I only took one undergrad economics class but then I boosted that with stuff like Freakonomics, so I’m 100% qualified to talk about this today.
Some wireless carrier ads got me thinking today. Rogers has this data sharing plan, which, if I’m not mistaken, lets you share your data plan across multiple devices for $10 extra per device per month, so basically $20 to get started, which I guess is what you’ve gotta do if you use non-iOS devices and can’t share your internet for free as part of the core feature set.
Now Telus has come out with their seven minute abs: if you go with them, you can share between a phone and a tablet for free, which is a $20 savings over Rogers for that scenario, assuming all other plan aspects are identical.
There’s no word from Bell (the other major carrier) but let’s assume they get on the train too, and offer something even better. Well, something that’s slightly less crappy, anyway, given that Apple devices get this stuff for free.
It’s worth noting that this isn’t really competing on price, which tends to be a race to the bottom and usually doesn’t happen between established companies because they got where they are by realizing the whole bottom-racing thing. For this one, it’s one feature that they’ve done the math on and figured out how much it’ll cost in lost incremental revenue (and I suspect it’s not a lot of users that would use it anyway) without sacrificing their core ARPU (average revenue per user, yo.)
So what’s next? Does Rogers up the ante, go to the innovation bucket, and make their plan more attractive in some other way?
I can’t predict the future all of the time, but in this case history is a good guide. At some point, we’re going to make the magic transition from constant innovation to sufficient suckage. The carriers will rationalize that they each suck sufficiently less than the other guy, in their own unbiased opinion, and things will stop getting better. The price will be what it is, until someone else comes in and pokes something with the marketing stick.
I’m not even picking on the carriers that much here – this happens in almost every business. Except maybe Apple, who I think could have closed their R&D lab for 5 years and still kept on top this year, but imagine what they might have done if someone else was close to them? (If you’re not an Apple fan, you’ve probably got some other counter example.) It’s pretty much standard practice, anyway.
But does it have to be?
Are we reaching a point where communications technology is intersecting perfectly with global availability of all kinds of resources is going to make the cost of infinite innovation actually achievable, at least in some industries?
Photo by bradleygee
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