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March 28, 2006 Changes in the Finnish mobile phone market Posted by Phil Schwarzmann at 11:45 PM | Categories: Commentary
The S60 team is spread out around the world, but the majority of S60 employees are here in Finland. This country's government have created some strict regulations on mobile phone sales - operators are not allowed to bundle mobile phones along with service plans. So residents of Finland choose a seperate phone, then a seperate plan, any Finnish SIM will function in any Finland-bought phone. But as of next month, these laws will cease to exist...
For years, Finnish law required that handsets and service subscriptions be sold separately. Recent changes in the law, however, now allow for tie-in sales after the first of April.

Under the new law, if a consumer signs up for a phone contract with a certain operator, a phone can be thrown in for free or at a considerably reduced price. The deal is alluring for many consumers, especially as the going rate for 3G phones is over 500 euros.

The Ministry of Transport and Communications says it hopes that the move will encourage more Finns to upgrade to newer and better phones.

With so many laws, there's always the pro's and con's. Like the Ministry says, Finns will be more likely upgrade to newer and better phones more often (Finns are very thrifty people, many people hold onto their old phones for many years). When people have nice smartphones on fast networks, they'll be more likely to purchase cool applications, thus supporting the software developers - and we have a LOT of mobile developers in Finland who could benefit from this.

On the downside, people feel their overall mobile phone costs will rise. There's no such thing as a "free phone", operators will just raise their rates to compensate. Also, people fear they'll have less selection of phones, they'll be forced to choose the smaller selection of phones their operator offers. S60 is the world's leading smartphone platform, but we don't perform as well as we'd like to in the United States. This is partially due to legislation like this which gives the operators more power in the industry - If the handset maker and operator don't strike a deal, your phones don't sell.

It's a controversal new law, something that probably has no wrong or right answer. Does anyone have any thoughts on this? Is Finland making the wrong move?


Permalink |

Comments

I think yes, this is a wrong move.
As you said the Us have this kind of law, and it's not a coincidence that in terms of mobiles they're the less advanced market.

This is clearly a pressure made by the operators to the government. I live in Portugal which is a less developed country than Finland, but I think that a government can't make laws to "encourage" the act of buying new phones just so the people start using new services. It's forcing not encouraging.

What government want is people spending more money in things they don't need. If one needs than, it will search for it, not the other way around.

Posted by: Alexandre Silva | March 29, 2006 01:02 PM

The UK is the other end of the scale, we've got expensive phone contracts (generally 12-18 months) with almost free phones.

They effectively paid me to take a 6680 (70GBP minus about 100GBP in various rebates).

The deals offered if you don't choose the subsidised phone route are generally unattractive too (no data, expensive calls, no roaming etc).

Posted by: Jim Hughes | March 29, 2006 02:20 PM

But lots of companies bundles things together. Why should the government give special protection to handset sellers?

Posted by: Phil | March 29, 2006 03:02 PM

I agree with Alexandre, forcing people to have contract might be the wrong move.
We have seen so many "unlocking" services. It shows that many customers don't want it.
Well, there are still some customers who want cheap phones, of course.... :)

Posted by: Antony Pranata | March 29, 2006 06:59 PM

The worst results of bundling phones with contracts are doubtlessly the fact that some companies insist on branding phones (e.g. Vodafone) which means they adapt the style of the menues and icons and even remove some functionalities (e.g. send pictures via Bluetooth directly from the camera menu)... I heard in the U.S. they go even further. And then there is that whole topic concerning locking a phone to the operator from which you have bought it. In the end prices with 'subsidies' are the same as without (due to high monthly fixed charges) but phones are crippled...

Posted by: martin | March 29, 2006 10:27 PM


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