Enslaved by Telecommunications Corporations

26 Apr 2008

An old high school friend recently visited me here in Shanghai with her husband. Our chat made the usual rounds of old friends, life updates, etc., and then settled on China. When it comes to discussing life in modern China, one topic I find myself returning to again and again in my conversations with Americans is the whole cell phone thing. Americans are always blown away by how easy and convenient (for the consumer) the system here is.

My own situation:

– Monthly 30 RMB plan with China Telecom, comes with talk time and plenty of text messages. I don’t think I ever exceed my limit, but if I do, I pay very little extra.
– Cell phone bill paid by prepaid card, which I can purchase at any convenience store in increments of 100 RMB or 50 RMB. I only need to do this about once every three months, and it takes 5 minutes to add the money to my account. China Telecom SMSes me when I need to re-up.
– My account and phone number are linked to my SIM card, which I can remove from my cell phone at any time and use in any other cell phone here in China. Upgrading a cell phone is as easy as removing and inserting a SIM card, and takes less than a minute.
– No mail, no credit cards.

I don’t even know the full extent of the hell that American telecommunications companies put their customers through, because I never had to deal with it myself. I got my first cell phone in China. But it all sounds really stupid. The whole concept of “cell phone minutes” annoys me.

The one drawback of not being enslaved by the telecommunications companies is that any cell phone you can steal you can use immediately by simply swapping out the SIM card. Small price to pay, I say. Just be careful.

The worst part about all this is that when Americans come here and realize that even China has a way better cell phone system in place, they are blown away, but they are nevertheless completely resigned to their fate. And yet, it doesn’t have to be that way…

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John Pasden

John is a Shanghai-based linguist and entrepreneur, founder of AllSet Learning.

Comments

  1. Yup, Using a cell phone in USA is definately way more expensive! American companies force you to sign contracts of 1-2 years! Try to get out of the contract will cause you to pay huge penalty. Prepaid cards are only begining to gain more acceptance. Majority still are enslaved into paying $49.99 per month and FCC and various city, state, taxes of close to $15 bucks! Total $65 USD bucks per month! And the funny thing is we are falling behind in phone tech, Alot of asian countries already Using 3G., well, Guess what we haven’t. And that is SAD! You can thank the lobbyist in washington and Greedy corporations for the current situation we are in. Fact is they do not want to invest in new infrastructure while they still can Milk us dry for using the old current system!

  2. My Chinese cell phone was SO easy. I didn’t even have a plan going with a cell phone company. I bought the phone at Carrefour and then got my SIM card from the guy with a bike selling phone cards outside the main gate of my university. He’d also put minutes in whenever I ran out for really cheap. I saw other people being handed the card with how to put in more minutes, but I think he assumed I wouldn’t have been able to read it, which was probably true. I often wondered about the legality of selling SIM cards and cell phone/text time like that, but there were always cops hanging out and chatting with him, so apparently it’s no big deal? It wasn’t in Tianjin, anyway…

  3. Frank Rizzo Says: April 26, 2008 at 1:10 pm

    US cell carriers had to pay billions of USD to get spectrum licenses from the FCC. Chinese cell carriers got spectrum licenses for free. The population density in China is also much higher than in the US, allowing cell infrastructure to be amortized over more subscribers. It’s pretty easy to see why Chinese carriers are able to charge lower prices.

    And BTW, @Tony: Yes, some Asian countries have deployed 3G. Not China. 3G is an even bigger failure in China than in most places.

  4. The US telecom laws are so ass-backwards it’s amazing. The only thing I liked about the cellphones in the US was that if I signed a contract I got a free phone plus free long distance calling. Even still, the service usually sucks–can’t get a signal at my parents’ house (or the surrounding area).

    Everywhere else in the world has much better service than the US. It’s been really convenient to have a cellphone in China… although most of the time I still can’t stand this damn technology.

  5. I’ve been using a mobile phone for over ten years in convenient and cheap arrangements like yours. First in Belgium, then in China and now back in Belgium. However, in Belgium I use ATMs to recharge (Belgium was a pioneer country with those) and in Belgium a mobile is only cheap if you keep your calls really short. Anyway, seems the U.S. is the exception here. One explanation I have heard offer is that most of the world is standardised on GSM while the U.S. remains stuck with a smorgasbord of obsolete standards.

    If it’s any comfort for people in the U.S.: it’s absolute hell having to deal with Chinese banks. They manage to actually be worse than U.S. banks (or so I hear – I have no personal experience with those).

  6. Welcome to USA, where freedom is not free, and its just another marketing tool to milk the average citizens who think they are free to choose whatever they want.
    The cell phone systems here are still in stone age for me. U go to these dumb looking “cellphone stores” like att, t-mobile… showing phones that look and work also like gadgets from the stone age, with plan A or B you can choose. But either way you are jacked. The prepaid is shit, u will be ripped off the same way as u join a plan. And u are stuck with the phone they ‘provide’ u for ‘free’ with the plan, and these phones often cannot even be used in any other country but inside usa…..
    Sigh…don’t get me started.

  7. I’m in the Ukraine and the cell system is much like the one in China. Prepaid cards, SIM cards and all that. There’s even a new phone out that you can put two SIM cards from two different carriers in. Most people here have 2 or 3 cards/numbers each on a different carrier. It’s easy and quick. People are not slaves.

  8. Some of the phones we can buy here in China are much cooler than the phones available in the US. When I was in the US for my sister’s wedding, the photographer was coveting my Sony Ericsson Walkman Camera phone.

  9. Actually, China is not an exception. This way to use and pay cell-phones is almost the same everywhere in the world.

  10. America is definitely on the tail end of things when it comes to cell phones and most other electronic gadgetry as well. I remember my brothers back in the US going gaga over the Motorola RAZR phone when it first came out- very difficult to get your hands on one and way expensive. Here there were RAZRs in every cell phone store I walked into at about 2/3rds the price it cost in America.

  11. You are flattering one of the most criticized company in China. I think China Mobile will be so grateful for all your comments.
    🙂

  12. I totally agree with John’s assessment of cell phones in China compared to the ones in the US. If I had to pick, I would definitely take the Chinese system over the SU one. There are a few drawbacks of the Chinese system though. One other small drawback of the Chinese system however, is that you actually have to pay the full price of the phone, whereas in the US, you usually get a phone very cheap, if not free, just for signing on. That is all offset of course by the ridiculous costs, overtime fees, taxes, unused minutes, etc, of the American plan.

    Another drawback is if you do a lot of traveling. It’s possible things have changed since I left China last year, but for my calling plan (I had China mobile), I would be charged roaming charges any time I used my phone outside of the city I bought it (even if I was in network), and the roaming charges were quite expensive (.8 RMB per minute if I remember correctly). As long as you don’t travel, this is no big deal, but if you do travel, it means you will burn through phone cards like rubber. Another drawback (and this is completely ridiculous) is that often you have to charge your card up in the city you bought it in. For example, I bought my phone in Fuzhou. But if I was in Beijing, I could not buy a phone card there to charge up my phone. I would have to call a friend in Fuzhou, and have him buy a card there, and charge it up for me. Sometimes China Mobile stores would let you add money to an out of province phone, but often this didn’t work either. Because of the costs and hassles, I found myself making most phone calls while traveling from public phones, which were much cheaper anyway.

    The good thing, however, is that text messages are 1 mao regardless of where in the country you are and regardless of where in the country you are sending your text.

    Overall, I would still have to say though that I prefer the Chines system to that in the US.

  13. don’t go shopping at Carrefoure, haha;-)

  14. China and Europe have good systems (and possibly other places, but these are two places where I’ve lived). I find it sad that it’s so expensive and such a hassle in the States, but the situation is even worse in Canada where a report recently stated that we have some of the highest cell phone rates in the world!

  15. It is the Winner’s Curse, see this wikipedia entry.

    As Frank said, in the U.S., the Federal Government auctions access to all kinds of resources. Companies have to bid to win the spectrum and they tend to overpay. They then have to charge high prices to recoup the money they’ve paid out. Google just forced cell companies to increase their bids, by competing with them, just so Google will be able to get free access. Consumers will end up paying for Google’s access.

  16. In Ireland we are very much on the cutting edge and altough a few people are on those bill contracts, most people feel the are a rip off and opt for top ups when ever credit is getting low. When I bought a Sim card from China mobile I kept getting texts and advertisments from people I didnt know. Very annoying.

  17. “And yet, it doesn’t have to be that way…”

    Indeed. Armed revolution would solve this.

  18. First, I think China’s cell phone system is great. Especially the SMS ability and speed and relative cost of use.

    For the record, the reason why there are 1-2 year “enslavement” “contracts” for US plans is because the plans typically come with “free” phones or net a heavy discount on high end phones. If there weren’t contracts, there would be widespread abuse and lots of free phones issued, people jumping to different carriers, without the companies able to recoup costs.

    The very con of an unlocked phone is a pro to many. You can slip in any sim card and the phone works. US companies release all their phones locked so you can’t jump around to different carriers. To unlock the phone, you have to be loyal for at least 6 months and then call the company demanding an unlock because you are traveling to a foreign country (why do the companies advertise a quad band international feature if they lock the phone to domestic use?)

    Though you can request EZ BILL PAY features or paperless email delivery of bills/invoices/phone call records, its astounding to think how many trees are logged to supply the paper invoices for phone bills per month. Remember the big news regarding the Apple iphone customers who received yellow page book thick envelopes?

    And the last thing to do is place value in “cool” or new cell phones, especially when shelf life is a tiny 6 months.

    In summary:

    In America, you buy service, phone comes with.
    In China, you buy the phone and buy service.

    Think about the relative nature of monthly income vs phone use. I think it’s about the same when comparing the two systems. $2500/$50 vs. 800RMB/30RMB

  19. Wow, you guys don’t have 3G yet? We’re on 3.5G (HSDPA) and 4G (WiMAX) stuff is already being developed here in Taiwan, though Wifi is prevalent in Taipei. Japan’s ever further ahead, though.

    Then again, the US has the iPhone! ;p

  20. The downside to excellent China Mobile, is the (or perhaps not?) lack of voice mail!

    Also, mobile internet is slow.

    And phones with WiFi are hard to find – due to China Mobile not allowing it, or so I hear.

  21. ash, good point on the lack of voicemail. I am able to achieve everything by SMS with more punctuality and efficiency than voicemail. What is 3 g and 4g and 3.5g in terms of actual end use? Are you just able to surf the web with those generations and have a phone with more lights flashing and animated gifs and selling points for victims of marketing?

  22. In the US you’re also able to use an unlocked GSM phone, and charging it up is really easy. That’s what I use when I’m there any more. You can buy an unlocked phone off (say) Amazon, or just use the same one as in China, although cheaper dual-band Chinese phones won’t work in the US. You can also use the big cell-phone companies, without entering a one or two year contract – obviously you don’t get the free phone though.

    Personally for me, I talked a lot on the cell in the US, so a monthly plan was cheaper. I spent like $35/month after taxes and talked as much as I wanted and never went over the time limits, that also included that a large portion of my calls were to 3,000 miles away and I roamed pretty frequently. Paying a monthly bill is not really all that inconvenient although going to the drug store is easier.

    Charging it up at a booth or a convenience store is really easy. But in the US you can charge up online with a credit card, so really it’s about the same difference. Also some companies have charge up cards that are for sale at every convenience store and grocery store and drug store.

  23. Greg Pasden Says: May 1, 2008 at 1:09 am

    I can’t wait to trash my US cell phone and only have/use my international plan from Asia. Next time in PVG, maybe you can let me know where to get a sim card for my cell phone.

    Take care always
    Greg

  24. Hey John – how about a link to this Y30 calling plan (I can’t find it). Not exceeding your minutes sounds hard to believe seeing as you’re a popular guy working for an upcoming company. You must spend at least as much time on your phone as I do, and I spend anywhere from Y75-125 / month. And I get all received calls free. Anyway, try using mobile internet or the iphone and you see the comparison between US and China come even. Either way, unlimited internet is pretty nice.

    Btw, I know you’re blog is vehemently apolitical, but being in Shanghai, you’ve got to notice all this pro-Olympic, nationlistic sillyness, at least from a linguistic point of view. Any thoughts? Even when you look at something like this: http://rbt.sohu.com/zt/ilovechina/index.html – hardly the most shrill example out there)

  25. Sure! You don’t have to be silly when you MAKE the moral standard, just like all other standards in the world. Oh well, no politics. Cell phones maybe handy in china, but don’t worry, America is the one who makes communication and network standards. Those are the real power and money in the industry.

  26. 75rmb to 125rmb a month bill? I could only dream of it! Most months I am in the 400-500rmb area!

  27. sloppyzhou,

    I don’t know the name of the plan I’m on, but I just went to the China Telecom office and picked it off of a brochure like two years ago. There are a bunch of them…

    I don’t actually make that many phone calls at all, so my cell phone bill stays quite low. There are still relatively cheap plans for people that make more calls, though.

    As for all the nationalist Olympic hubbub, I find it pretty boring, really… Sorry!

  28. Cell services in North America are really horrible, with Canada probably being even worse than the US. Europe, China and even southern Africa are miles ahead of these telecommunications dinosaurs.

    I’ve sent texts between China, Europe and southern Africa in all sorts of different directions with no problems. Have a North American phone enter the equation as the sender or receiver, however, and suddenly the chances of message reception drop significantly.

    I will say, though, that I did have a fair amount of problems recharging my Chinese account outside of the province where I had registered it (this was back in 2004, so don’t know if things have changed). My phone was Zhejiang-based, and I ran out of credit in Sichuan. I got circulated to all sorts of different China Mobile offices in Chengdu to no avail, and finally an attendant took pity on me. She called someone in Hangzhou, got them to physically go out and buy top-up credit, and then relay the code over the phone to us. I paid for it on my end, but who knows how Zhejiang China Mobile ever got its money for that. Very similar show with trying to deal with banks in different provinces, it was like they were different companies just franchising the “national” name.

  29. sophie Says: May 4, 2008 at 5:59 pm

    john
    你好省钱哦呵呵。我以为像我这种不善交际的人才用那么点话费呵呵。我以前一直以为中国的话费很贵,听你这么说后想想中国移动还是挺不错的。

  30. Coming from Canada, I feel the same pain.

    Canadians have the same thing Americans have – a heavily regulated market with only a few major players. I come from Saskatchewan, where just a few years ago there was a local telecommunications monopoly (i.e. “Crown Corporation”, a provincial government run company) that screwed us every chance they got, not only on cell phone use but also with long distance.

    I don’t quite agree that the U.S. doesn’t have the population density to build infrastructure and still have low costs. Hello, interstate? Broadband? Surely they can do it with cell phone coverage. The Chinese government, flawed as they are, still had the foresight to invest heavily in creating perhaps the most extensive cell phone network in the world. I often have a connection in elevators, and the subways and tunnels are not a problem. Even in the nether regions of Gansu, Xinjiang and Tibet there is cell phone coverage! The equivalent areas of Canada are limited to using fixed line phones… or perhaps telegrams.

    One amazing aspect of cell phones in China is how the massive and fast development of infrastructure here allowed the average Chinese citizen to skip a generation of technology. There are millions of Chinese people who still don’t have fixed line phones and will never bother because they already have cell phones. Whereas in North America I still have friends who refuse to buy cell phones on health and privacy concerns. One commented to me: “If you want to call me, call me at work. And if I’m not at work, call me at home. If I’m not at either place, I don’t want to be called.” The slow take-up of cell phones may explain some of the ass-backwardness of the laws and regulations that hinder free market competition in the mobile industry in North America. (Yes, had to say ‘mobile’ once for the Europeans.) And one to two year contracts in order to force loyalty is a joke – if the service was good and the costs were reasonable, no contracts would be necessary.

    The opposite attitude towards phones is true in China, where people on dates will often spend half their time texting and talking to other people on their phones. Even young kids have phones so the ever-doting parents and grandparents can keep track of them. They’re easy to buy and easy to pay for. Plus, early on texting was made incredibly cheap in order to get around the budgets of some people when talking rates were still a little higher. The texting culture matches the instant messaging culture of computers. I foresee plenty of carpal-tunnel in the future.

    On cell phones, it’s not just China, it’s the whole world that has it right, and only the States and the Canucks that have it oh so wrong. The freedom to be able to switch carriers, buy a new phone and simply insert the SIM card, etc., is so great and SO LARGELY UNKNOWN IN THE U.S. AND CANADA. Get off your duffs and demand some changes.

  31. Just found out that AT&T Mobile (formerly Cingular) uses GSM technology in the US, and is now using SIM cards in some of their models. Don’t know if this means my Lenovo phone will suddenly start working, but I’ll give it a try.

    Has anyone tried this yet with a China-purchased, GSM phone in the states? Is SIM card design universal?

    Unfortunately Verizon’s unlimited nights and weekends nationwide to other Verizon users is kind of tough to beat, especially considering that 7 out of 10 of my closest peeps use Verizon. Their good phones are expensive and their cheap ones are shiiiit.

  32. Just to preface my little blog: I’m not defending high prices or those multi-year contracts since I’m a victim of both. However, has anyone considered the economics behind at least the high prices? (Multi-year contracts is a topic of its own.) Take “Sprint” for example, a very large cell phone company. Sprint’s customer fees are high because (or at least partially because) they spend gobs of money on advertising to compete for “expensive” cell phone customers with expensive interests/hobbies/lifestyles! Case in point, Sprint has paid a staggering amount of money to become the chief sponsor of NASCAR’s Cup series. I enjoy watching NASCAR, which is more and more become mainstream here. (Jeff Gordon rocks!) I think when the Chinese people have the luxury of more expensive interests (like NASCAR) and more disposable income, then they too will pay indirectly for their cell phone companies’ advertising expenses.

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