Lately, Google (s goog) Voice is perhaps one of the most widely discussed products in the Apple (s aapl) blogosphere besides Apple’s own native devices. With its rejection from the App Store and people pointing fingers at Apple, AT&T (s att), Steve Jobs and just about everyone and everything else in between, new evidence put forth by Andy Kessler and The Wall Street Journal (WSJ) directs blame squarely at AT&T. Rightfully so.
Is anyone really surprised?
We know that AT&T and every other cell phone carrier overcharges for service, taking into account the sheer volume of users and how long cell phone technology has been around. Considering how much providing basic cell phone service costs, and how relatively inexpensive it is to add text messages and data support, it’s clear that companies like AT&T stand to make a pretty penny.
I mean, honestly; it costs an extra $20 a month for unlimited texting in addition to $30 a month for “unlimited” iPhone data usage. Really? Text messaging costs two-thirds the price of always-on, feature rich email? Emails that support video, audio and images; something iPhone users still aren’t getting because of a lack of MMS support. There’s just no way the pricing structure is based on the product.
Looking at the Big Picture
The WSJ report reveals that AT&T’s profit margin for its wireless services are considered high at 25%. It makes sense, considering many people likely pay extra for hefty plans (data, text, video, etc.), when the actual impact on AT&T’s network is marginal. Granted, sometimes coverage is spotty and “crowded” but the fact is, that’s not because we’re causing too much strain on the network, it’s because AT&T should be investing in making these networks more interoperable with others and capable of carrying more users, but is instead price gouging customers for increasingly horrible service.
Are they taking advantage of us? Yes. We know that. (Even David Pogue agrees with his “Take Back The Beep Campaign”) So why on earth would AT&T quietly stand aside and allow Google Voice, since it represents such a dramatic shift from the norm? Google knows that voice calls and text messages are very easy on bandwidth. AT&T knows that allowing Google to steal its profits marks the end of an era. Landlines gave and continue to give ground to cell phones, and customers are switching to VoIP services or other mediums like Twitter or Google Voice for communication. Cell service might be next on the chopping block, if something like Google Voice is allowed to take root and grow.
Can AT&T reinvent itsefl and survive? The economy is tough, so now is the perfect time to be daring and really focus on your customers. Or will AT&T continue to overcharge and stifle innovation like Google Voice and other services? I personally hope that we will move towards a better future where carriers will play nicer with each other, with other services, and with other emerging technologies. For example, wouldn’t it be great if when I was at home, my iPhone routed calls over my Wi-Fi connection instead of over the “crowded” network? It might alleviate some of AT&T’s service outages. Things like this are possible, but only in consumers wield their power and demand that carriers provide them.