Treat customers with respect, make bank

My dad's a good guy. He'd been an industrial equipment salesman for much of my life, and he was very good at it. Even though he's retired now, his phone still rings a few times a week. Sometimes customers need a part, sometimes they need advice on an installation, sometimes they're just calling to shoot the breeze. He helps where he can, but they're always upset to hear that he's not in the business anymore.

"Sure, I can screw this guy over and make a few extra thousand dollars on his order. Maybe I can do it a few more times. But you know what? Sooner or later, he's going to find out I'm screwing him. And I'll never hear from him again, and he'll tell everyone he knows," he'd tell me. He wanted to do honest business. Not just because it was "the right thing to do," but because it was the financially prudent thing to do. In the long term, doing right by your customer is always going to put more money in your pocket. When you're talking about a Fortune 500 company, everyone from your shareholders to your executive board down to your junior sales reps should be able to appreciate that extraordinarily simple, universally rewarding truism.

And that's why the American wireless industry is so very difficult for me to feel good about right now. Customers are being screwed in some very overt ways that we've talked at length about in the past several years — but they're being screwed in countless subtle ways, too.

Take tonight's news that HTC isn't being allowed to offer a bootloader unlock for the AT&T-branded version of the One X. Though the company isn't saying that it's AT&T blocking the unlock, it's patently obvious that's exactly what's happening — HTC just can't afford to jeopardize that cash cow of a relationship by lobbing the ball into AT&T's court. I understand, and I don't blame HTC. In fact, I don't even blame HTC for taking the One X launch deal with AT&T in the first place and agreeing to the locked bootloader, because everyone knows what a dog-eat-dog world the OEM business is — HTC needs big hits, it needs them on big carriers, and it had to strike while the iron was hot.

I blame AT&T. It's a petty, pitiful move that serves no practical function other than to alienate a very small number of their enthusiast customers in exchange for a perception among executives that profit margins are somehow better protected. And let's be very clear: AT&T doesn't lose a dime from the handful of One X customers who would choose to bootloader unlock their devices. Subsidies are protected by AT&T's $325 early termination fee (if that $325 isn't sufficient to cover a subsidy at AT&T's volume commitments, someone isn't doing their job), and these customers aren't using any carrier-branded value-add services that are wiped out by a custom ROM anyway. Free tethering? That's not a concern either; we all know AT&T's well able to detect unauthorized tethering at this point.

And let's not single out AT&T. Verizon is presently trying to extort the federal government into approving its purchase of AWS spectrum from cable companies by conditionally offering to sell A and B Block 700MHz spectrum that it has been sitting on, warehoused, for several years now. If it succeeds, the rural carriers who would likely buy it would have limited ability to use it without the FCC mandating 700MHz interoperability between the A / B and C Blocks, a measure that both AT&T and Verizon have fought tooth and nail.

In other words, these small carriers would have a much tougher time competing with Verizon on 4G services. Competition, of course, is good for customers. Randall Stephenson, CEO of AT&T, disagrees: "Obviously, the more competitors you have, the less efficient the allocation of spectrum will be. It's just... that's mathematical."

On the surface, we can all understand why executives at any company would be opposed to competition. But let's consider the effect of competition on the industry since the FCC created the PCS band — and in doing so, significantly expanded the number of players in the market — in the early 1990s: the use of cellular has exploded. Dumbphones became ubiquitous, then feature phones, and now smartphones. Data use and ARPU are through the roof, exceeding even the most generous estimates from a decade ago. And that's been a rewarding effect for every carrier in the industry, entrenched giants like Verizon and AT&T included.

Clearly, these guys can continue being unfriendly and still make bank in spades. Spectrum, being a precious resource, makes for tremendous leverage — you and I aren't about to give up our data-hungry smartphones, after all. But I think they'd be shocked to discover that treating their customers like friends — like people they genuinely want to do right by — isn't in any way incompatible with their ultimate responsibility to deliver value to shareholders. And it all starts with a little bootloader unlock.

My dad was onto something.