Saturday, September 13, 2008

T-Mobile@home with Competition

Our landline connection to the local telephone company has finally been severed! We are "free at last, free at last!" Well, not quite free - we'll be paying around $12 per month (saving about $25/month) and getting better features.

As I pulled the plug a couple days ago I reflected on the recent comment that mentioned the "ethics-free competition of capitalism". In my lifetime, telephone service has evolved from a "natural monopoly" with a single supplier and limited choice to a vibrant competitive marketplace with a wide variety of service options and prices suitable for nearly everybody. Lots of telephone operators and others lost their jobs, but many more new jobs were created, and, best of all, consumers now have tremendous communications opportunities at reasonable prices.


When I was young, we did not even have a telephone in our Brooklyn apartment. My parents made calls from pay phones. Incoming calls came to the candy store on our block and a kid would be dispatched to fetch us. When we finally got our own phone it was used almost exclusively for local calls because long distance was so expensive. Early in our married life we had a farm in a rural area of New York and experienced the joys of a four-party line.

I remember when the monopoly phone company would not even allow you to connect a "Brand X" phone to their lines because it might "disrupt" service to others - a "phone-y" excuse as we now know. Like all monopolies, the local phone companies provided minimum service, with little efficiency, and used inane "public service" excuses to keep competition out.


Well, along came cell phones, with multiple companies competing against each other and against landline phones. Some of our friends cut their landlines at that point. Then, with the advent of the Internet, and broadband connectivity to most households, along came Internet phone service. More and more of us are cutting our landlines, getting better service at lower prices.

We selected T-Mobile@home because we have T-Mobile cell phones and it is available for only $10/month plus tax and fees (a few bucks, we are not sure yet). Advantages: 1) You get to keep your old landline phone number, 2) all the existing phones in your home ring and can be used to make calls, 3) Your computer does not have to be on to receive or make calls, 4) The speed and voice quality are as good or better than a landline phone, 5) You can use your old answering machine and/or let the T-Mobile system record your voice mail, 6) Unlimited national long-distance is included, 7) Caller ID is included, 8) Call Waiting is included, 9) Call Forwarding is included., and 10) 911 works to alert emergency services to our home address.

We normally leave our old answering machine on and it intercepts and records voicemail normally. When we are away we can turn our old answering machine off and calls will be answered by T-Mobile voice mail -or- we can forward them so any calls to our home phone will ring on one of our cell phones. The only disadvantage of T-Mobile@home is that it fails if the electricity goes down (but that was the case already since all our phones are wireless and the base units need electricity to work) or if the Internet goes down (in which case we can use our cell phones.)

Our local phone bill, with Caller ID but no long-distance or Call Waiting or Call Forwarding, was over $37/month. We expect to save about $25/month once we recover the one-time $35 access fee and $50 wireless router fee.

There are many other Internet phone options if you have broadband service. They range from free to about $25 plus taxes and fees. If you are willing to leave your computer on to receive or make calls, you can sign up for services like Skype for free and make voice and video calls to others, WorldWide, who also have Skype and have mutually registered. Something called Magic Jack costs about $20/year and allows calls to be made and received nationally like a regular home phone. Services like Vonage cost about $25 plus tax and fees and appear to be similar to T-Mobile@home except you do not have to be a T-Mobile customer to qualify.

I expect other cell phone companies will be forced by the competition to offer $10/month home phone via Internet service. However, many cell phone companies are also in the landline business and will be reluctant to do so.


The main purpose of this posting is not to "sell" T-Mobile@home, although I certainly recommend it. My purpose is to counteract the media-sponsored idea that competition is somehow evil.

Fair competition - even the "cut-throat" variety - with government serving only to police standards and fair advertising and contracts, is far more responsive to consumers, and more efficient, than monopolies can ever be. Something that is now said to be a "natural monopoly" may, due to technology advances, no longer be so "natural". Beware of claims by monopolies that they are "protecting the public" or "assuring service to poor people or to rural people" or "protecting American jobs", etc. They are usually self-serving, anti-competitive, and, over the long run, bad for everybody, especially the poor and disadvantaged.

Ira Glickstein


Howard Pattee said...

I think Ira’s promotion of competition, “to counteract the media-sponsored idea that competition is somehow evil” is unnecessary. Evil or not, competition, like death and taxes, certainly does not need promotion! All three are unavoidable.

My history of digital technology differs from Ira’s. My history says competition did not play the dominant role in developing this technology. I think his view of monopoly as the alternative to competition is misleading. Monopoly is more often the result of competition. Game Theory says cooperation is the alternative to competition. A basic lesson of Game Theory is that pure competition is a dead-end strategy leading to extinction or monopoly.

Modern evolution theory also supports the complementary view of competition as just the tip of the cooperative iceberg. Cooperation is one great competitive strategy! If it were not for cooperation we would still be single-cell Protista, and civilizations would not exist.

Ira’s crediting competition for the Internet and cell phones is simplistic, and has little to do with their actual complex history. I can think of no better example of cooperation between international, national, and local levels of governments, multiple research centers and manufacturing technologies. Without cooperative international agreements on frequency allocations, communication protocols, like TCP/IP, the launching and coordination of satellites, down to thousands of local communities’ approval of cell towers, plus the thousands of coordinated technologies and vendors ― without these innumerable cooperative infrastructures none of the later competitive local ISPs and cell phone services would work.

Unfortunately, Ira cannot avoid ethics-free competition from conglomerates like Time-Warner and Murdoch’s News Corp to eventually, just for profit, take full advantage of this elegant cooperative system, often by bribing local politicians. Already that is the case here where Time-Warner has a virtual ISP monopoly.

I think the conservative’s promotion of unconstrained competition is misguided and dangerous. The greatest threat to civilization is war, and war is the ultimate consequence of an ideological competitive mind set; but that’s another topic.

Ira Glickstein said...

As usual, Howard and I agree far more than we disagree. Certainly cooperation is a necessary complement to competition. They are two sides of the same thin coin - totally opposite yet as close together and inseparable as possible.

One of the great lesson's Howard taught me is that standards (constraints) that restrict freedom at one level of a hierarchy are necessary to expand freedom at the next higher level.

The best example of that is the standardization of English letters and pronounciation that serves as a reliable platform for words, and the standardized meanings of words that allows us the freedom to express a nearly unlimited set of ideas. As this Blog proves, it is sometimes difficult for friends to understand each other's ideas - imagine how difficult it would be if we did not share language standards. (That is the meaning of the "Tower of Bable" story in the Bible.)

Howard is correct that TCP/IP and other Internet standards are due to a US government agency, DARPA (the DEFENSE Advanced Research Projects Agency).

However, "IBM compatible" PC standards were developed in the private sector by IBM (often by selecting companies with existing privately-developed standards for the original IBM PC, such as Microsoft's Operating System). Had IBM not entered the competition with the pionering Apple II home computer and the Radio Shack TRS-80 computer and others, one of them might now be the leading standard for PCs.

I bought one of the first Apple IIs and loved it. As an IBM employee I got one of the first IBM PS1s. It amazed me that IBM selected an "open" OS and architecture that spawned "IBM compatible" competitors. That IBM "cooperation" with other computer makers helped beat down the "closed" Apple system. It was a case of "let us (IBM compatibles) cooperate to compete with Apple".

I bought another IBM PC when IBM launched OS/2 as a competitor to the Microsoft OS. I suffered with OS/2 as Microsoft competed against OS/2 with the original Windows and beat OS/2 into oblivion.

Yes, cell phones and Internet phones and Internet service providers and cable system licensing are the result of government standards and approvals as well as the cooperative evolution of privately-developed standards into industry standards.

See the history of how the US Government (FCC) banned Carterphone from selling devices that could be attached to the monopoly telephone system. Fortunately, in 1956, the US courts overruled that ban. That opened the way for the telephone revolution we enjoy today.

Had the FCC ban stood, there is IMHO zero chance the local monopoly phone companies would have developed anything like the system we enjoy today.

Howard mentions "ethics-free competition from conglomerates like Time-Warner and Murdoch’s News Corp to eventually, just for profit, take full advantage of this elegant cooperative system, often by bribing local politicians."

Right! Back in 1996 we were connected to a cable TV company owned by Time-Warner that had a local monopoly. The startup Fox News (owned by Murdock) was excluded from that cable system because Time-Warner owned CNN, the leading cable news network.

So, to get Fox News and overcome Time-Warner's "bribing" of local officials to get a natural monopoly on local cable distribution, I got DirectTV. At the time satelite TV was expensive ($700 investment plus self-installation), but it got me around the monopoly. Eventually all local cable systems had to accept Fox News to satisfy their customer's desires - it was guys like me who made them do it and who helped destroy the local monopoly power of Time-Warner.

If Murdock's Fox News is a virtual monopoly it is because cable viewers make that choice. CNN and MSNBC are available but they "vote" for Fox News. Sorry.

Howard's last paragraph says that war is "the greatest threat to civilization". He may be right but I think he will turn out to be wrong. Keep in mind it was the threat of war that led the government to fund DARPA, the military agency that pioneered TCP/IP and the Internet.

Ira Glickstein