Travels

What can be said about a merger between Sprint and T-Mobile?

It won’t happen, that’s what.

Let me dive into the heart of an announcement I’ve been mulling over for the past few days. Recently there has been small-talk in the wind about a potential merger between T-Mobile US and Sprint, whom are the fourth and third largest wireless carriers in the United States respectively. This announcement comes on the heels of an already-completed merger between MetroPCS and T-Mobile US which was finalized at the end of 2013. Both Sprint and T-Mobile US have expressed an interest in merging forces to take on ATT, who (despite direct marketing attacks against them from T-Mobile) still continues to show positive growth in last year’s 4^th quarter earnings.

Although I can see the logic in another merger by T-Mobile US (especially a merger with a company larger than themselves) I don’t see the sense in choosing Sprint. Granted, T-Mobile US is aware that they have a lot of ground to cover in order to regain lost market share; prior to the merger with MetroPCS, poor management and advertising led to a sharp drop in new subscribers which ultimately forced the hand of T-Mobile US’s parent company, Deutsche Telekom, to either drastically re-invest in the American portion of their market or bail. Their ultimate decision was to go balls-to-the-wall and reinvest. Deutsche Telekom bought US prepaid carrier MetroPCS as their first move in a hard push to rebuilt their American market.

It seems the MetroPCS merger worked out well for T-Mobile US, so why don’t I see any sense in choosing Sprint as the next merger-buddy?  Although it isn’t common knowledge (or perhaps as common as it should be), Sprint and T-Mobile are currently operating on two completely different and incompatible wireless technologies.

Let me explain. There are three major technologies in wireless phones right now: GSM, CDMA, and LTE – the last of which you have probably heard of, if nothing else. What these acronyms stand for is essentially irrelevant; what is important to know is that each carrier uses either CDMA or GSM services as their backbone and then LTE service is applied on top of the backbone to provide next generation (or 4G) service.

For example, Verizon uses CDMA service as their backbone. CDMA provides Verizon customers with talk service, and 2G/3G data. From there, Verizon has applied LTE service on top of their CDMA service. When you’re in range of a Verizon tower that has had LTE service added to it – boom! You have 4G speeds.

It is important to note that carriers can only have one backbone. In other words (going back to our Verizon example) if Verizon uses CDMA as their backbone, their devices cannot detect or use GSM towers. This seems to be silly, but the two technologies are so completely different that there just isn’t enough room in phones to build in a radio for both services (Nerd moment: there are, of course, some exceptions to this rule and I'm sure one or two tech-savvy people will point that out to me. I'll squash that argument now by saying that if a carrier were to hypothetically use two backbones, it would need all of its phones to be dual-SIM and those phones would be financially unfeasible to market. Therefore, arguing that Sprint and T-Mobile could migrate over to a dual-SIM environment is not an option). There are a lot of reasons for this including the way in which the receivers are constructed and the frequency that each service uses in the air, but we won’t get into any of that here. After all, knowing why the two technologies aren't compatible isn’t necessary to understand why a Sprint and T-Mobile merger makes no sense.

Anyway, GSM and CDMA each have their own unique advantages. GSM uses SIM cards, meaning that you can easily carry your number from one phone to another and even from one carrier to another assuming that carrier uses GSM technology. CDMA, however, does not use SIM cards and therefore carrying your phone to another carrier is virtually impossible on a CDMA service. Additionally, GSM has greater 3G speeds and is the only of the two technologies that has the capability to talk on the phone and use data at the same time. CDMA, however, is cheaper to implement and can therefore cover a much broader area with much lower maintenance costs. This explains why Verizon has been able to advertise their reliability for so long – they simply have more towers because their towers are cheaper to mass produce – and why AT&T has been able to advertise the speed of their data network for so long.

(If you’re not a tech nerd who didn’t already know that, some lights should be going on in your head regarding all the confusing commercials you’ve seen about wireless service – but let’s get back to the point)

So, hang on a minute here – as far as “customer satisfaction” goes, GSM sounds like its superior. Even though CDMA is cheaper, shouldn’t every carrier be using GSM?

When CDMA was introduced it promised the ability to lock down a phone to a carrier – something Verizon really wanted to do. Why, you ask? The answer actually has to do with the way phones are sold in America. In the United States, carriers offer phones at low prices by locking you into a contract which brings down the price of the phone. We are the only country in the world that does that (and if you’re curious as to why, it can be found in my blog post here). Although this helps American customers to get very expensive devices at a low cost, it has proved to cause one major problem: if a subscriber cancels his service early, the carrier actually loses money on the deal. This happens because of the way contracts are structured and can be clarified by reading the blog post linked above. Although I could give you a clear explanation here, the reality is that I’ve rambled enough already. So, suffice it to say that subscriber cancellation in America = a loss of money, and losing money is bad.  

So what does this mean for us? Since every cancellation in America is a net loss, carriers want to give as few reasons as they can to subscribers that would be an incentive to cancel their service, and CDMA carriers use an inability to transfer your phone to another carrier as a cancellation deterrent. It sounds kind of underhanded, but it’s true.

Let me get to the point. There are two CDMA carriers in the United States: Verizon, and Sprint. Everyone else uses GSM (and prepaid carriers just mooch off of the towers that the big carriers put up, so they don't count). Everyone, including T-Mobile US, uses GSM. This means that Sprint and T-Mobile US would be merging two mutually exclusive networks and trying to somehow duct tape them together to make one network.

How would they do this? The only logical answer is to use the LTE service.

The only way to make a Sprint and T-Mobile US merger work would be to not merge their services, but instead share capital and patents to work towards a massive-scale LTE rollout.

Clarification: LTE, although currently being used as a service laid on top of either a CDMA or GSM backbone, can operate as a standalone backbone itself. LTE service has the ability to handle phone calls, data, and anything else a subscriber can throw at a mobile network. Therefore, Sprint and T-Mobile US would only have one reason to merge – to surpass Verizon’s coverage and then make a massive push to phase out their CDMA and GSM services altogether and migrate their network solely to LTE.

In the end, I just can’t see this happening. LTE rollouts are a massive undertaking. If they weren’t, we would have it everywhere by now. For Sprint and T-Mobile to try and make some kind of underdog push from behind and then magically become so efficient that they could beat Verizon to a full LTE conversion would be one heck of a feat – a feat that I just can’t see happening.

In my opinion, if either of them actually had the internal structure to take on Verizon’s rollout-pace they would have done it already.

So the verdict in all of this? Two wrongs won’t make a right. There is no way that a T-Mobile and Sprint merger would be financially or operationally feasible and to stand behind the notion that a push for a full LTE rollout would be a valid reason for a merger is not only lacking in common sense, but it’s something that the FCC will never buy. After all, the same argument was made just last year when AT&T tried to buy T-Mobile and the FCC didn’t buy that, even for two companies who would have to do far less work to successfully merge, as they already currently run on the same backbone.

Over the course of the last couple days, I have been voicing my distaste over the new Apple iPhones that were released – specifically, I have thoroughly decided that I am not a fan of the iPhone 5c.

In the first post that I put out, I made a comment that I was of the opinion that the iPhone 5c should only launch overseas, and that Apple shouldn’t bother with it here in America.

A lot of people wanted to know why I said that. Is it because I think other countries are less privileged than us or something?

No, actually this is not the case at all. You see, here in the United States we don’t pay all that much for phones, and it’s been this way for so long that we don’t think twice about it, except maybe for the fact that as consumers, we here in America aren’t really willing to pay more than a two hundred bucks for a phone, right?

So could you imagine paying seven hundred dollars for an iPhone?

This is where you violently eject the drink you were sipping on and laugh, or perhaps wonder why anyone would pay a price like that for a device that isn’t worth that much.

Well, guess what: it really is worth that much.

You see, smartphones these days have the power to do anything a modern computer can do, and then some. In reality, it costs apple well over four hundred dollars to produce an iPhone; but if that’s the case then why do we only pay two hundred dollars for it?

In steps the contract.

Have you ever wondered exactly why cellphone companies lock you into a contract? Most people don’t even think about it anymore because it’s just such a common thing. When considering a cellphone, your internal monologue usually goes something like this: “You want Verizon or AT&T premium service? You need a contract”. That’s just how the world has worked for so long now that the great question of “why” doesn’t even cross our minds. It seems incredible, too, that with so many “No Contract Phone” options the contract carriers would still be able to rope people into the contracts. How do they do that?

Allow me to answer the question you never thought you needed to know. On average, prepaid carriers will charge you fifty five dollars per month for “unlimited” smartphone service during the course of a thirty day period. To get the same deal, the average contract service runs about ninety dollars per month. Furthermore, a contract requires you to sign on for two years, with the threat of a “cancellation fee” that can be upwards of three hundred and fifty dollars in the event that you decide to jump ship early. So why do they do that? It doesn’t seem like a sound business model to charge more for the same service, right? Why are they charging you an extra thirty dollars per month?

To find out the answer to this, I’ll compare the price of a Galaxy SIII on a contract and on prepaid.

On Verizon services, the Galaxy SIII is currently available for free as an upgrade. On Boost Mobile, the Galaxy SIII will run you four hundred dollars.

Yep. Four hundred dollars.

How does that happen? The answer is simple: contract carriers are using the structure of a contract to reduce the price of the phone. In other words, a contract carrier charges you a higher monthly price because it is essentially subsidizing the price of the phone over two years. This is also why they don’t want you to cancel their service; if you did that, the company would lose money on the phone. On top of the cheaper phone, a contract carrier can also offer faster service and better coverage, but all of that is just fluff. What you, the reader, should walk away from this blog with is that a contract only serves one purpose: to put a phone in your hands without paying nearly a thousand dollars for it.

So in the end, what’s the point of “no contract providers”? The answer there is that it’s all about the marketing. Have you ever had a bad experience with a contract? Many people at one point or another have encountered an enormous cellphone bill due to some kind of overage (remember the days before text messaging was unlimited?) and as a result, they don’t want to be “locked in” by a carrier. They’re afraid that they’re being ripped off, mostly because the carrier didn’t properly explain the potential for overages or how the contract system works in general.

Fortunately, the days of massive overages are long past. Contract carriers have simplified and dramatically lessened overage fees, and there are new “transparency” rules in place for things like cancellation fees. However, a lot of people are still scared of the contract, and no contract services feed on that fear to draw people away from the premium service of contract carriers, all the while continuing to provide phones at a non-subsidized price.

Okay. So, iPhone 5c? You said something about not marketing it in America?

Right. So now that you know the difference between a subsidized price and an unsubsidized price, let’s shed some light on the iPhone 5c.

First off, the subsidized price of an iPhone 5c is ninety nine dollars. Unsubsidized? Three hundred dollars.

Subsidized price of an iPhone 5s? two hundred dollars. Unsubsidized? Eight hundred.

Subsidized price of an iPhone 5? Ninety nine dollars. Unsubsidized? Eight hundred.

So let’s look at those numbers. Over the course of the contract, the “time to profit” point on the iPhone 5c through the course of a contract is much sooner than the other phones. What is time to profit? Think of it as a phone provider asking the question “at what point in a contract while paying the subsidy cost will  the customer pay off the cost of the phone and we’ll begin to make a profit?”

So the iPhone 5c makes a profit a whole lot faster because it’s cheaper to build. The crazy part about that is: the iPhone 5 costs the same amount of money on a contract, has the same hardware as the iPhone 5c and is built a whole lot better! In other words, if you’re thinking about a cheap iPhone, in our country, you would be a whole lot better off just buying the iPhone 5. After all, it is the same price.

So, what good is the iPhone 5c, and what does this have to do with other countries?

Most countries in the world do not have the ability to subsidize the price of a phone. In China, for example, it’s normal for individuals to dish out eight hundred dollars for a phone. They don’t subsidize the phone, which means no contract, but also means an expensive phone.

So, the iPhone 5c would be fantastic in markets like China. Why? People would only have to pay three hundred dollars instead of eight hundred for the phone!

Great idea!

This is why I believe it shouldn’t have ever been launched in the United States. Here in the US, the iPhone 5c is nothing more than a money-hungry grab at profit. In China, though, it’s a brilliant and ethical way to get iPhones into the hands of the average person.

So there you have it. This was more of an informative post than news, but it is something that I believe all phone users should get a clear explanation on – after all, we’re the ones under contract and buying this hardware. We have the right to know what we’re getting ourselves into.

Stay empowered, and the next time you walk into a phone store to get your next upgrade you’ll be prepared.

 

Image Source Found Here

 

After doing a lot of reading on the iPhone 5s, this device seems to be pretty good on paper. It's one of those things that I hate to admit (because I'm not typically a fan of Apple) but I believe in being fair.

For the past few days I have been yearning to do some research on the iPhone 5s and how its changed; I am particularly interested in the details of the fingerprint scanner, but other ventures have sucked away my time. So at long last I have finally been able to take a look into the yet-to-be-released phone.

The changes of the new iPhone can be summed up into two categories: technical changes in the phone, and other changes, which I will hence be dubbing "iFluff" - things that have been added just because they're easy to market as "cool". The major iFluff upgrade? The fingerprint scanner.

Yes, Apple has added the much-talked-about fingerprint scanner to it's new phone, but to be honest it's probably the least interesting upgrade on the list. However, I will be going into great detail about it. I really wasn’t interested in looking into the fingerprint scanner because I thought it was cool, though; more realistically I wanted to bash it (because I think it’s nothing more than a novelty) and bash it I will.

At the end of the day, the rest of the iPhone 5s has very little to be negative about though, and all-in-all despite the fact that the advertising over-glorifies it to the point of puking rainbows, I would give the device a healthy 9/10 in terms of it’s features and hardware.

That means a lot coming from me. I don’t really like Apple, but fair is fair. It’s a good phone and for the rest of this blog I'll be breaking down what makes it something to talk about.

First: This phone is the first device - ever - to run on a 64 bit processor and operating system.

This doesn’t mean much to people who are non-technical, so let me break this one down real quick. In terms of computer processors, there are two types: 32-bit and 64-bit. Saving all of the technical mumbo-jumbo, what you should walk away with from this paragraph is that 64-bit systems are the newer, faster ones. You should also know that regular computers have been off of 32-bit for about five years now. So why hasn't this technology moved to smartphones yet? It has been difficult to get that technology down to smartphone-size and I definitely give Apple kudos for doing it first. 

To the consumer, the whole "32-bit vs. 64-bit" thing doesn’t mean much – right now. The problem is that 64-bit systems don't really work faster unless the programs on that system are optimized for it.
What does that mean? Well, it means that there is an inherent problem with the initial transition to 64-bit: the software now has to come up to meet the hardware, meaning that most apps won’t even take advantage of it yet. In other words, we probably won’t even feel the difference of 64-bit until the iPhone 6 is on the horizon. However, Apple is setting themselves up to continue to be a smartphone player in the future by making the switch now. IN the end, it will mean that Apple will be the first to optimize, the first to get faster and this will mean that Apple stays in the lead when it comes to the speed and fluidity of their devices. It seems that while everyone else was revolutionizing the accessory market with smartwatches, Apple was working on a 64-bit phone. Well done. I still think Apple needs a new toy to prove they can continue to innovate in the overcrowded smartphone market, but that’s a point I’ve already made.

Second: iOS7 is really very nice.

Even though this isn’t really an iPhone 5s-specific thing, I have to give it mention. I am very, very pleased with the iOS7 system. It’s brighter colors, flatter look and more robust set of features bring it (finally) up to par with the android systems in terms of “cool-things-my-phone-can-do” stuff, and these little gadgets suck in new users better than any marketing method. Case and point: the main selling point of the Galaxy S4 is its ability to track your eyes. It’s a novelty, but its just one more cool thing it can do to allow its owner to say “my phone is cooler than yours”

iOS7 is finally supporting lock screen notifications (those things that tell you when you have messages, voicemails, etc. that you see when you first turn on your phone), a radio service similar to Google Play or Spotify, and quick-switches for phone features like Wi-Fi and Bluetooth. These are things that android has had for years now, so it’s about time Apple jumped on the band wagon.

Third: The Camera got a much-needed update

For those who aren’t familiar with the issue, the iPhone 5 has a major camera problem when in sunlight. Apple opted to use a sapphire lens on its camera on the iPhone 5; sapphire is a good choice because of its thinness and durability. However, the small size of the camera on the iPhone 5 caused the sapphire lens to make photos, well….sapphire-colored, when in direct light. Therefore, the iPhone 5s received a wider lens. This should correct that issue.

All in all, this whole group of things stacks up well. New features, a new chipset running on a 64bit architecture and a fixed camera mean the only thing consumers will be worrying about is the durability of the phone, which still lacks. Oh, right, and the fact that the phone keeps a record of your fingerprint.

So, let’s move on to that fingerprint reader.

This so called “revolutionary security device” gave me a good laugh today while I was catching up on the details of its function.  I’m disappointed that Apple centered its focus of changes around it when so many other, more significant things changed in the iPhone 5s.

First off, let me start by saying that Apple’s fingerprint scanner is by no means revolutionary. The Motorola Atrix HD had a fingerprint reader back in 2011, and there are even a handful of other devices that have had it since then. Heck, even computers running windows 7 have had fingerprint readers for years. Fingerprint authentication isn’t anything new and if you’re attentive you’ll note that you really don’t see them on anything nowadays, simply because they were expensive to produce and didn’t really change anything.

Now that I’ve gotten that out of the way, let’s move on to Apple’s device, which is apparently “revolutionary” now that it’s in an iPhone and not in the hundreds of other devices they’re already in. The fingerprint scanner itself is known as “Touch ID” and saves your “fingerprint data” in an encrypted section of the processor. Apple is doing this because they are ensuring us that reading a fingerprint is more secure than typing in a passcode.

Except, Apple doesn’t believe it’s more secure than a passcode. As it turns out, if you reboot the phone or wait longer than 48 hours between successful unlocks, the phone reverts to a “backup passcode” that you have to use to unlock the phone.

Apple’s reasoning for this “feature”:  To prevent phone-thieves from “stalling for time while they figured out a way to circumvent the fingerprint reader”.

What?

So, Apple, what you’re saying is “Fingerprint reading is less secure, but it’s cool so we’re going to put it in. However, to keep your phone secure, we’re going to make it so that you have to get into the phone the old fashioned way if it gets hijacked”.  Now, that’s just funny to me. Also, the Touch ID is already being reported to have spotty functionality at best when hands are “sweaty, wet or dirty” and you essentially have to poke the home screen dead-on for the phone to work, so forget one-handed unlocking.

So, what is the verdict on the Touch ID system? Fail. Also, I’m not happy with Apple claiming to keep my fingerprint data in the wake of all the news about the NSA hacking into everything. For all I know, they’ve hacked into my cat by now. The last thing I want them getting is my fingerprints – not cool. Now before everyone tells me I’m overreacting, I should note that I fully understand how the Touch Id system works: I understand that it’s kept on an encrypted part of the chip, and never gets transferred over the internet, etc. etc. But, if the NSA can get into a Blackberry – which is certified in security far beyond any Apple product - I trust nothing.

At the end of the day, the iPhone 5s is a solid device wrapped in a package of fluffy iSheep wool. Despite this, I would still recommend the device to a consumer, especially if you’re already an Apple user – this one really would be worth your money if you're looking to upgrade. If I were you, though, the first thing I would do once I unboxed it would be to turn off Touch ID. It’s useless. As for the second thing? Put an OtterBox on it. The iPhone 5s still retains classic Apple fragility, and besides - TouchID doesn't even work with an OtterBox. How could it, when the OtterBox cases cover the button?

 

Image Source Found Here

I am officially taking issue with the iPhone 5c.

Why, you ask?

For starters, its marketing scheme is a direct rip-off from the Nokia Lumia 920.

Okay, enough with the one-line-impact-phrases; allow me to explain myself. I am currently the happy and proud owner of three regularly-used devices: the Nokia Lumia 920, which is my business phone, and the HTC One, which is my personal device, and a first-generation iPad, which serves as my regular web-browing and email tool. In owning the Lumia 920 it has quickly become my favorite smartphone, being extremely durable, smooth to use and incorporating a large volume of business-oriented tools like Microsoft Office. When you couple all of that with a phenomenal camera, a scratch-proof screen / scratch-proof body plus great battery life, you get one heck of a phone.

Before I purchase anything, I make darn sure I know what I’m buying – this behavior largely stems from the inevitable truth that I’m very stingy about what I spend money on. That being said, when I looked into purchasing the Lumia 920, I looked into everything, including its hardware, software, and projected market longevity. Now when I say “projected Market Longevity” this is by no means an exact science. I “calculate” market longevity by essentially evaluating the branding and advertising scheme that the company (in this case Nokia) is implementing towards their brand and taking into consideration the company’s marketing budget for said brand and release cycles as a company. From there, I essentially just do my best to judge how long that particular device is going to be marketed, receive updates, and be produced.

So what’s the point of saying all of this?

While I was evaluating Nokia’s strategy for the Lumia 920, I noticed something important: Color was a thing. Nokia was trying to stand out from Apple by breaking away from the stereotypical black and white and producing a series of colorful devices. In fact, one of their most prominent advertising pictures was this photo here:

Look familiar? That might be because it looks a whole lot like this iPhone 5c advertising picture:

Crazy, right? I only pieced this together because of my borderline-obsessive need to know everything about a product before I buy it, but that’s pretty cut and dry. It seems to me that Apple has recognized the consumer interest in color, and is following in Nokia’s footsteps.

So what’s the big deal? It's just color. 

For the consumer, this doesn't mean much. However for the investor, little things like this are a bad sign. I take minute details like this into consideration all the time when making judgments on the future of a company or product, and I am sure that investors do precisely the same thing. Seeing Apple blatantly follow-suit in such a way as this further underscores the company’s recent lack of innovation. With Apple’s failed “Special Event” behind us, where the Cupertino company essentially released more of the same, seeing more signs that Apple is having a difficult time innovating is definitely a scary thing. It’s things like this that cause sharp drops in stocks, and I feel as though Apple carelessly overlooked these small details.

Unfortunately, the list of painful details in the fine print doesn't stop with the whole "color fiasco". There's also the fact that the iPhone 5c launched with its own, unique dock and won't work on any docking devices designed for the iPhone 5s, and then there's the fact that the iPhone 5c even launched at all. 

...wait what? 

Yes, the iPhone 5c being launched in-general is a big, blinking red sign that Apple is struggling to keep its valuation high, meaning that they're concerned about how valuable their company is (because their stocks keep dropping).

This is the point I'm trying to make: the fact that Apple is forcing you to buy unique hardware for the iPhone 5c, combined with a "follow-suit" marketing campaign and the fact that the iPhone 5c was an unneccessary device in the first place shows clearly that the iPhone 5c is nothing more than a blind attempt at turning a high profit on a low-cost item. Apple isn't producing that phone for you or for any consumer - they're producing it to line their pockets.

So, what does this mean for Apple?

I feel as though Apple currently has enough iSheep to still have a good flock after the wolves have fed, but I see a major decline in the company’s valuation in the near future. The iPhone 5c will not be the cause of the decline, but it will certainly be the early warning that most of us miss.

Oh, and although I have no qualms with the iPhone 5s (other than that it’s an overpriced, overglorified iPhone 5) or Apple as a company, I genuinely hope the iPhone 5c is the next Apple Maps. 

top image source found here