out service in rural locations, or we can end exclusivity agreements that would provide disincentives for innovation in the cell phone market. How would either course of action prove beneficial to most consumers?

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