Don’t Pay AT&T $20 Per Month for Text Messages — Switch to Google Voice

google_voice_iconAT&T is “streamlining” their text messaging plans effective August 21st (full story) — no doubt in preparation for the iPhone 5. In this case, “streamlining” is a business euphemism for “taking away lower-priced options that too many customers prefer.” More specifically, AT&T is getting rid of their $10 per month limited texting plan, and only offering a $20 per month unlimited option. They claim to be doing this because “customers have expressed a clear preference for unlimited plans,” however I have a strong suspicion that this has more to do with customers who prefer to pay less.

Unfortunately, Verizon customers shouldn’t be too smug about the news because our day is almost certainly coming, as well. There is so little competition in the mobile phone industry that AT&T and Verizon essentially operate in collusion. For instance, one company goes from one-year contracts to two, and after waiting a respectable period of time, the other does the same; as one company’s early termination fee goes up, so goes the other’s; one carrier gets rid of unlimited data in favor of tiered plans, and rather than offering a more attractive and competitive service, the other eventually makes the switch, as well. As long as consumers don’t have realistic alternatives, it’s more profitable to raise rates for existing customers (and/or provide less service) than it is to compete for new customers. (I know T-Mobile is still an option, but they will soon merge with AT&T, and Sprint just doesn’t have the network coverage and device selection it needs to satisfy a large percentage of customers.)

AT&T is telling existing customers that they will be able to keep their $10 per month plans, and that the price hike is only for new customers. I suppose that’s some consolation, however that won’t last long. The next time you upgrade your phone (remember, the iPhone 5 is coming!), you will discover that your grandfather status has expired. At that point, you will be right where the mobile phone industry wants you: out of options.

That’s why I recommend switching to Google Voice. Google Voice still isn’t as easy to set up as it should be, but once you get it configured, you get all of the following features:

  • Free unlimited texting (on both Android and iOS devices).
  • The ability to send and receive text messages from your browser using a Gmail-like interface.
  • One phone number that maps to multiple phones. (When someone calls your Google Voice number, you can have the call forwarded to multiple numbers simultaneously — home, office, mobile, etc.)
  • The ability to make voice calls from your browser (this is how I make most business calls now).
  • Free voicemail with very humorous speech-to-text (it’s good enough to skim and get a feel for a message, but don’t base any important decisions on this technology just yet).
  • All kinds of very sophisticated call filtering, screening, and grouping capabilities.
  • Integration with Google Contacts.
  • Seemingly unlimited archiving and indexing of text messages and voicemails. (If there is a limit, it’s very generous.)
  • Completely free.

I should point out that I don’t expect Google Voice to remain free indefinitely; the service can still be a little rough around the edges, so I’m guessing they’re waiting until it’s more robust before actually charging customers. However, assuming it’s a fair and competitive rate (I’m guessing maybe $10 – $20 per year), I will be happy to pay. Google Voice is far more innovative than just about anything AT&T or Verizon have done in recent memory (or distant memory, for that matter), and I’m happy to pay for services that provide real value.

If you use Android, Google Voice integrates seamlessly with the OS to the point where you won’t even be aware that you’re not using your actual mobile phone’s number. If you use iOS (that is, an iPhone), your life isn’t going to be quite as good. Unfortunately the Google Voice iOS application is very buggy and not all that well integrated into the OS, but in my opinion, it’s still much more functional and feature-rich than anything you get from your standard mobile phone plan. And even on iOS, it’s certainly better than paying $20 per month for text messages which, believe it or not, cost carriers all of about 0.0002ยข each.

Think Twice Before Building a Business on YouTube

Update: About 45 minutes after TechCrunch picked up this story, the Watch Report YouTube account was restored. Thank you YouTube, and thank you TechCrunch.

Watch Report, one of the oldest and most popular watch blogs, recently had its YouTube account terminated in error, and there seems to be no way to get it back. If you’re thinking of building a business based on YouTube advertising revenue, you might want to think again. As we learned, all of your work can be taken away at any moment, and there’s absolutely nothing you can do about it.

Here’s what happened to us at Watch Report.

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Why Google Needs to Find Social Success

It’s incredible to me that the same search engine technology which seemed indomitable only a few years ago is now being seriously threatened by something most of us initially mistook for a silly diversion: social networks. The point is best illustrated with a story:

My daughter’s hermit crab recently died and she’s been asking for a guinea pig to replace it. There was a time when the first thing I would do is search Google for information on guinea pigs and do research to see if they would make a suitable pet for an eight-year-old girl. Not anymore. Instead, the first thing my wife and I did was query our social networks.

Two things are happening that are seriously undermining search engines right now:

  1. Because of Facebook and Twitter, we now have the ability to ask just about everyone we know and trust anything we want and get extremely relevant responses usually within minutes.
  2. The internet is flooded with extremely low-quality content designed to be nothing but search engine bait making search-based research less and less efficient.

In other words, the quality of the results I get from search engines like Google is declining while the quality and relevancy of results I get from Facebook and Twitter is increasing. And this is happening alarmingly fast.

To put things into perspective, I still use Google (and even Bing sometimes) several times a day — dozens, in fact — and by no means am I predicting the death of anyone. However, I am finding that my search queries are now divided into two distinct categories:

  1. Information seeking. If I want to know how long it takes for a wildebeest calf to be able to start walking after birth (yes, I actually looked this up the other day), I use Google (and frequently end up at Wikipedia).
  2. Question asking. When I have a specific question about something (Do guinea pigs make good pets for young children? Which brand of printer is most Mac-friendly? Should I go Nikon or Canon?), I almost always turn to social networks first.

(As an aside, a third but less relevant category is navigation: most sites have such poor navigation that it’s often faster to use Google to find a particular page inside a site than to use a site’s own navigation or search. Sad but true.)

What’s interesting (and potentially very alarming) about these categories is their relevancy to advertising. I’m finding that the kinds of searches I do with Google these days are less relevant to commerce than the searches I do through social networks. In other words, I’m not going to pay for information about wildebeests, but if I’m researching the differences between Nikon and Canon DSLRs, I’m likely in the market for a camera and poised to spend some serious money. As you can imagine, this is a huge problem for Google.

So why are many of us unconsciously drifting away from using Google for certain kinds of search? The answer is surprising: because Google has become a victim of its own success. Google’s search algorithms fueled an explosion in advertising revenue, both for Google and for publishers (sites hosting Google ads). Advertising has become such a big business with such low barriers to entry (thanks largely to blogging) that the amount of content specifically tailored to capture search engine traffic has increased at an astounding rate. Unfortunately, as its growth has increased, its quality and relevancy have plummeted.

I’ve become increasing frustrated with the quality of result I get from Google, and increasingly suspicious. I would estimate that at least half of the links I click on lead to information that was generated purely to capture search traffic and show ads. It’s getting more and more difficult — and taking more and more time — to find high-quality results through search engines while simultaneously getting increasingly easy and efficient to simply ask my friends and let the information come to me.

Search engines need to diversify. Bing is branding itself as a decision engine rather than a search engine which I think is interesting and will very likely prove an excellent distinction. Google seems to be experimenting with the decision engine approach, as well (hence their recent purchase of ITA, I suspect), but Google is also trying to figure out how to be social. Google Talk, Google Buzz, Google Wave, Google Profiles, the ability to search your social network, and the rumored "Google Me" service are all strong evidence that this is certainly not escaping Google’s attention (nor has it escaped the attention of Facebook and Twitter). However, in the area of social networking, Google is looking more and more like Microsoft: struggling to find a foothold, launching branded service after branded service hoping that one will eventually stick. This isn’t necessarily a criticism — Thomas J. Watson said that the best way to increase your rate of success is to increase your rate of failure. However, Einstein also said that the definition of insanity is doing the same thing over and over again and expecting different results.

It’s time for Google to do something very different.


Although it’s search engines that are immediately threatened by social networks, e-commerce sites are next. It won’t be long before we’re buying and selling through our social networks, as well.

The Real Media Revolution Must Come From Content Creators

As I was watching TV on my iPad last night, I was struck by two things:

  1. How far hardware and software have come over the last few years.
  2. How far media distribution still has to go.

Media distribution will be broken until it reaches one single and very simple objective: anyone should be able to watch or read anything at any time on almost any device. What’s interesting about this objective is that it’s 100% achievable today in terms of technology; it’s media distribution that makes it laughably unrealistic.

As much as I like my iPad, I just don’t find it all that useful because of the incredible lack of media options. First of all, I think we call agree that the iPad is designed primarily for media consumption rather than creation. Yes, you can do some creative things on the device, but for the most part, if you really want to make something, most of us are better off using our computers or cameras or whatever it is we use to create. But for media consumption — reading, watching video, and playing games — the iPad is fantastic.

In theory, anyway. In practice, it’s hugely lacking. Rather than watching and reading the books and shows I’m interested in, I find myself having to pick from very limited selections carefully designed not cannibalize other revenue streams. A good example is my recent interest in Modern Family (the show which recently set a new standard in product placement and shilling, but which is a good show nonetheless). I got into the show very late in the season which means that I’ve missed about ten episodes, and there’s no practical way for me to get caught up. In the year 2010, while surrounded by some of the most advanced devices on the planet and having massive amounts of bandwidth at my disposal, the only options I have available are:

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Is Verizon the new AT&T?

If you thought AT&T’s exclusive access to the iPhone has made them brazen, check out what happened at the Verizon store on Friday while I was checking out the new Motorola Droid:

  1. The first thing I confirmed was that Verizon does expect you to pay $45/mo for data if you want to use Exchange. I’m guessing you don’t actually have to buy a corporate plan to use Exchange, but they certainly want to make you think you do. Since my company doesn’t pay for my phone, but I still want to use it to access my corporate email, there’s no way I’m paying $15/mo more just for Exchange access. To be fair, I believe AT&T also offers corporate plans, but nobody ever tried to sell me one, and Exchange works fine with the regular $30/mo plan.
  2. I also confirmed that Verizon is raising their early termination fee on November 15th from $175 (somewhat reasonable) to $350 (absolutely absurd). That means after November 15th, pretty much nothing will be able to get me to buy a Verizon phone (until AT&T does the same thing, that is, which I’m sure is coming).
  3. The most atrocious thing I saw was a salesperson tell a customer that he just found out that the Droid was going to have all the apps that the iPhone has. I chuckled, but let it pass until I heard him use the same line on someone else standing next to me as I played with the display model. That was too much. When I called it on him, he assured me that all iPhone applications were being ported to Android. He wasn’t happy when I explained to him (and the other customer) that there was no way that was going to happen. Nor was he particular receptive when I suggested that he pitch the Droid on its own merits (of which it has plenty) rather than misrepresenting it. I really hope this was a sales tactic employed by this salesperson alone, and not something he was instructed to say during sales training.

Part of the reason I was so interested in the Droid was to get away from AT&T which I feel has abused their exclusive access to the iPhone, however from what I can tell so far, Verizon isn’t going to be much better. My inclination at this point is to stick with the devil that I know.

The Phone Itself

My impressions of the Droid were pretty positive in general, but I don’t feel like the keyboard was done well enough to justify the additional size, weight, and moving parts. The four primary problems I found with the keyboard were:

  1. It’s not centered. Because of the D pad on the right, you have to really stretch your right thumb for it to be in position which throws everything off. In my experience, keyboards need to be symmetrical to be usable.
  2. The keys aren’t offset. In order to save space, they keys are in a tight grid rather than an actual keyboard pattern. This seems subtle, but it really slows down typing.
  3. There’s no dedicated number row. Having to use meta keys frequently on a thumb board really slows me down.
  4. The keys aren’t raised enough. I made as many mistakes on the physical keyboard as I did on the software keyboard, and more than I make on my iPhone’s virtual keyboard. Maybe I’d adjust to it eventually, but then again, maybe I wouldn’t.

Google, Motorola, and Verizon are right to focus on a phone that has things that people want, but that Apple isn’t interested in providing (like keyboards), but that doesn’t mean we’ll be happy with a substandard implementation. We’re all so accustomed to the virtual keyboard on the iPhone by now that a physical keyboard has to be done extremely well for it to qualify as an advantage. It really baffles me why so few phones get keyboards right. Here’s a hint: get an old Sidekick 2 or 3, and do exactly what they did. That’s it. Don’t compromise, and don’t even try to make improvements. A keyboard as good as the Sidekick’s on a device as powerful as the Droid would be hugely compelling, and would certainly be enough to make me switch.

The State of the Mobile Industry

So what is ultimately going to save us from this mess that passes as the mobile industry in this country? In the short term, government regulation that makes all these anti-competitive practices (huge early termination fees, unrealistically long contracts, arbitrary software approval processes, etc.) unlawful. And in the long term, our best hope is ubiquitous Wi-Fi (or whatever the name will be for Wi-Fi that’s everywhere). Having ubiquitous and affordable Wi-Fi instantly transforms the mobile industry into what the PC market is today. In other words, rather than being locked into contracts, being forced to pay exorbitant monthly rates, and having your hardware purchases tightly controlled by poorly run service providers, consumers will be able to purchase any type of hardware they want right off the shelf running whichever operating system they like best, then do anything they want with it, including making as many VoIP calls as they want to whomever they want, installing any application they want, and buying as many different devices as they want. Unfortunately, we’re still a long ways away from what’s best for consumers as my trip to the Verizon store reminded me.

The Free Market Paradox

I realized recently that there’s an inherent paradox in the free market system: left to its own devices, the free market will create as little freedom as it possibly can.

The most obvious examples are the big famous monopolies like Standard Oil and AT&T, but this happens in much more subtle ways all the time. Here are just a few examples:

  • Cell phone companies. Why is it that all carriers require two year contracts? Why doesn’t one company gain a competitive advantage over another by offering a one-year contract, or a six-month contract, or no contract at all? The answer is collusion. Maybe not the kind where men in expensive suits sit around smoking cigars and plotting, but there is clearly some kind of an "understanding" in the industry (which seems to have come about in response to number portability). As choices become more limited (exclusive handset deals, consolidation), I wouldn’t be surprised to see three-year contracts become the standard like in Canada. Carriers get away with this because the costs of anyone new getting into the industry are prohibitively high. No single mobile phone service provider can act as a monopoly, but acting in collusion, they can very easily limit consumers’ options, and apparently get away with it.
  • Television providers. Not only do you have very little control over who provides your television/internet/phone service, but at least where I live, they are all starting to require contracts just like mobile phone carriers. As in the case of phone contracts, customers are expected to sign agreements with penalties before it’s even possible to know how good the hardware and services are, and how they compare with the (limited) competition. Often the only recourse consumers have is switching to another product or service which these contracts are explicitly designed to prohibit.
  • Alarm companies. Same story. Every one of them in my area requires a three year contract. If you want wireless equipment (which is all anyone wants to install anymore), they also want to charge extra per month rather than a higher up-front cost. If you call them on the length of their contracts, they simply respond with something like "it’s the industry standard." In this case, "industry standard" is synonymous with collusion.
  • The software industry. There are just too many examples to name in the world of software. Customer lock-in is standard operating procedure. Think about how difficult it is just switching to a new computer with the same operating system, and now imagine switching to a different operating system, or migrating years of data from one software package to another, or converting an entire company from one internal workflow to another. These challenges often aren’t accidental. In most cases, it’s easier and cheaper to put up with what you have than to switch to something better.
  • The medical industry. Regardless of where you stand on the healthcare debate, unless you’re a highly paid specialist or an insurance executive, it’s hard to argue that the system isn’t out of control. Doctors and hospitals charge way too much because they know that individuals usually aren’t paying their own bills, and insurance companies therefore charge as much as they can for coverage and pay for as little treatment as they can get away with. The victims are the insured and uninsured alike who are locked into a system that doesn’t work and which doesn’t provide any better options.

The reality is that it’s cheaper and easier to lock customers in, stifle competition, and apply "leverage" than it is to truly innovate and compete on a level playing field. Even if it’s not good for the industry or for consumers in the long run, it’s better for next quarter’s earnings which, as we all know, is what leads to higher stock prices (aka executive compensation) and better bonuses.

All of this takes place in a free market system, and all of it is either perfectly legal, or at least legal enough that nothing is being done about it. All of these limitations and constraints and miserable experiences that we are all stuck with are actually rewarded by the free market which, in many cases, isn’t free at all. The only way to create a truly free market is to constantly regulate it — sort of like the government itself.

So what can be done about it? First and foremost, multi-year agreements should be illegal, plain and simple. If a company can’t provide a service which is valuable enough to keep you from switching to another service, you should be allowed to switch without penalty. Second, in any instance where the huge majority of dominant companies in an industry begin to adopt the same sets of practices, the government needs to investigate. I don’t like the idea of the government getting involved in private industry any more than anyone else, but the reality is that private industry has proven over and over again that it will not regulate itself, so the only entity with the power to do it for them is the federal government. And finally, wherever competition is lacking in a particular industry (or a particular industry which is strategic to the country is failing to prosper), the government should offer incentives to private industry through low interest loans, tax breaks, etc. This does not mean giving failing car companies who have a long history of mismanagement more money to mismanage; rather, it means giving entrepreneurs the opportunity to compete against the status quo.

It’s easy to argue that these kinds of solutions are unfair, but if businesses are offering quality products and controlling costs (i.e. executive compensation), nobody should have anything to worry about.

Update: Judging from the comments, I feel I should clarify some points in this post. By no means am I unconditionally in favor of more government and regulation, nor am I in favor of nationalizing private industry in any way. I believe we need the right amount of government which means less in some areas and more in others. And, of course, we need government that works. Often the assumption is that everything the government attempts to do will inevitably fail miserably. Obviously that’s not acceptable. Just as we should be able to drop our mobile phone carrier if their service is not what it should be, we need to vote out politicians who can’t ensure that government programs are run effectively.

Although I know this post could come across as sounding like I want a market that is less free, the irony is that I want just the opposite. That’s the paradox. I only want to see regulations placed on private industry where that industry is trying to limit freedom, choice, and innovation. I want freer markets. Maybe government regulation isn’t the best way to get there, but as I said above, these markets don’t appear to be willing to regulate themselves, so who else is going to do it?

Why all the recent movie news isn’t good news

Lot’s of interesting movie news lately. First of all, Toshiba has released the first HD DVD players in Japan, and will soon start selling them in the US for $499 and $799, depending on the model. The debut of HD DVD will soon be followed by Blu-ray technology backed by Sony and Samsung (the new Sony PS3s will have Blu-ray built-in), and we’ll all get to relive the Betamax / VHS format wars all over again.

So what’s wrong with first generation DVDs? First and foremost, they aren’t selling like they used to, so it’s time to revitalize the market by updating the format. According to Toshiba, however, people are asking for them since television resolution has surpassed that of DVDs. Personally, I think Sony, Samsung, and Toshiba have a lot of challenges ahead of them.

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Why this isn’t another bubble

If you think we’re experiencing another technology bubble, I have some news for you: we’re not even close. How do I know? Well, I’m no economist, but I know because I was there during the first bubble. I worked at a quintessential .com startup in Dullas, Virginia between 1998 and 2002 while my wife was working at AOL, and believe me when I tell you that there’s no comparison between then and now. While my wife enjoyed all the benefits of working for a big company flush with cash and desperately trying to hold on to employees, I spent my days, nights, and weekends in a little office park wearing Birkenstocks, playing foosball and Quake 3, drinking free Mountain Dew, engaging in Nerf warfare, and working superhuman hours with people’s dogs wandering around the office. In fact, I’m sitting in an Aeron chair right now that used to belong one of the founders who was removed by the board in classic style. So like I said, I’m no economist, but I know.

Here are all the most common pro-bubble 2.0 arguments I hear:

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