Cellular Carriers

George made an interesting observation regarding cellphone carriers. He was pondering what it would be like if all the carriers had the same technology and thus competed on services and phones rather than the mish-mash of different technologies we now see.

Interestingly, this is exactly waht Europe did. They mandated GSM technology and hence all phones support GSM and the continent is standardized the nice benefit is that roaming works smoothly and there are nice economies of scale when it comes to handset manufacturing. At the time, I thought that it was not the best idea, because they were making a big bet on one standard.

Contrast this with the US where carriers were free to use their own technologies, and so we have a wide variety of cellpone technologies including CDMA, TDMA (going away), GSM and iDEN. I think the theory behind the open market approach was to make the markets more competitive and encourage the adoption of new technologies. Interestingly, the wide range of technologies has added much complexity and confusion to the market. From the phone companies perspective, it is probably a good thing because it increases switching costs, but from the users perspective it is frustrating because there is little commonality between carriers.

I originally believed in the competitive story, but am not so certain anymore. I find the whole world of cellular phones extremely annoying. Interestingly, I am fairly well educated when it comes to wireless technologies and standards and so I can only imagine how it difficult it must be for people who have limited experience. The unfortunate thing is that it is doubtful the situation will get any better and so in the end, when buying a new phone, the story remains: buyer beware.

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