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back to article US lawmakers call for AppleT&T probe

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 …

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Sound thoughts from Washington?

Someone tell me that I'm not dreaming but I do believe that they are suggesting something to protect the consumer? Would our european overlords look into this as well? I for one would like to have a camera in the room when an o2 exec is told the iphone must be allowed on any network without outrageous penalties...

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Jobs Horns

@Brian Witham

Where did it say without penalties? This could have been arranged by AT&T to allow them to milk customers of cash- transfer fees, cut-off fees, early repayment fees, etc. You could probably bring in a decent chunk of the money they'd otherwise bring in- without having to pay for their network usage.

Apple may also like it as it'll stop / lower the number of people jailbreaking iphones. Which means fewer people are looking at the way it works, which means Apple gets a tighter stranglehold on the application market, tech support and all sorts. Alternatively they could start making more money- there's no real need to have discounts and the like when you're the only supplier in town and you've got the customers begging for more.

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@Brian

I for one would like my PAC code from O2 as quick as possible if they were forced to allow that.

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Anonymous Coward

no more operator "sponsored" handsets

Let's hope European regulators have the decency to outright ban the bundling of handsets with subscriptions.

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Bring it on...

I hope the same thing is done here, although I know the relevant parties in the UK haven't the power or will to do something useful. Personally the iPhone has shown how damaging exclusive arrangements are for the customer, you only have to look at the outrageous pricing demanded by O2 for the latest iPhone 3G S to see how badly the customer fares, from inflated handset pricing to extortionate monthly tariffs which are far worse than O2's own non-iPhone tariffs.

Don't get me wrong, I'm a huge Apple fan and I love my iPhone, I just wish I wasn't lining O2's pockets quite so much.

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MMS

Why is this such a big deal? It's bollocks.

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Alert

Phase 1: Profit. Phase 2: Mutual Back Scratch. Phase 3: Milk, Cream, Repeat

"Such deals can also enable more innovation by juicing manufacturers' R&D budgets."

Yeah, bollocks. The negative-impact-on-product-quality ruse is a classic defence for imminent-wing-clip multinationals making huge stacks of money for shareholders at the expense of their locked-in customer base. Multinational execs never spend money on R&D at the expense of shareholder profit as they must maintain the confidence of their funders in order to keep drawing their pork.

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Stu
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So...

...two years late, and 21 million units sold (according to the great Wiki) Washington finally catch on to this whole iPhone monopoly thing!

It should be as clear as crystal to everybody - if AT&T and O2 plus every other countries providers were in direct competition with other operators, the iPhone would be less than half the overall contract price it is today, and we wouldn't see stupid restrictions and extra costs levied on tethering and roaming!

Governments working for the common man? Possibly eventually.

So give it another couple of years and the EU might do the same...

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Jobs Halo

Maybe it's something else, altogether

They all want iPhones, but iPhones don't work in the Washington DC Metro, because Verizon (and its CDMA network) have exclusivity underground?

/Just a guess

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Won't fly

While I am all in support for banning "exclusive rights" deals, it won't go anywhere. First off, one of the bill's sponsors is John Kerry, a man who changes opinion faster than he changes underwear. Second, this will affect other rich corporations who have exclusive rights deals. For example, greedy, rich, and evil EA has an exclusive rights deal with the NFL for use of the players' names. No other company may make a video game and use the players' names. Satellite provider DirecTV also has an exclusive rights deal with the NFL so that only they can broadcast every single game. All other providers must accept what is on the local station. The NFL is the biggest money making sports league in the US and for EA and DirecTV this is a cash cow. If this law passes, then others can get the crazy idea that competition is a good thing too. Hey, if a company isn't allowed to have an exclusive rights deal when it comes to a particular phone, why should it be allowed in anything else? EA and DirecTV have enough money to bribe Congress to prevent that pro-consumer outcome.

If the bill somehow manages to get anywhere, us Americans can probably expect to see an ad on TV claiming how this bill is really anti-consumer using twisted logic. AT&T and Verizon won't give up their money maker without a fight.

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What is this idiocy about ending subsidies?

If handsets are unbundled from contracts, most people will end up paying a LOT more up-front for their handset. Don't believe me? Go to www.expansys.com or www.expansys.co.uk, and look at the price of operator-independant handsets with and without tarrifs.

iPhones in particular have been available in the EU via countries that already do prevent lock-in of handsets to networks, and the price for non-subsidized iPhones is very, very high - 600 or 700 euros if I remember right. Compare that to the subsidized price, and you will realize that not too many people will want to buy a non-subsidized iPhone if it involves that much cash upfront.

There is no free lunch - top-line handsets are expensive, and they will remain out of reach of most consumers without bundling and lock-in.

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Stop

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.

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Flame

About damn time!

The FTC should ensure standards and interoperability. The industry needs to be forced into open access, kicking and screaming.

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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.

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iPhoney

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?

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