iPhone 3G Activation Woes: The Industry Needs Reform

The widespread and widely-reported problems with activating iPhone 3Gs purchased last Friday (the day the latest Apple wunderkind went on sale) could be written off as another case of information overload, in this case the networks, servers, systems, procedures, and customer-facing staff simply not being ready or able to handle the load. We've seen this before, and will of course see it again. Such has practically become an expectation - just try, for example, to buy tickets to a hot concert online. It's chaos. Good luck getting through, getting the seats you want, doing so in a reasonable amount of time, or, perhaps most importantly, at a reasonable price. I've personally given up, and always wait for the DVD. And no, I was not in line at the Apple store last Friday, even though the iP3G remains on my list of possible replacements for the Q. I hate waiting in line, and never buy anything the first day it's released.

One would think, regardless, that picking up a new handset should be easy no matter what. But buying a cellphone of any form is a two-entity problem. First, of course, there's the device. Some devices are only available through certain carriers, even though technically they could work on other networks as well. Then comes the service - the iPhone, for example, is bound to AT&T because of a business deal, not because such must be that way to operate. But AT&T is thus in the critical path here, and it's clear they weren't ready for the level of demand that anyone could have told them would materialize. And how many transactions are we talking here? A few thousand at any given moment? Something went dreadfully wrong. While a bit more respect for paying customers was indicated here, however, AT&T didn't need to care - they are, in this case, the only game in town. Of course, AT&T's activation practices were motivated by a handset subsidy that demands in-store activation so as to prevent losing the services revenue that pays for the subsidy. But, that being the case, isn't the subsidy and the associated trauma to those waiting, waiting, waiting in line, a false economy? The original iPhone model of separating device and service worked better, but the revenue is accounted for differently. AT&T undoubtedly likes the new method better.

OK, the iPhone 3G activation debacle was caused by the typical (although I'm by no means saying here inevitable or excusable) breakdown in systems and procedures noted above. It was enabled, however, by an industry practice that needs to stop, and indeed, IMHO, should be illegal. Bundling a device with a specific service or binding it to a particular carrier where such is not required by the underlying technology is anti-consumer and ultimately in the best interests only of the suppliers, not the customers. The handset and the network meet at what we might call a natural interface point, and these in all cases should and must be open.

By way of a more common example, we've seen a similar issue with PCs. Call up Dell or HP or Lenovo or almost any PC supplier and ask to buy a computer without an OS. You can't. You can do what I do, and build your own from components, which isn't really very hard for anyone with a reasonable background in assembling electronics kits, assuming anyone besides me still does that. But the major PC vendors will try to sell you that awful abomination called Vista, because of agreements that are, again, anti-consumer and simply designed to drive up prices. Why have we, as consumers, yielded so much power to the suppliers? The market is supposed to work in the opposite fashion.

C'mon, carriers. Let's see some competition that extends beyond your ability to lock in customers with high prices and long-term contracts. Let's put the customer first. That is how, regardless, you build long-term relationships, loyalty, and trust. I hope those things still matter - but I could be wrong. And c'mon, lawmakers. Here's a real opportunity for you to redeem yourselves after dropping the ball on everything from the economy to education to Iraq. Anybody listening?

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