For almost 20 years the “big 3” cell phone companies (AT&T, Verizon, Tmobile) have been making billions of dollars in profits via their unfair contracts and questionable positions of influence with the US government and regulatory agencies. For the first few years profits were predictable and stable. Then smart phones came onto the market and the flood gates for massive profits were opened.
Smartphones take advantage of powerful microprocessors that enable them to act (in essence) as a mini-computer. Coupled with the amount of media (both video and music and video games) they made available and the overall increased monthly bandwidth that each user used sky rocketed. The cell phone companies saw a way to stick it to the consumer and charge them for bandwidth usages. Despite the cell phone companies paying a flat rate from the bandwidth providers, they decided they could make even more profits by divvying it up in a tier-related structure. If you look at the profit sheets from Verizon, their annual revenues from the cell phone market went up ten fold the year after smart phones became ubiquitous. Coupon codes were the next item they used to help increase their profits, with Straight Talk Wireless being the biggest user of them.
Seeing an opportunity, the MVNO carries (Boost Mobile, Cricket Wireless, Straight Talk and even Freedompop) decided to purchase bulk time and rates and bandwidth from these major companies and then charge a flat fee to the consumer. $45 unlimited talk, text and minutes was the modus operandi for many of these carriers. Yet, the bandwidth issue stayed the same.
At the start of their operations, 3gigs of bandwidth was the norm. Then as the so called “carrier wars” (a term coined by Tmobile) came about, such companies as Straight Talk decided to increase the amount of bandwidth given to their customers to 5gigs (up from 3gigs). Most of the other MVNO’s followed suit.
Around 2012 the “big 3” cell phone carriers started noticing the new market emerging and realized they could undercut (or at least try to undercut) the new mobile virtual network operators. Verizon and AT&T instantly came out with the “Go Phone” which ran on the AT&T network. A flat rate fee of $45 for unlimited talk and text was initiated. Soon all the major cell phone companies were in on the gold rush. The smarter ones decided to partner up with major brick and mortar retailer stores such as Best Buy, Radio Shack and even Walmart and Target.
Mobile bandwidth data is the future of the cell phone market. The obvious winners will be the ones who are willing to take a hit in the profitability sector in exchange for a bigger slice of the pie. This is why in this author’s opinions these markets need to remain unregulated as the market will self correct and capitalism will eventually win in the favor of the consumer. As the smart phones become more and more powerful as the years go by, we are going to see an increased demand for more bandwidth.
Google recently came out with Project Fi. At its core, it is an MVNO, but with Googles history of innovation and insatiable lust for market share, it is an almost guarantee that in 2016-2017 we will see increased bandwidth allotments for the users of Project Fi. The current benefit to switching to Project Fi is that you can use your phone in almost 120 different countries across the world. This is great for people who travel for business and will benefit them from not having to pay unfair and massive roaming charges. The only real limitations are the phones that can be used. Bring Your Own phone is not as diverse as it could be.