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Comment by awalton | Hacker News Reader

Must be nice being in an industry where you can basically print money by levying completely arbitrary fees and nobody is willing to stop you (i.e. because you've already used those fees to pay off politicians in both political parties in all of the legislatures in the land).

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Aren't we talking about fees for cell phone service here? It's a robust market with quite a few major competitors. What does paying off politicians have to do with anything?

Being able to advertise price X while billing price Y after locking someone into a 2 year contract.

Don't virtually all the major carriers routinely run deals where they make it extremely easy for you to buy out of a competitors contract?

The lock in from these contracts is quite weak.

That's not a solution to bait-and-switch.

I’m a little troubled that consumers would have an expectation that they may have to rely on that as a result of arbitrary rate increases. Do the vast majority of consumers know about those opportunities?

I’m definitely for consumers being wise about what they get themselves into, but I’m also of the opinion that a reasonable contract would preclude the addition of arbitrary fees. If I contract you to work for me at $80/hour, for example, I would not be particularly happy if you turned around and forced me to pay you $85, or be forced to pay some kind of fine.

I'm more troubled by spectrum "auctions" than by anything else. If it were up to me, I'd dig up the bones of whoever was in charge of this asinine decision and have them hanged, quartered, and drawn. Then, I would nullify existing contracts and return all their money.

There has to be a better way than to grant a single company monopoly over the spectrum slice for a market.

Yes. Shared network, transparently operated by all the service providers. (See also: in response to a similar what to do comment - https://news.ycombinator.com/item?id=17417243 )

Yep. It's definitely the contract part of this that is wrong. A price change should trigger a no-penalty renegotiation of the contract.

Are 2 year contracts still common in cell phone plans? I've used att for years and never was presented with the option of signing a contract like that.

Technically they are gone. But now the popular option are device payment plans spread out over 2 years so it’s essentially a contract as if you were to cancel your device the remaining amount is due immediately.

Another gotcha are how they discount $200 off a phone. The bill credits are applied over those 24 months so if you cancel early you don’t end up getting the full $200 off the total price.

I love Tracfone.

It is a great pleasure to swap the Verizon card for AT&T when coverage requires it, with no change to my billing or rollover minutes/data.

AT&T will not be charging me this fee. Let them try.

It's the additional fees above and beyond the base service. Carriers don't have to advertise these, which makes it incredibly difficult for the average consumer to reasonably compare plans side-by-side. Consumers sign a multiyear contract at a "$100 unlimited" plan or whatever, only to find out it's not actually unlimited and there's all sorts of additional surcharges. And now they're locked into a contract. Competition doesn't really help much at this point.

From 2011-2016 the FTC [1] and FCC [2] took significant action against mobile carriers for spurious charges, unadvertised fees, etc. These resulted in hundreds of millions in fines against the carriers and portions of that being returned to customers.

The amount of enforcement by these regulatory authorities changes significantly over time due to shifting political winds.

[1] https://www.ftc.gov/news-events/media-resources/mobile-techn...

[2] https://www.fcc.gov/enforcement/orders/1849

Before you sign that contact, you are entitled to read it.

That’s a given. But I think we have to split the difference on this one and argue that these practices are deeply anti-consumer. If a contract is, in essence, an agreement that one party is free to do effectively anything, and that the other must simply pay whatever the other party demands, subject to change at any particular time, that is less of a contract than it is a pair of handcuffs and a ball gag.

Except of course that in that contract it does not spell out the surcharges that they add without you being any the wise until you receive your bill.

They reserve the right to alter the deal. Pray they don't alter it further.

The contract was drafted by a team of expensive lawyers over a period of weeks or months. You, a complete legal novice, are going to read it in five minutes. Who’s more likely to win?

Furthermore, the economy presumably has more productive uses for everyone's time than expecting them to be amateur lawyers...

>It's a robust market with quite a few major competitors

If 4 is what you consider quite a few.

The way the mega mergers are going down, "quite a few" will be 3 here soon.

> It's a robust market with quite a few major competitors.

There are FOUR major competitors (AT&T, T-Mobile, Sprint, and Verizon) and this is soon to be 3, assuming the Sprint - T-mobile merger goes through. (Which it most likely will)

I have not found that T-Mobile has enough coverage to be useful. That is, a mile or two from the center of a city, there seemed to be no reception for me. I am skeptical that Sprint is any better based on what I've heard from others. And I think Verizon requires different phones, so I feel for practical purposes I am locked in to AT&T.

This is dumbing down the whole thing Sire. Why did ATT increased the fees by $1 and not $10 then ? Also you can literally chose from many many other telecom operators. I use T Mobile and my car has ATT. ATT is way better than TMobile for coverage may be the extra fees help them give better coverage ?

(Also what is the alternative ? Trump controlled government servants to decide how much fee they can raise ? At that rate we will be like UK where you need a license to own a TV).

The question is simple economics, specifically game theory.

What's the contract between the parties? Is it one sided, and allows arbitrary modifications by the service provider? (Check.) Is the telecoms market currently in a pathological (unhealthy) state, due to lack of sufficient number of competitors, due to gigantic barriers to entry, due to regulatory capture? (Check.)

Infrastructure is typically something that benefits from standardization and economies of scale. The original network effect. Therefore it's very much a "natural monopoly". But combined with spectrum auctions, it's a proper state sanctioned monopoly, or in this case oligopoly.

The solution is to separate the raw technical network operation from all the other shit, and make it a true common carrier. The hard problem is of course the network evolution (maintenance, tower allocation [add new or remove old, what kind of tower, where, when], backbone management [buy new fiber optic or sell old, or downgrade, what kind, from where to where, and when]), but this should be financed by the operators, and it could very well be operator contracted (when one operator feels they would benefit from a new tower, they would request that from the shared raw network provider, and pay for it).

Of course, there could be incentives to help the roll out of new towers (so, let's say the operator that pays for it gets 1 year exclusive access on that tower), or that the operators must finance at least X new towers every year or pay a fine (but this must be formalized so they must spend X % of their revenue on extending the network to new customers, and at least Y% on upgrading the existing network), etc.

Ultimately, it's a simple question, that leads to a hard problem, with very good approximate answers. We know this shit, it's the economics of a market of fungible service providers. It's the shit that got people Nobel-like prizes in Economics, because it's easy to model and show what's going on.

If you have to make that complex verbal gymnastics to explain "simple economics" you probably don't get it at all.

If you think that's complex, I think it's time to hear some bad news about other aspects of our lives.

If you have substantive criticism, questions, or other addendum, I'm interested and open to discussion.

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