Exclusive phones exclude too many people

The birth of the iPhone also gave birth to exclusive carrier contracts where phones are released on one carrier at the expense of all others. There is good business logic in this process, but I do wonder if the bubble has already burst. Here’s a quick list of the downsides of exclusive contracts-

• Lack of choice for the customer. If they want a particular phone, they will have to move carrier or accept the tariffs available from their current provider. It is possible that coverage is a problem with the exclusive supplier and so they will have to wait to get the phone they want.

• It breeds negativity throughout a large proportion of the mobile customer base to the point of excluding more than 60%. This can affect the carrier brand in the long term.

• It can also affect the mobile manufacturers brand because they are keeping their product off limits to many customers.

• Exclusivity breeds contention amongst the network operators and the next big phone release will no doubt go to a competitor and so the merry go round will continue. Rather than the network operators being able to stand up on the quality of their network and customer service they end up having to rely on one product to bring in new customers.

• It constrains competition. Palm has gone with Sprint for the Palm Pre and for a company that is relatively small in this business that is proving to be a restriction it could well do without.

• The power has shifted away from the networks to the manufacturers and this limits choice for the customer and ultimately value for money.

I have tried to come up with some positives surrounding exclusive contracts, but can’t. It was only a couple of years ago that we could buy almost any phone we wanted on any network and they competed with each other to give you that phone at the cheapest price. Now they do not have to compete and can rely on the customers wanting a particular phone above a network and this, in my opinion, potentially makes them lazy in how they deal with customer service and pricing.

As far as I can see the benefits are all moving to the network operators and the manufacturers, but I suspect that there will be a nasty sting in the tail as this process reaches its natural conclusion. It is with great confidence that I believe the days of exclusive contracts are numbered, and I can’t wait.