One Fool shares his views on the mobile phone industry: pricing, flexibility, transparency and service.
He came to Fool HQ under the banner of talking about the mobile market, but wearing a bandana of selling his company's products. A fair exchange, I thought, providing the subject is interesting enough for an article. And indeed, various things came up in my meeting with Robin O'Kelly of T-Mobile which are worth writing about.
Flexibility and transparency
Mobile phone companies will need to become transparent and more flexible, says O'Kelly neatly. (I'm paraphrasing throughout, by the way, hence the lack of speech marks. My interview shorthand is non-existent.) He then talked about how T-Mobile's newish tariff 'Flext' fits in with this, so I too shall use it as a marker for precisely how flexible and transparent the industry is.
With Flext you're not allocated a set number of texts or minutes per month, but a monthly allowance. You can use any combination of calls, texts, picture messages and voicemail up to the monthly allowance, all paid for in your monthly charge.
Take the Flext 35 deal. It gives you a monthly allowance of £180. Calls cost 20p/min and texts 10p. This means you might choose to make 900 minutes of calls or send 1,800 texts, or a combination of the two, providing the total doesn't exceed £180-worth.
This certainly fulfils the flexible criterion in a way that the industry hasn't done before, so T-Mobile gets a tick. However, I can't say that it's transparent. You see, this deal costs £30 per month through the T-mobile website, but if it only costs £30 then you can't possibly be getting £180-worth of usage! The usage amount makes the deal seem unduly fantastic.
Prices
Let's take a look at pricing now. The mobile phone industry has an interesting (and confusing) pricing and sales structure. O'Kelly mentioned that the deals you get offered by middlemen aren't the best deals out there and said that people get better deals through the T-Mobile website. It's clever stuff from Kelly, as it's all true. However, it's also true that these middlemen offer much better deals, even if they don't necessarily point you to the best one.
Take the Flext 35 deal, for example. Remember, you can get it with a free phone for £30 through T-Mobile's website. A quick look at The Carphone Warehouse shows that you can get the same deal through them for £17.50 for the first nine months, then £35 for the last nine months of the 18-month contract. Overall, you save £67.50 through the latter.
O'Kelly said that the mobile phone industry had really shot itself in the foot in some ways. By using companies like Carphone Warehouse to sell its products, it has allowed these middlemen to offer part of their commission in free phones and part in half-price deals or cashback. Now, we all expect deals at half-price and we expect free phones.
Services (and gimmicks)
O'Kelly pushed T-Mobile on services as well as flexibility. He believes that the mobile phone industry must do more to encourage loyalty, and about time too! All of them are competing with the same sorts of technologies (e.g. the new mobile broadband), but they each have their own angle on services: Orange has its 2 for 1 cinema deal, Vodafone has it's Music and Fun, O2 has.Um. Right. But they all have their spiel.
T-Mobile has StreetCheck. It's a nifty little online service that allows you to check T-Mobile coverage by post code. So if your office is surrounded by tall buildings, you can see quickly if it will affect the coverage.
It's reassuring, as T-Mobile wouldn't offer this service if it didn't have good coverage around the country. Still, I think it likely that other phone providers have equally good coverage, which negates its usefulness.
O'Kelly was saying that Flext and StreetCheck are the beginning of better service, greater flexibility and more transparency. Personally, I just want to call and text, so I'll keep choosing my phone contract on price and I'll take all the free phones and half-price deals I can. The Carphone Warehouse might do well out of our disloyalty, but so do we.
Still, it pays to shop around. You don't get many people on our Mobile Phones & PDAs discussion board buying their phones from The Carphone Warehouse either!
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