Smartphones' biggest drawback? Terms of service

This post was written by TechRepublic member dcolbert.

My introduction to the Verizon Droid highlights how unsatisfactory “smartphone” service has been from major wireless carriers - not simply because of the hardware, but because of their own, backwards, greedy practices. Let me explain.

Previously, I owned an HTC XV6800 (TyTN), which was a decent phone with a resistive touch screen, slide-out keyboard, and WinMo 6.1. Now, many of the unsatisfactory things about this phone were related to the hardware. The 2mp camera was horrible, the resistive touch screen was a complete hassle for dialing phones, plus the OS was dated and didn’t support finger navigation, so you pretty much had to use a stylus.

However, I carried an expensive data plan on this phone for a two-year contract, and largely because of Verizon’s Orwellian lock-down policies that cripple hardware features on their phones, I could never utilize the phone to its full capability without either paying extra (double) to unlock additional “services” (disabled hardware features).

For example, Verizon disabled GPS on their early smartphones, and while they retroactively allowed GPS on some smartphones, they never extended that to the XV6800. They alienated a large segment of their gadget-happy subscriber base through this action, for no real good reason (the XV6800 probably also was an insignificant number of total phones on their network, so the logic of upsetting those customers seemed to have little financial incentive).

To me, this is like selling you a car with an 8-cylinder engine but only 4 cylinders are working - and you have to pay more money to unlock the other ones. Oddly enough, this is a model more and more consumers are willing to accept across a broad range of products.

My second complaint is the model of selling an “unlimited” data plan – which is in fact limited to a 5GB cap – and then charging extra to tether to a notebook or PC, even if it never exceeds that “unlimited” 5GB cap, tethered or not.

Verizon argues that GPS and tethering create additional load on their network and therefore need to be charged as premium services. With Assisted GPS, this is true to a certain extent, but again, so few of the GPS-capable phones on the Verizon network are Assisted GPS devices that alienating the owners of those phones makes less sense than simply absorbing the cost of allowing them to enjoy unlocked GPS, like the rest of Verizon’s customers.

With tethering, this is absolutely a fallacious argument. 5GB of “unlimited” data transfer is 5GB of “unlimited” data transfer, regardless of if it occurs on a notebook, phone, desktop, XBox 360, Wii, or any other device that can connect to the Internet. The fact that you can reach 5GB faster on a notebook has merit, but that doesn’t justify charging TWICE as much to allow tethering UP TO that 5GB limit. Charging you for something that you’ve already been charged for is completely unethical – it’s greed, pure and simple.

Many Verizon users, feeling that they’ve been treated unethically by the company, have played a cat and mouse game where they unlock the GPS and use third-party tethering apps to avoid Verizon’s unjustified charges. But why should people have to go through hoops to enable features that are already part of the device that they OWN and that do not cost the company any EXTRA money to enable? The short answer is that they shouldn’t have to.

So, because of this, combined with hardware shortcomings, I found that the Verizon XV6800 didn’t really deliver a significant advantage over a regular smartphone. I contemplated purchasing the new Verizon Droid, but after reflecting on my experience with the XV6800, I decided to cancel my service – and drop my number that I’ve carried since 1987.

Two decisions on Verizon’s part, in particular, helped push me over the edge:

1. Raising the price for early termination from $175 to $350
2. The decision to continue to charge additional fees for tethering even if the 5GB cap on “unlimited” service was not exceeded

But in a weird twist of fate, the company I work for wanted me to have a cell phone. When I cancelled mine, they provided me with one – a Droid.

Now, the irony here should not be lost on Verizon executives. They consider the Droid a “consumer” phone, and it is. But at the prices they want for the services they offer, I’m not willing to pay those prices as a consumer. Only if my business offers these services will I accept Verizon’s terms. And a lot of IT shops are not going to support the Droid, at least as it exists today.

I hope that a lot more consumers will come to the conclusion I have about smartphones – that $4000 in TCO for a typical smartphone every two years can go to quite a few other things I’d rather pay for. And hopefully businesses will increasingly either demand corporate-secure devices like Blackberries or they only buy smartphones for executive management. If consumers and businesses put the hurt on companies like Verizon, perhaps it will force them to change their ways.