## Death to Verizon

Needing a token of my years in Waterloo, I figured it was finally time to trade in my Pleistocene Nokia phone for a BlackBerry. So I used some of my startup funds to buy a BlackBerry 8830 World Edition from Verizon. What particularly excited me about this model was that it was advertised as having a built-in GPS receiver — meaning (or so I thought) that I’d be able to pull up Google Maps wherever I was, and never get lost again.

Well, today the phone arrived, and I found out that Verizon has disabled the GPS (see here, here, and here). The reason, apparently, is that at some unknown time in the future, it plans to sell an inferior navigation service for $10/month, and doesn’t want people getting for free what it will later rip them off for. I’ve been having fun imagining the conversation between Mike Lazaridis (the founder of Research in Motion, the Waterloo-based company that makes BlackBerries) and Verizon: Lazaridis: It’s an abomination! As long as I draw breath, I’ll never agree to your crippling my invention! Verizon CEO (breathing heavily): Young Lazaridis, come over to the Dark Side. Lazaridis (pause): Actually, how much are you offering? I’ve been needing cash, ever since blowing all those millions on the Perimeter Institute and the Institute for Quantum Computing… Some will say I’m a sucker, buyer beware, etc. The more sympathetic will call me a victim of false advertising — indeed, of the exact sort of corporate behavior that my best friend Alex Halderman and his adviser Ed Felten have battled for years with some spectacular successes. Recently I attended a talk by the legendary free-software activist Richard Stallman, who thundered like an Old Testament prophet about human beings’ inalienable right to understand, modify, and share the technology they own. At the time I agreed with Stallman intellectually but found him a bit obsessive. Now I have my own dog in this fight. I’ve always known that American cell phone companies are evil: they have shitty, unreliable networks, enormous advertising budgets, and miniscule R&D budgets. But Verizon has taken things to a level even I wouldn’t have predicted. We’re not living in anything close to the efficient market dreamed of by my economist friends like Robin Hanson. The invisible hand has palsy and four missing fingers. And the proof is that, when a company like Verizon pulls a Monty Burns, there’s almost no risk it runs — almost nothing it fears. Indeed, about the only risk it does run is that some of its customers might have blogs — and that some of the savvier readers of those blogs might figure out how to hack the crippled phones and share that information with the world… ### 42 Responses to “Death to Verizon” 1. Joe Fitzsimons Says: Hi Scott, Vodafone did a similar thing to my Nokia N95. They left the GPS intact, but disabled the voice over IP feature. Fortunately I downloaded a little program called Fring that allows me to use Skype over the WiFi card, or any other internet connection. Usually a way to solve problems of this type is to get hold of a firmware update from the manufacturer. If RIM have one available, just download it, and install it, and your GPS should return to full functionality. 2. denis bider Says: If the U.S. cellular companies are as bad as you say – and from what other things I heard, it is easy for me to believe that they are – then this would mean that it should be fairly easy for a newcomer to make an entry to the market offering superior service – perhaps something like the South Koreans and the Japanese have had for a number of years – and grab significant market share. Why is this not happening? Is it more costly to provide the same service in the U.S. cities as in Japan’s or Korean ones? Might there be some hurdles to competition that have to do with regulation (and abuse of regulation) of the cellphone market? I’m pretty sure the shitty service stems from an interplay between politicians and phone companies, not from excessive freedoms the companies might enjoy in the cell phone market. The situation usually gets this bad only when there are forces external to the market that ensure “stability”, such as a cozy relationship with regulators who can put up hurdles for compaines that would threaten the status quo. 3. Maverick Says: I vaguely recall that Verizon was caught when they disabled some bluetooth capability in the V710 and there was a class action. In the end, I received some credit to my account but that was worth about a month of service. Now if there is one for the 8830… You may also want to read the “we want to ensure quality” response from Verizon: http://jkontherun.blogs.com/jkontherun/2007/07/blackberry-88-1.html 4. Jon Tyson Says: I’d like to encourage your readers to get back at the phone companies by using 800-GOOG-411 instead of dialing 411 on their phones. Of course, the cell companies could try to block google’s free directory service as well as google maps. 5. Scott Says: You may also want to read the “we want to ensure quality” response from Verizon Yeah, I saw it. It’s the same reason why movie theaters don’t let you bring your own food: because for all they know it might have E. coli. 6. Jon Tyson Says: BTW, have you tried filing an online FCC complaint about Verizon for false advertizing? http://www.fcc.gov/cgb/complaints.html Sprint overcharged me and customer service blew me off completely until I filed with the FCC. Sprint really didn’t like having an FCC complaint, and I got NICE calls from their resolution department and a refund pretty quick. Of course, they couldn’t fix their billing system so the problem kept reappearing. (I dumped them and switched to T-mobile.) (BTW, I’ve also found that airlines HATE it when you threaten to complain to the department of transportation.) 7. Scott Says: I’m pretty sure the shitty service stems from an interplay between politicians and phone companies Denis, I think there’s some truth to this. One thing I’ve heard is that the way the frequency spectrum was originally auctioned off was disgraceful: basically, the FCC took an extremely scarce public resource, and asked a small number of companies to pay once if they wanted to control it for the rest of time. Can anyone fill us in on the details? 8. Scott Says: Jon: Interesting idea! I might try it… 9. Alon Rosen Says: Hi Scott, Apparenly this kind of behavior on behalf of cell phone providers is global. I just returned to Israel and tried to get a cell phone. Knowing who I am dealing with, I ended up spending an outrageous amount of time in the store trying to figure out where is “The Catch.” Needless to say that, despite my best efforts, I managed not to get the (pretty modest) features I wanted (e.g. the ability to receive text email on the cell phone without having to pay an outrageous extra amount per downloaded Kb). What made things worse is that they also ended up giving me features I specifically mentioned I didn’t want (such as the ability to download idiotic ringtones for$1 each).

If this is of any consolation to you, at least you have the ability cancel the deal (I might be wrong here). Here in Israel it is more like a catholic wedding (and it’s not like you would like to marry the two other girls in the village). It took me more than two hours of vocal arguments (a well known local tradition) just to get them to acknowledge that they have been lying to me (of course they didn’t put it this way). Bottom line: due to blatant lying by the sales representative, I am now stuck with a deal I am not too happy about. Death to Orange! (A global cell phone provider that makes Verizon look like a dwarf in terms of market size.)

Overall, a pretty nasty experience. (Blends well with the cultural shock I am having here after coming back from 4 years in the US…) Thanks to your post, however, I feel there is hope: let “The Catch” be avenged by “The Hack!”

10. Gil Kalai Says:

Scott wrote: “We’re not living in anything close to the efficient market dreamed of by my economist friends like Robin Hanson. The invisible hand has palsy and four missing fingers. And the proof is that, when a company like Verizon pulls a Monty Burns, there’s almost no risk it runs — almost nothing it fears.”

This is a very interesting view and, of course, as people of the academia our real revange, can be to try to figure things out (in the right generality) and if worse come to worse write a paper about it.

Why do you think, Scott, that this Verison behavior is contrary to what can be expected in an efficient competative market? Why does it show that the invisible hand does not work and isn’t it just in the margins? and if there is a real problem here how general is it and what in your opinion is going on?

11. ScentOfViolets Says:

“The invisible hand has palsy and four missing fingers.” Nice. Can I appropriate this bite when next I have a discussion with a ‘rational’ libertarian?

More seriously, you seem to be in the same boat I am. But . . . I am a (mostly) mathematician who also teaches at a university, and it occurs to me that many people here have approximately the same backgrounds. So how do we know that these companies are in fact not catering to the demands of their modal customer? My daughter, for example, would download a couple of ringtones a day if I let her, and I suspect that she is more of the target market for these operators. Not academic types.

12. John Sidles Says:

Hmmm … lots of grist for information theory here.

Example 1: How complex can a (cell phone, or any other) market be before it is no longer efficient, for the common-sense reason that it is too complicated for recently-evolved chimpanzees to figure out?

Example 2: More broadly (and stimulated by recent upheaval in the mortgage market), is there a liquidity crisis in science and technology? That is, a market that is chronically afflicted with lots of sellers (recently minted PhDs) but few buyers? If so, how can the market be adjusted to work better?

13. Scott Says:

“The invisible hand has palsy and four missing fingers.” Nice. Can I appropriate this bite when next I have a discussion with a ‘rational’ libertarian?

Sure! I’m rather proud of that sentence.

how do we know that these companies are in fact not catering to the demands of their modal customer?

Are their model customers demanding crippled phones?

Seriously, BlackBerrys are mostly for businesspeople rather than giggly teenagers, and I suspect that even the average BlackBerry buyer would be outraged by this. Verizon, then, seems to be banking on most customers being too busy/trusting/unsophisticated to ask the questions I didn’t.

14. Patrick Says:

If the U.S. cellular companies are as bad as you say – and from what other things I heard, it is easy for me to believe that they are – then this would mean that it should be fairly easy for a newcomer to make an entry to the market offering superior service – perhaps something like the South Koreans and the Japanese have had for a number of years – and grab significant market share. Why is this not happening? Is it more costly to provide the same service in the U.S. cities as in Japan’s or Korean ones? Might there be some hurdles to competition that have to do with regulation (and abuse of regulation) of the cellphone market?

It isn’t happening because there is a monopoly/oligopoly on wireless spectrum created by regulation (spectrum auction). It will never be fixed until the spectrum is free to use for anyone. A newcomer cannot do anything until they have secured spectrum. You can imagine that with control of such a valuable resource incumbent telecos will unleash the dogs of war to keep control of it.

This problem is far bigger than cellular phone service. Incumbent telecos currently control essentially all Internet access. People have rightfully become nervous that the incumbents would start leveraging their monopoly powers, ‘taxing’ web-sites, monitoring your activities on behalf of the government or to sell for marketing or data-mining purposes, filtering certain applications, degrading service in order to sell a ‘premium’ tier, degrading or blocking services that compete with the telecos offerings… etc. (See all the discussion about network neutrality). In a free market some of these issues probably wouldn’t be a problem (government spying still would be), competition would theoretically end up providing at least ‘good’ service to consumers. However, it is infeasible for a new competitor to start laying new cable/phone-line to your home, both financially and due to regulation (you shouldn’t have 10 different companies running phone lines or cable runs to your house). The only viable solution is… wireless access: connecting your home wirelessly to a tower that feeds you Internet. This is the alternative ‘third pipe’ panacea (The means to bypass the first two pipes, cable and DSL, controlled by telecos).

Big players (e.g. Google, Microsoft) are particularly worried because they have deep pockets and telecos have started sabre rattling that they need to pay to have access to ‘their’ customers for their high-bandwidth services (e.g. Youtube), otherwise they would limit/throttle it (because it uses too much data they say).

Google tried to do something about it by asking the FCC to require non-discriminatory leasing provisions (i.e. other companies would be able to get access to the spectrum for a fair price), but they failed; the provision was denied by the FCC. It is important to keep in mind that the FCC makes a lot of money from the auction so they are expected to do whatever maximizes their earnings, regardless of whether this is the best thing for the public or industry.

The other hope is ‘white space’ devices, a.k.a. ‘cognitive radios’, that can operate when spectrum is not in use (typically this would be spectrum owned by telecos). You can imagine how much telecos like this idea. The FCC is reviewing these devices but unfortunately it seems that the submitted prototypes are being submitted by a consortium consisting of Google, Microsoft and others and it is not clear how much is being done by experienced wireless equipment manufacturers.

A video by Lessig talking about the issue of open spectrum is available
here.

By the way, if you want to learn more about the free software movement you should listen to talks by Eben Moglen (search google video) and/or read his essays. Many of his works are collected at wikisource. While Moglen talks mainly about free software he also talks about the need for free hardware, free bandwidth and free culture as necessary conditions for social justice.

Finally, it is important to recognize that this issue is far larger in scope than having cheap connectivity or hardware with lots of features, it is a question of freedom (from which these benefits can arise). You cannot have a free society without free individual (modern) communication. The only practical way for an individual to achieve this is wirelessly. Unfree spectrum means social injustice.
Sorry for the long and largely incoherent post.

Patrick Said: However, it is infeasible for a new competitor to start laying new cable/phone-line to your home, both financially and due to regulation (you shouldn’t have 10 different companies running phone lines or cable runs to your house). The only viable solution is… wireless access:

Actually, there’s a simpler solution: In Israel they’re separating infrastructure and content-providing by legislature. In other words: One set of companies provide you with the actual wire and data transportation, be it through cable or satellite; and the other set of companies act as ISPs — they connect the loose end of the wire to the world wide web. A company in the first set cannot interfere with net neutrality or anything of the sort, because they only provide the physical wire; and membership in the second set is pretty free-for-all so there’s real competition.

And, of course, the two sets of companies are legally barred from being too entangled with each other.

By the way, they’ve been doing the same thing with long-distance telephone service for decades now in the US (and for about a decade in Israel), and they’re now starting to do the same thing with local calling, electricity, and many other services.

Maybe it should be the same with cell-phones…

16. Andris Says:

Are their model customers demanding crippled phones?

No, but it’s perfectly rational to prefer a service where one pays less and gets less features. (If I never use GPS, why should I be paying the same as people who use it?) And “crippled phones” are probably the cheapest way to provide this option.

17. Domenic Says:

Disabling features like this is pretty standard for lots of cell phone companies. Top choices are GPS, bluetooth, and bluetooth high-quality audio. Generally there are people on the web that can fix your problem, usually with a firmware update.

Scott, the other problem is that Verizon, specifically, can get away with a certain amount of crap that it’s competitors can’t. Someone upthread mentioned the v710; I bought one, knowing full well that the Bluetooth was crippled, because I wanted a Verizon phone and I wanted what Bluetooth the v710 did have. Verizon just has the best network in the country; a lot of customers, like me, will sacrifice a fair amount in the features department to make sure they get the reception they want.

19. Patrick Says:

No, but it’s perfectly rational to prefer a service where one pays less and gets less features. (If I never use GPS, why should I be paying the same as people who use it?) And “crippled phones” are probably the cheapest way to provide this option.

Isn’t it more rational still to prefer a service where one pays less and has more features? Keep in mind that the GPS unit is still in the phone and the software drivers have already been written. The per unit price of each phone is not cheaper (to manufacture) if the GPS is disabled by Verizon. It seems to me you would only be saving money, compared to an uncrippled phone, if someone else was making up the difference for you; the consumer group as a whole would still pay the same, in fact more as Verizon wouldn’t go to the effort if there wasn’t an upshot for them.

Compare with a car dealership that slashed the tires of all cars on its lot in order to sell its own tires. Would you imagine that you would obtain a savings if you already had your own tires? Even if a given individual could, it would appear that as a group consumers would be worse off than before.

It also strikes me as terribly economically inefficient (and undesirable) to break/disable a feature that would normally work. But I am not an economist. Maybe one comes along to skewer your argument better than I can.

20. Anonymous [insert pseudorandom identifier here] Says:

“Nice. Can I appropriate this bite when next I have a discussion with a ‘rational’ libertarian?”

I, considering myself a semi-libertarian, would respond by focusing, as a knee jerk reaction, on the statement made by Denis Bider: “I’m pretty sure the shitty service stems from an interplay between politicians and phone companies, not from excessive freedoms the companies might enjoy in the cell phone market.” Of course, a final answer would require more research into the issue. Is it the scarce nature of the spectrum, the government regulation of the spectrum, government corruption, or something else that precludes a robust provider market?

I would also add that I can’t see how a democrat or a republican would differ in response here. Perhaps the libertarian would suggest that the constitution does not afford the federal government the power to regulate the cell spectrum in the first place, which does not sound very democrat/republican.

21. Gil Kalai Says:

Four remarks: First, it is not clear why Verizon’s cutting the GPS option hoping to charge extra 10$/mo for a similar (or even the same) option in the future is an example of market inefficiency. Second, it is interesting to understand why Scott and many comentators feel that Verizon’s behavior is unfair or inappropriate. This sentiment seems to express what behavioral economists talk about but not necessarily what “classical” economists talk about. Third, maybe what we see here is the possibility of a company to adjust the prices to the consumer’s richness. People who want GPS or want to retrieve long e-mails on their cell phones pay more because they are richer and can efford it, and not because the extra cost for the company. This may sound unfair (especially if it applies to you) but why is it? It can be regarded as fair. Fourth, to the extent that this or similar examples do manifest market failure they do seem to be related to cartel type behavior. 22. Patrick Says: First, it is not clear why Verizon’s cutting the GPS option hoping to charge extra 10$/mo for a similar (or even the same) option in the future is an example of market inefficiency.

I am not sure how you define ‘market’ inefficiency but it is apparent to me that it is inefficient to build something and then purposefully break it. Verizon is not adding value by crippling their phones.

23. Scott Says:

Gil, if you missed it, what I objected to was not so much the crippling of the phone as the false advertising, which gave no indication that the phone was so crippled.

That’s the risk of playing devil’s-advocate: while it’s possible to construct hypothetical scenarios in which the devil isn’t so bad, the real devil keeps doing stuff that not even his apologists can explain!

24. Douglas Knight Says:

First, it is not clear why Verizon’s cutting the GPS option hoping to charge extra 10$/mo for a similar (or even the same) option in the future is an example of market inefficiency. Removing options decreases efficiency. It would be mildly plausible that it was efficient if Verizon offered the current plan of potential GPS but also offered non-crippled phones for$20/mo.
Of course, they would have to advertise these options and Scott’s complaint would go away, although other people’s complaints would intensify.

I’ve ignored a lot of details, but I challenge you to find an economist who denies that this is the right standard. (I’m reminded of the reductio in Tyler Cowen’s paper on what it means for a policy to be too utopian. One could claim that reality is the only realistic option, therefore the most efficient.)

Patrick:
Breaking things can make everyone better off. If may be cheaper to break something than to build a separate version without the feature. Offering both versions with prices above and below what the price would have been with a single version will allow more people to buy the product. This happens all the time in electronics.
But this only works if they offer both versions, as I complain above.

25. Robin Hanson Says:

Sure, companies (and people) do lots and lots of things that seem wildly at odds with simple notions of efficiency and decency. If the main people to read to see our best understanding of why these things happen are … economists! Don’t shoot the messenger.

26. Gil Says:

OK, I see. I also do not like false advertisement. (But if this is forbidden the whole cosmetic industry will go away, and a lot more.) It is interesting that it comes across as especially unfair that Verizon cuts an option that was already there. It goes along with what behavioral economists say.

27. denis bider Says:

I like the comparison to software. When a company is trying to recoup a big upfront investment (such as into R&D, or such as having paid ridiculous amounts for a share of the wireless spectrum), it makes sense for them to try to collect from their customers according to the value they are bringing a particular customer. It makes sense to try to collect more from a customer to whom the product is more valuable, and to collect less from customers to whom the product is worth less. The way to do this is usually to differentiate the service somehow, so that the higher paying customer gets somewhat more and the lower paying customer gets somewhat less, but the only reason you actually do so is to (a) actually be able to tell apart the higher-value customers from the lower-value ones and charge them more, and (b) to offer people a fake sense of “fairness”.

As far as the company is concerned, it would be easiest to just offer the same service to everyone, and charge for it differently depending on how much value a given user is extracting. But since people won’t just volunteer that a service is worth to them more than they are paying now, the only way to separate them out is to offer them more bells and whistles for more money, and rely on that people to whom money means less will use the more expensive service.

I don’t know what Verizon’s current financial situation is, but if you keep in mind that they might be having to recoup a huge amount that they previously sinked into getting the wireless spectrum, their shark behavior may start to make sense.

The question is, who did the proceeds of that auction go to? If the money went into the general budget, then the high cost of service now might just be a form of paying back taxes that the wireless companies already paid some time ago on everyone’s behalf. Money that has already been spent on who knows what – pensions, health care, the war in Iraq, development of nuclear armaments…

28. milkshake Says:

When the invisible hand of free market is picking your pocket, your options are: a) Putting up with it b) Cancelling the purchase c) Suing, complaining and making yourself difficult. I have been a difficult custommer several times but in the end, it was never worth my time and expense to take a company to court. Complaining over the phone or writing e-mails is not effective – but filling a written complaint with both the company and the regulatory state/federal agency sometimes brings about the change.

29. Gil Says:

While far from being a blind supporter of the free market economy which indeed is full of false advertisement and cheap tricks for companies (and for high level officers in companies) to increase their fortune, I still also remember the alternative. At that time there was hardly any waste of money on advertisement true or false. Once you ordered a phone from the mail ministry, there was more than 99% chance you will get it within 6 years. The mail ministry was not the devil. As a matter of fact the people working there were quite nice and if you knew somebody from the mail ministry you could get your waiting time somewhat reduced. If you had heart condition the waiting time could have been reduced to 3 years. All the phones looked and sounded the same and when, in the 60’s, they started making white phones this was perceived as no less than a revolution.

30. Patrick Says:

Breaking things can make everyone better off. If may be cheaper to break something than to build a separate version without the feature. Offering both versions with prices above and below what the price would have been with a single version will allow more people to buy the product. This happens all the time in electronics.

Clearly it does not make everyone better off. One group is paying more than before and some subset of consumers that would have originally bought the GPS unit now either buy the GPS-less unit or forgo the phone altogether. Merely having more people buy the product is not sufficient for an increase in economic wealth. That having a crippled version creates more wealth is an assertion that would need to be proven. An assertion that would in fact seem difficult to prove. For consider a competitive market where 3 versions of the phone exist: the original uncrippled phone, and two other phones resold by company ‘Foo’, one crippled and one uncrippled, priced lower and higher than the original respectively. No one will prefer Foo’s uncrippled phone over the cheaper original with the same features. Second, since Foo pays the same unit cost as the original it will have no reason to price it lower (the original can match any price just as well and retains all features). Therefore Foo’s crippled version would not exist at all.

31. Gus Says:

The invisible hand has palsy and four missing fingers.

Is it not the case that the invisible hand works best in a rational market with complete information? I take it as given that our world is nowhere close to meeting these conditions. But without those two prerequisites, firms have incentive to lie, cheat, and steal — hardly the desired behaviour.

…when a company like Verizon pulls a Monty Burns, there’s almost no risk it runs — almost nothing it fears.

This topic touches a raw nerve with me… with a Simpsons reference for garnish! I have come to accept pseudo-free markets as the best known method for distribution of resources. Given such a doctrine, it is very depressing to see that our best shot isn’t even close to the target. In a world where rationality and complete information are impossible, how can Lisa possibly convince Cletus and all his pals to stand up to Monty Burns?

32. Scott Says:

Gus, you hit the nail on the head. That’s precisely the question on which the future of civilization hangs: can the Lisas convince the Cletuses to stand up to the Monty Burnses?

33. Douglas Knight Says:

Patrick,
As you say, switching from a powerful product to offering both the original and a crippled version does make some people worse off. I would expect that it would largely be a progressive redistribution of wealth, from those who are willing to pay the higher price to those who were unwilling to pay the medium price, but there are also people who lose out by being priced out of the market for the more expensive version.

But there are other scenarios where breaking things, or rather having the option of breaking them in the original planning, does make everyone better off. The simplest is if the alternative is making two products separately, which is often more expensive. If the alternative is just to produce the weaker product, then its price may go down and a new option is available to other consumers. This is not a terribly likely scenario, though.

This price discrimination only happens in non-competitive markets, which is why it does not happen in your competitive example. In theory, a perfect price discriminating monopolist and a perfectly competitive market achieve the same maximal efficiency, just that the monopolist pockets the money rather than the consumers. In practice, competition works better than price discrimination, but we should not sneer at price discrimination. And returns to scale appear to produce natural monopolies in electronics, so breaking computer chips really is making some customers better off. I don’t think this is an example, though.

34. Douglas Knight Says:

My second paragraph contains two scenarios. Perhaps I should have said “Or if the alternative…”

35. Mikael Says:

Another problem with the US cell-phone market, is that the service provided and the device used for that service is provided by the same company. Comparing to Sweden where I live, it is quite commonto buy your phone separately from subscribing to a service.

This naturally requires a standardized network-system, which we have in europe (everybody has GSM, and now the 3G UMTS networks are starting to gain traction). Compared with the laissez-faire style in the US, where you have lots of different kinds of networks.

36. geez Says:

Am I the only one who’s bothered by the obviousness of Patrick’s statement (in comment 14) “It is important to keep in mind that the FCC makes a lot of money from the auction so they are expected to do whatever maximizes their earnings, regardless of whether this is the best thing for the public or industry”? I thought the FCC reported to the US congress, not to share holders. The problem is that capitalism has so brain-washed most of the world (the situation here in Israel isn’t much better), that this sounds like a non issue. In case this isn’t clear, I’m not claiming Patrick is wrong, but that we expect too little from government institutions.
Governments have budgets, of course, and in order to achieve their goals may require money (and collect taxes to get this money). The process, inside governments and out, however, focuses in our days almost exclusively on “efficiency”. You can measure the dollars collected by the FCC by selling the BW, but it’s harder to measure “good management of natural resources”.

37. Dylan Thurston Says:

I’m surprised no one has mentioned some of the previous examples of deliberate crippling. Two that come to mind are Intel and IBM. Early versions of the Intel i486sx had an FPU present on the chip, but disabled. And IBM used to sell multi-processor systems in which only some of the processors were enabled; when you wanted to expand, you would tell IBM and they would enable more processors. The IBM case seems perfectly fine to me, since it was always clear what they were selling. People got upset about the Intel case, but it’s not entirely clear to me why. (But note that the chip was never billed as having an FPU.)

38. Jonathan Vos Post Says:

Government agencies ALL exist as bureaucracies for their own benefit. D’oh!

When I worked as a contractor on an FAA multibillion project, I found that out rather directly.

The short description in my CV is:

HUGHES AIRCRAFT COMPANY, Fullerton, CA Mar 85-Oct 85
Independent Contractor
* Through SDC, performed and documented system and simulation analysis of computer, radar, and communications subsystem of Advanced Automation System designs for Federal Aviation Administration (next-generation Air Traffic Control System)
* Received #1 technical evaluation from FAA

At one point, an official of the FAA called me into his office. “What do you think the mandate of the FAA is?” he asked me.

“I think there are two opposed mandates,” I began. “First, to represent the public consumers of the airline and other aviation infrastructure, to make it safe, after that 1950s collision over the Grand canyon; and second, to represent the airline industry…”

He cut me off. “No, young man,” he said, with a sigh. “It is to build facilities in the congressional districts of the congressment who authorize and allocate our budget. That’s why your suggestions for satellite-based navigation as as useless and misguided as your suggestions for Artificial Intelligence. Neither one builds radar facilities on the ground…”

By the way, the technically superior proposal I helped write did indeed “Receive #1 technical evaluation from FAA.”

But they awarded, even under formal protest, to the other team, the one headed by IBM.

It was stipulated that both teams would use a specific IBM mainframe configuration, at a given cost.

Then IBM, at the last minute, lowered the cost to themselves, for precisely that configuration, and underbid us.

Billions were spent. The new system does not work.

I always loved flying, having done my first takeoffs at age 13, and my father being a flight instructor in World War II. But after that FAA experience, I always worry on takeoffs and landings…

39. Jud Says:

“[T]he proof is that, when a company like Verizon pulls a Monty Burns, there’s almost no risk it runs — almost nothing it fears.”

Exactly true, because as pointed out by other commenters, this is in no way a free market.

Case in point: A town near where I used to live laid fiber optic cable under its main street and began to offer local companies and residents Internet access as a municipal service. I called and asked whether the town would consider erecting a tower on a local mountain to offer wireless access to the surrounding area (including me). I was informed by the person in charge of the town’s Internet access infrastructure that Verizon had sued them for unfair competition; that continued active prosecution of the suit by Verizon, regardless of its merits, would bankrupt the small town (a fact that Verizon would of course be well aware of); and that Verizon would hold off on active prosecution of the suit if the town maintained status quo but didn’t seek to expand its customer base to the surrounding area.

Later this essential state of affairs was made state law: Verizon gets a couple of years to decide whether or not it wants to offer broadband access to a given area, and only if they don’t want the market does the local municipality get the opportunity.

40. Chris W. Says:

A jaundiced view: Participants in a free market tend to do what they can get away with, which includes undermining the freedom of the market in ways favorable to themselves (often while trumpeting the virtues of the private sector). If government isn’t in the mix as a significant player—and a candidate for being bought off—then other steps can be taken, such as manipulating and intimidating one’s customers to the point of passive acceptance of the raw deals they’re getting.

Remember the free market’s evil twin—organized crime.

41. Mikael Says:

For more discussion on the crippled BlackBerries, see http://hardware.slashdot.org/article.pl?sid=07/08/18/1913246

42. EricC Says:

The real problem in this case is of course what Mikael points out. You’re blaming the service provider for a problem with your phone. That makes about as much sense as blaming your cable company when your TV breaks or the DMV for problems with your car.

I don’t know about Canada, but at least in the parts of the US where I’ve been it’s not like you have to buy your cell phone from your service provider. There are perfectly fine GSM networks here, and there are no problems buying GSM phones. Despite that a lot of people chose to get quick short-term gains by buying crippled phones from their service providers, but that’s their choice. Nobody is forcing them (but there sure are a lot of commercials and clueless representatives misleading them).

Seriously, how fun do you really think your car would be if it was handed to you by DMV (or by some gas company)?