US lawmakers call for AppleT&T probe
Wireless exclusivity spotlighted
A quartet of US senators has asked the acting chairman of the US Federal Communications Commission (FCC) to review whether mobile phone manufacturers should be allowed to enter into exclusive contracts with wireless service providers.
In a letter signed by four lawmakers - including Senator John Kerry, chairman of the Senate's Commerce Subcommittee on Communications, Technology, and the Internet - acting chairman Michael Copps is asked to "act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace."
Although such exclusivity agreements are commonplace, the request for an investigation is a direct shot across Apple and AT&T's shared bow.
How direct? Very direct. One of the concerns enumerated in the letter is "Whether exclusivity agreements place limitations on a consumer’s ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to 'tether' a device to a computer for internet use."
Sounds like a direct poke at AT&T's inability to provide those two exact services to owners of Apple's iPhone.
The letter raises other concerns, as well:
- "Whether exclusivity agreements are becoming increasingly prevalent between dominant wireless carriers and handset manufacturers;
- "Whether exclusivity agreements are restricting consumer choice with respect to which handsets are available depending on a consumer’s geographic region, particularly for consumers living in rural America;
- "Whether ... the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete; and
- "Whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace."
The letter notes that in May 2008, the Rural Cellular Association, a trade group with 90 smaller wireless-provider members that provide coverage to a claimed 73 per cent of the US, filed a petition requesting rule-making by the FCC on exclusivity.
The process begun by the petition, according to the letter, resulted in a wealth of comments from large and small service providers, consumer groups, regulatory agencies, and handset manufacturers - information that could be used by the FCC to jump-start its investigation.
The debate is sure to be fierce on both sides of the issue. Pro-exclusivity proponents argue that such contracts enable mobile-device manufacturers to cut deals with service providers that result in lower prices to consumers. Such deals can also enable more innovation by juicing manufacturers' R&D budgets.
Anti-exclusivity champions contend that locking competing providers out of contracts with popular device manufacturers engenders a "We don't care, we don't have to" attitude in exclusive providers of popular handsets, as well as squeezing smaller providers out of the picture entirely.
These and undoubtedly many other arguments will be heard at a hearing on "The Consumer Wireless Experience" to be held this Wednesday in Washington, DC by the Committee on Commerce, Science, and Transportation. ®
What a joke. MMS is available on AT&T and so is tethering; it just isn't available to one phone, the iPhone. I have sent MMS messages for years and have tethering for years as well. MSS was first deployed in 2002; hardly new technology. Why didn't Apple add functionality that has been on other phones for years from the start? Even with the latest 3.0 software, it is only catching up to what other phones have had for the past few years. 7.2Mbps 3G; Nokia has sold phone that supported it for about two years. Of course Apple wouldn't want to put it in the model a year ago, then what would they have to put in the new model?
Subsidized prices and carrier signals
@Robert Hill - You're possibly right, but there's another possibility you're missing: the fundamental rule of price & demand in free market economies. Right now, Apple tell you that the iPhone is worth 600-700 Euros, but they're "nice enough" to sell it to you for a subsidized price that's easier to swallow for the consumer. But, just because Apple tell you the iPhone is worth 600-700 Euros doesn't make it so; in fact, it's actually worth the subsidized price because that's the price at which most people are purchasing them. Now, if subsidies cease, and Apple raise the price to 600-700 Euros how many people are going to buy those iPhones? Certainly not as many as would buy it at the lower, "subsidized" price... but, certainly, some still would because it's an Apple product and namebrands sell. However, I believe it's equally possible for Apple to instead be forced to sell iPhones at the previous subsidized prices due to concurrent lack of demand.
@Brett Brennan 1 - You certainly pointed out an issue between CDMA and GSM carriers, but isn't it possible that it would force manufacturers to produce products with both CDMA AND GSM receivers? AT&T isn't the dominant provider in every market, and I don't think many manufactures would risk losing out on good customer markets because of different carrier signals. Now, it's true that they could manufacture two handsets, one with GSM and one with CDMA, but it would be vastly more cost effective to produce one product with both receivers coming standard. And, in that case, it would only increase competition between all mobile companies as they're no longer fighting only for the hippest, newest product, but for total market share.
Always think outside the box...
Funny how this "investigation" request comes just as Sprint starts selling a potential iPhone competitor - with similar limitations. Is it possible that this move is an attempt to give equal competitive advantage to AT&T by allowing them to immediately grab "killer" technology for their use?
Anytime I see Congress-critters jumping in on some perceived misdeed like this I start lifting the edge of the rug, looking for where the cockroaches scurried off to. And this "investigation" would do far more damage to Verizon and Sprint - the CDMA carriers with limited device choices to begin with - than AT&T and T-Mobile here in the Colonies. Releasing the iPhone from exclusivity with AT&T would have almost no effect on AT&T's dominance - yes, it would allow tethering and MMS, woohoo - but iPhone owners would still have only the choice of a GSM carrier to connect with. On the other hand, it would allow AT&T to pick up any GSM phone (which it does now with unlocked phones from any world-wide vendor) AND put pressure on manufacturers to make a GSM version for their near-monopoly market.
No, what this investigation would really do is sound the death-knell for Sprint and Verizon's use of CDMA, effectively handing the mobile market to AT&T over the long haul. And Apple will go laughing all the way to the bank, as they will STILL get full price for the iPhone, since there is nothing demanding that the phone maker build a CDMA version for other carriers to sell as well.