Change The Station

Having worked in the cellular industry for over two years now (full-time at first, but now part-time as I go to school), I think I finally have a good grasp on much of how everything operates. That is, the phone companies themselves, which I have in one way or another all worked for, and the customers. It may not seem like a complex industry at all, if you’re just a regular consumer. You sign up for your plan or whatever, get your phone, and there you have it. You’re off with your free phone, having signed a 3-year contract, and it’s happy sailing from there on. Wrong, my good friend. Let me shed some light on the inner-workings of these companies.

So what do we have? Bell, Rogers, Fido, and Telus. Then we have Virgin and Solo, which both suck enough balls themselves anyway, so no real need to mention them anymore in detail. Rogers acquired Microcell Telecommunications a while back, November of 2004, as I recall, so it’s all under the Rogers brand now, but they operate as independent entities and brands. They are the only two GSM providers in Canada, and share network towers. Telus and Bell, on the other hand, operate under a CDMA network, and they too, share towers. Cuts costs, I suppose.

Anyhow, being that there’s not much competition going on in Canada, these companies are pretty much free to charge whatever the hell they want to charge. For phones, plans, service fees, etc. Your choices are limited, really. And to top it all off, every single company offers essentially the exact same plans. Fido comes out with some plan with X amount of minutes for X amount of dollars. Vigilant Telus and Bell reps hear about this shit before it even comes out. I have no idea how this happens, must be word of mouth from within the company. But within hours, Telus and Bell will offer the exact same plan.

Now for phones, you’re looking at a GSM vs CDMA battle. CDMA claims to offer better reception, and has a faster data network, EVDO. GSM phones contain SIM cards, which can be easily swapped into another phone, so you can get overseas phones and whatnot, which isn’t possible on Bell and Telus (well, it is possible, but requires a sketchy and expensive process called ESN cloning). A common misconception with the companies is with phones breaking. People seem to think there’s an advantage to having a GSM provider over CDMA. Now, I work for Telus currently, and if your phone is broken and you’re out of warranty, you’re fucked. You’ll have to buy a new phone. Luckily, their phones at outright cost (that is, without a contract term), are cheaper. As with Bell, I would assume. But, that’s the exact same situation as with Rogers or Fido. If your phone is broken, you’ll have to buy a new one. The only difference is, you have more choice in that you can purchase an overseas phone, or any GSM phone you can get your hands on. Usually a much more expensive alternative. GSM, however, would be great for cellphone enthusiasts who like having phones from overseas and not be restricted to the shitty models we get here in Canada. But for a regular user who just needs service, any company would do.

One of the biggest things wrong with the cellular industry…..the customers. There, I said it. And it’s true. People expect WAY too much out of the companies, and subsequently, their phones. Cell phone companies provide you with a service. What you choose to do with your service, and how you treat your phone is not determined by them. I’ve had customers come in with ridiculous problems and expect the company to take it up the ass. For example, lost or stolen phones. Yes, it’s a damn shame your phone got stolen. But how is it Bell’s responsibility to give you a brand new phone for free? Yes, you will still be charged for your service even if you don’t get a new phone. Tough shit, eh? If your phone falls in the toilet, no, it is not covered under warranty. Don’t expect to get a new one, or even have your current phone fixed. If you drive your car into the lake, Toyota would not hand you a new Corolla, so how is your cell phone any different? People tend to think that because they pay for this monthly service, the cell phone company is liable for the functioning of their phone, and that it is their duty to provide you with a fully functioning unit. Wrong again. They don’t owe you shit. Let’s look at why, through a financial stand-point.

Let’s get the obvious out of the way. Cell phone companies exist to make profit. They provide you with a service, and in return, we pay them money to receive the benefits of this service. Now, let’s say you get a phone from Rogers, or whatever, they’re all the same. You sign a 3-year contract, and you get a phone for $0. Sounds pretty sweet, huh? Because the retail value of that phone is probably $299 - $399. You get a $30 plan, plus fees and whatnot, before taxes, you’re looking at $45 bucks, roughly. In order for Rogers to make their money back for giving you the phone for free, plus paying commissions to the store and sales reps and whatnot, they’re looking at roughly one year before they break even and start making profit. If your phone breaks within 6 months, and it’s your fault, it wouldn’t make financial or business sense to give you a new one for free; they’d be losing money.

What most people don’t understand is that when you sign a contract, you receive a phone at a subsidized cost, because with that contract length it is expected that you’d spend more money on your service than the initial cost of the phone to the company, and there’s the profit. It’s all about the Benjamins, unfortunately, when it comes to busted phones. Because, let’s say, instead of a $45 dollar plan, you’re on a $450 plan. Well, things are different now. Because you’ve made Rogers more than enough money back in the first 6 months, so if your phone breaks, they’ll probably get you something for a good deal, because they know that they’ll make the subsidy back quickly. And on top of that, they make you extend your contract length again, so they’re guaranteed to make even more. Smart bastards.