Chetan Sharma interviewied in Time magazine!!

OpenGardens blog contributing blogger Chetan Sharma interviewed by Time Magazine!

Well done Chetan!!

chetan_post.JPG By Chetan Sharma

Wednesday, Jun. 27, 2007

The iPhone’s Carrier Problem

By Jeremy Caplan

It’s one thing to get your hands on an iPhone, as folks camped out in front

of Apple stores around the country will do by the weekend. But there’s no

choice about the carrier: you only get AT&T (formerly Cingular) on an

iPhone. And so far, the early reviews have not been kind to the mobile

service and especially its cellular data network (“Pokey,” says the Wall

Street Journal; “excruciatingly slow,” says the New York Times. A spokesman

for AT&T said the company disagreed with those characterizations). Before

the reviews emerged, AT&T tried to play down the speed issue and play up the

new experience provided by Apple’s so-far well-received iPhone software.

“It’s not just the speed of the uplink,” says Carlton Hill, an AT&T

Vice-President. “It’s about the processor speed on a device and the

application design that enhance the customer experience. There are a lot of

ways to have an optimized data experience.” And the iPhone’s web capacities

are said to improve dramatically when it can sync up with local Wi-Fi

networks – if so, it would be a juxtaposition that may make the AT&T

connection feel even slower.

Nevertheless, analysts expect that millions of consumers will eventually

switch away from their current carrier to buy into Apple’s offering – and

that says a lot about how frustrated people are with the wireless carriers.

Forrester Research has found that the percentage of consumers who are happy

with their carrier has fallen steadily year after year, and more than 80% of

those surveyed by, a customer service rating site, aren’t

satisfied with their carrier’s service. founder Marc Karasu

says consumers are tired of carriers burning through hundreds of millions on

ads while ignoring major service problems. “Customers are screaming for

better service,” he says, “and if it doesn’t come from the carriers, it will

come from someone else.”

Here’s a look at what frustrates consumers most (some solved on the iPhone,

others not):


Consumers are tired of wading through eight messages to hear the one they

need (an inconvenience the iPhone is said to solve). And they are frustrated

that carriers erase old messages and tightly cap your inbox. With data

storage costs dropping, why can’t you keep your messages, or download them

to your computer? Imagine if Yahoo! let you keep just 30 or 40 email

messages at a time. (Instead they offer unlimited, free email storage).

“People treat voice mail like toxic waste,” says Craig Walker, CEO and

founder of GrandCentral, a startup that offers unlimited voice-mail storage.

“They feel like they have to delete every single message. But what if they

want to save something?” says Walker. “I have 10,000 emails in my inbox,

which is incredibly valuable. I can go back and find an old message. People

should be able to do the same thing with voice mail.” Consumers have long

been able to save e-mails, forward them at will and access them in whatever

order they want, so why is voice-mail stuck in the dark ages? The carriers

haven’t improved voice-mail because it’s harder to market service features

than, say, sexy phones that work exclusively on one network.


After shelling out $40 or $50 a month for a basic calling plan, carriers

pinch consumers for additional bucks over and over again. Starting with an

activation fee and ending with a cancellation fee if you decide to switch

carriers or want to cancel your service, consumers are squeezed for dozens

of add-on charges. For ring tones, video services, text messages, and just

about any specialty service that comes along to provide a convenience,

dollars are tacked on to your bill. Apple and AT&T are taking a step away

from that fee-squeezing model by offering all-in packages that include data,

video and text messaging. They start at $60 a month, though, and climb to

$100 for 1,350 monthly minutes of calling. That means that if you get the

$600 model and choose the top minutes package, you’re going to shell out

more than $3000 over the course of the required two-year contract. Oh, and

you’ll still have to pay $36 for activation.


The carriers continue to block access to their networks by mobile startups

even as these innovators offer new ways to watch and share video, trade

pictures, and use phones in new ways. “They control the industry but

strangle innovation,” says mobile industry consultant Chetan Sharma. They

limit the things you can do with your phone. They want you to pay them for

picture messaging, so they restrict independent providers of that type of

service. They want you to buy ringtones from them, so they cut off growth

and innovation in that mini-industry. They would prefer you to buy music and

video from them as well, and they would rather you not call internationally

without using their high rates. All of this means that consumers are

consistently cut off from inventive startups. The carriers control billing

for add-ons, and service providers selling ringtones, music, video, etc are

so new that they need the carriers’ help to gain a foothold. When the

carriers do open up to partners, they often demand a 50% of revenue, far

exceeding the below 20% share carriers get in other countries.


The mobile carriers have maintained unchallenged dominance over their

markets – and their customers. That’s allowed them to preserve their

potpourri of fees and to go slow on innovation, thus the stale approach to

voice-mail and other services. Google recently proposed an auction system

that would enable new players to buy into the wireless spectrum, an idea

that could open the door to the sort of competition in the mobile world that

enabled the high-speed access offered by better Internet Service Providers

to topple AOL’s old stranglehold on its customers. The carriers argue that

they have continued to innovate: “Over the last five years,” says Verizon

Wireless spokeswoman Brenda Raney, “wireless phones have gone from simple

calling devices to multifaceted device entertainment and productivity tools,

because of broadband-like technology.” But American carriers have a long way

to go. Phone service in the U.S. remains several steps behind Europe and



The leading Web merchants have set a high standard for quick response times

and satisfaction guarantees. Consumers want to be listened to when they

e-mail or call customer service. They hate waiting for 20 minutes on hold

and they despise droning voice-mail menus with seven options, none of which

is a real human on the other end of the line. If the carriers don’t step up

their service, Google and other Web giants may find alternative routes for

getting mobile services into the hands of consumers. Daniel Doutol,

co-founder of SpinVox, an innovative voice-messaging startup, says it’s just

a matter of time before companies like Google and Yahoo! compete more

directly with the carriers. Both portals, like Apple, have fiercely loyal

fans. About 55% of those asked in a survey by Equs Group, a market research

firm, said they would happily buy a Google or Yahoo-branded phone. It’s a

lucrative market: by 2010, about as many people will have a cell phone as a


link HERE