LG Optimus T

Some analysts would have you believe nobody wants to keep doing business with T-Mobile, but when the price is right, it can bring the company’s online ordering system to its knees.

T-Mobile’s prepaid division ran a sale this morning on a refurbished LG Optimus T, an entry-level Android v2.2 smartphone, for just $82.49.  In addition to free ground shipping, the phone also included $30 in airtime credit (as all of their $50+ prepaid phones currently include).

T-Mobile exhausted its supply within hours, but not without some frustration from customers who found completing the order difficult when the website began to fail from all of the traffic.

“This is an amazing deal, especially when combined with some “cashback” programs run by websites like Fatwallet, which knocked another $7.50 off the price,” writes Stop the Cap! reader Jenny Truro.  “T-Mobile’s prepaid service is actually a good deal when you top up once for $100, because all subsequent refills in any amount won’t expire for an entire year.”

Truro doesn’t use a cell phone enough to justify a standard two-year contract plan, and hated dealing with AT&T’s GoPhone prepaid plan because minutes were costly and expired quickly.

“AT&T lets you keep minutes up to a year when you spend $100, but you have to keep renewing at $100 every year if you want to hang on to last year’s minutes,” Truro says. “T-Mobile doesn’t stick you with that, and some of the other providers charge way too much per minute.”

Truro says the LG Optimus T she purchased this morning will be her introduction to smartphones.

“If I find I don’t use it enough to justify paying for prepaid data plans and other features, it was not an expensive experiment.”

The LG Optimus T can also be unlocked by T-Mobile by calling customer service 60 days after activating the phone on their network.  That allows the phone to be used on other providers’ networks with an appropriate SIM card.

Since AT&T announced its intention to merge with T-Mobile, analysts have declared T-Mobile a white elephant — one that postpaid customers are increasingly leaving.  But T-Mobile’s innovative, often-aggressive pricing proves that for the right price, customers will not only stick with the carrier, they’ll be joined by thousands of others willing to sign up.

Verizon Wireless has announced a new $50 unlimited talk, text, and web prepaid plan for price sensitive new customers who don’t mind being stuck with a lower-end feature phone.

The new Verizon Unleashed unlimited plan has been test-marketed since April to prepaid customers in southern California and Florida, but will now be available nationwide from Verizon stores, Best Buy, Wal-Mart and Target.

Although existing Verizon Wireless prepaid customers may be able to sign up for the plan on their existing phones, new customers in test markets were limited to a selection of just a handful of “feature phones” that make web use and texting cumbersome:

• LG Cosmos™ 2 — Now into its second generation, this basic feature phone slightly improved its slide-out keyboard.  The phone was rated “adequate” for an entry-level feature phone, but CNET’s detailed review notes it lacks 3G EV-DO service.  That means you will be web browsing on Verizon’s painfully slow 1xRTT data network.  Verizon has no worries customers using this phone will chew up a lot of wireless data.  Customers rated the build quality as adequate, but found the keys on the first generation of this phone did tend to wear out with a lot of use.  It’s a true “throwaway” phone once the warranty expires.  Repairs always cost more than buying a new phone.  Verizon’s website prices the phone at a stiff $189.99 for month-to-month customers, but it will probably remain priced at around $99.99 for prepaid customers choosing the Unleashed plan.
• LG Accolade™ — A real workhorse basic phone for Verizon Wireless, the Accolade is much better for making and receiving calls than doing anything with texting or web use.  The phone has no QWERTY keyboard to type on, and no 3G service either, so its usefulness for data and texting is extremely limited.  But it is cheap, routinely selling for under $40.  CNET has a video review.  We suspect this phone will not be major part of the nationwide rollout of Unleashed, as Verizon appears to have discontinued it recently.
• Pantech Caper — A front facing tiny keyboard features prominently on this phone, which would have been considered cutting edge five years ago.  Now, it’s considered a ho-hum “feature phone” for the non-smartphone crowd.  It received a fair rating from most reviewers, with the biggest complaints coming from unintentional pocket dialing and button pressing, and a lousy built-in camera.  No 3G service.  The Caper also won’t win any awards for its ergonomics.  Verizon Wireless had been selling this phone in test markets for $80 earlier this year.  CNET’s video review is here.

There is a good chance a few different, more current feature phones will be introduced for the Unleashed plan later this week.  But they will all likely dispense with support for 3G service and lack features many customers increasingly seek on smartphones.

Verizon Wireless has traditionally done poorly in the prepaid market, because its plans are considerably more expensive that those offered by competitors, especially T-Mobile and Sprint.  Verizon Wireless had been charging $95 a month for unlimited talk/text prepaid service plus $0.99 per day for web use.  At those prices, Verizon has been losing prepaid customers, now down to 4.4 million.  Many of those customers fled to providers like Sprint’s Virgin Mobile, which saw a 23 percent increase in its customers, which now number 13.8 million.

Verizon’s $50 unlimited plan matches AT&T’s $50 prepaid unlimited GoPhone plan.  Analysts suggest both companies have set prices (and limitations on the phones that work with the plans) at a level that allows them to compete with lower-priced rivals, but does not encourage their contract customers to switch to a cheaper prepaid plan.

For data-hungry smartphone users, there is little here to persuade anyone to downgrade to a $50 prepaid plan.

Better days: AT&T's BlackBerry Curve, circa 2007

The prevalence of unlimited wireless data plans may have been an important factor in the American consumer’s move away from Research in Motion’s (RIM) former superstar BlackBerry, according to a company official.

Responding to questions about its falling market share in the U.S., Patrick Spence, the managing director of regional marketing at RIM pointed to unlimited usage plans as one potential way the competition got a leg up on their devices.

“In the United States, they’ve had flat rate data pricing for a long time, which has meant users haven’t had to worry about how they are using their smartphones,” Spence said.

He noted Americans love for wireless data has forced carriers to launch 4G upgrades in advance of other markets where 3G remains the fastest available standard.

The Guardian’s Charles Arthur gave RIM’s Patrick Spence a challenging series of questions about RIM’s ongoing loss of market share, and why the company is forcing BlackBerry owners to cope through two major platform upgrades in the coming months. (11 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Spence said the dynamics of unlimited data have inspired a change in the types of devices used in the United States, namely not necessarily those carrying the BlackBerry brand.

As carriers end unlimited data, Spence predicts users will likely change their behavior in concert with new data plan limits as low as 200MB per month.

Where data limits prevail, BlackBerry devices seem to do better.  Spence touted the fact BlackBerry phones have now achieved number one status in Africa and countries in the Middle East like Saudi Arabia, displacing troubled Nokia.

Spence warned tech reporters not to extrapolate American marketplace trends as foreshadowing developments in the rest of the world.  One reason for that, according to Spence, has been the unlimited data plan, now being replaced with usage based billing or usage-capped plans.

BlackBerry phones have had a difficult time competing with the iconic Apple iPhone, as well as Android-based smartphones on offer from virtually every wireless carrier.  BlackBerry devices, once deemed the most advanced phones in the market, have lost quite a bit of luster in the last four years, particularly after the arrival of iPhone.

As a result, RIM has been engaged in serious cost-cutting, announcing job cuts of some 2,000 employees recently.  The company hopes to spring back with a series of platform upgrades and new phones, dubbed “superphones” by RIM, to regain market share.

It cannot come soon enough, as RIM lost another four percent of market share in just the past four months.  comScore suggests RIM phones now have just 21.7 percent of the smartphone market.  Only Microsoft and Nokia are doing worse.  Most of the BlackBerry fan base are moving to Android-based smartphones instead as their contracts come up for renewal, particularly those made by Samsung.  The Korean manufacturer now manufactures one of every four smartphones Americans own.

As of July 2011, RIM has 7.6 percent of the market share in the United States.

BlackBerry phones have fewer challenges overseas, and the devices remain very popular among younger users in the United Kingdom, parts of western Europe, Africa, and the Middle East.  That has been a mixed blessing for RIM in England, where the phone has been  implicated as the device of choice for looters during riots earlier this month.

Sen. Schumer

Senator Chuck Schumer (D-New York) has proposed cell phone carriers permanently disable stolen cellphones, unless and until they are reactivated by the original owner.

Currently, only Verizon Wireless shuts down stolen phones, preventing their easy reactivation.  Other carriers only disable internal SIM cards, which are easily replaced by any thief in minutes, and for a fee AT&T and T-Mobile will reactivate any phone.  Sprint only disables access to stored contact lists and contents of memory cards that often accompanying modern smartphones.  But anyone can reactivate a stolen Sprint or Nextel phone just by claiming to have acquired it legitimately from the former owner and replacing the removable SIM card.

The result of easy reactivation is a thriving black market for stolen phones, particularly in New York.

“Forty-one percent of all property crimes in New York City in the first half of this year were related to cellphones,” Schumer said, noting phones often sell for hundreds of dollars and are back in operation sometimes hours after being stolen.

SIM Card

Schumer says if carriers permanently disabled stolen phones until the rightful owners declare them retrieved, phones would become worthless to would-be thieves.

The senator notes that European carriers use each phone’s unique identification code to monitor the status of the phone.  Once reported stolen, overseas carriers will not reactivate a disabled phone without a signed statement from the original owner authorizing the transfer of ownership.

Schumer notes cell phone theft is rising dramatically in New York as more people start carrying increasingly sophisticated smartphones.

In 2009, 10,650 phones were stolen in the city.  In 2010 — 10,746.  So far this year, more than 11,320 phones have been taken by thieves.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WNYW New York Deactivate Cellphones 8-21-11.flv[/flv]

WNYW-TV in New York has raw video of Sen. Schumer’s press conference on cell phone theft.  (10 minutes)