Thursday, September 25, 2003

Cell Phone Outlets

I dropped my cell phone and the antenna broke off. A 3-inch piece of wire seems meaningless, but it makes a huge difference to the reception on a cell phone -- the phone was almost unusable without the antenna. I went to the nearest shopping center to find a place to get a replacement antenna.

It's surprising how many different ways there are to buy a cell phone in this one shopping center:The Verizon store is typical -- about 2,000 square feet of floor space with extensive custom fixtures, lighting, screens, pamphlets and signage to let you see all the phones they offer and help you pick the right plan. There were six employees that I could see, and there may have been others out of sight in the offices at the back. Best Buy, Circuit City and BJ's all have large displays selling you phones from a variety of carriers. At Best Buy, for example, they probably have 2,000 square of space devoted to the cell phone display and it is the very first thing you see when you walk in.

It makes you wonder how much money is being spent selling cell phones. There are seven places selling them at this one shopping center, and four of them are dedicated stores that sell nothing but cell phones. TVs are much more common than cell phones, but there are only five places to buy TVs in that same shopping center (Best Buy, Circuit City, Target, Now and BJ's). And there are no "dedicated" stores selling TVs. Cable TV and landline telephone service reach more people than cell phones, and you never see a store for cable or the phone company. You just call them on the phone and order the service.

I ended up getting the antenna fixed at the Verizon store. The new antenna cost $10 and took 3 minutes to replace. But I had to wait in line behind other people. The line for repair was next to the line where people were coming in to complain about their bills. It was interesting listening to the complaints. The basic thing was, "look, when I signed up you told me I would be paying $40 for 1,000 minutes -- what are all these extra charges???"

A friend of mine works in the cell phone industry. He said that "customer acquisition" costs $350 per customer. That is, by the time the cell phone company pays for all the advertising, employee time, retail floor space, phone subsidies, etc. to get someone to sign up for a new cell phone account, it costs $350 per subscriber. That's why most plans now have 2-year contracts -- it takes awhile to recoup $350, especially after paying for all the employees who handle billing complaints once you activate the customer. There has to be a better way...

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