“It’s intolerable that the [U.S.]… has trapped its citizens in a backward, stifling system when it comes to the next great technology platform, the cellphone,” Walt Mossberg writes for The Wall Street Journal.
“A shortsighted and often just plain stupid federal government has allowed itself to be bullied and fooled by a handful of big wireless phone operators for decades now,” Mossberg writes. “And the result has been a mobile phone system that… severely limits consumer choice, stifles innovation, crushes entrepreneurship, and has made the U.S. the laughingstock of the mobile-technology world, just as the cellphone is morphing into a powerful hand-held computer.”
“To my knowledge, only one phone maker, Apple Inc., has been permitted to introduce a cellphone with the cooperation of a U.S. carrier without that carrier having any say in the hardware and software design of the product. And that one example, the iPhone, was a special case, because Apple is currently the hottest digital brand on earth, with its own multibillion-dollar online and physical retail network,” Mossberg writes.
“Even so, Apple had to make a deal with the devil to gain the freedom to offer an unimpaired product directly to users. It gave AT&T exclusive rights to be the iPhone’s U.S. network for an undisclosed period of years. It has locked and relocked the phone to make sure consumers can’t override that restriction. This arrangement reportedly brings Apple regular fees from AT&T, but penalizes people who live in areas with poor AT&T coverage,” Mossberg writes.
Mossberg writes, “These restrictions have rubbed some of the luster off the best-designed hand-held computer ever made.”
Much more in the full article — highly recommended — here.
<sigh> No AT&T;in the entire state.
Isn’t that a good thing?
Contracts have to go! Cellular service as we know it now, in general, has to go. Apple knew that whatever carrier agreed to offer the iPhone would want exclusivity (which imho should be illegal) otherwise they would refuse to carry Apple’s product. Verizon thought/thinks they are going to compete with the iPhone with high-end LGs and Samsung offerings and they’re not. There is no competition for the iPhone, it’s just a matter of coverage, and of cost of plans. For me the decision was/is simple – I don’t have AT&T;service in my home area – so there you have it. But, having said that, and having looked over the plans for the iPhone, I’m not sure I’d get into one anyway, not because I don’t want an iPhone, but because I’m sick to death of having to sign my life away to get cellular service.
And OMG, have you seen all of the nickle and diming in AT&T;’s service plans, in particular for the iPhone? Holy cow! (No offense to my Hindu friends.) I don’t want my beautiful Apple devices all intertwinded [sp?] with the likes of ATT, or Verizon or any of them. So I’ll just keep using whatever cellular service I’m compelled to use, and get an iTouch, or better yet, I’ve heard there’s a rumor afoot that Apple is coming out with a full PDA sometime in early 2008? It’s really everything except the telephony in the iPhone that I’m interested in, and I know Apple already gets that, and I think they’ve already begun to address that.
I think cellular service in the U.S.A. is mafioso (in principle) and should never be allowed to lock anyone into anything that would work just as well in a pay-as-you-go type of service. I don’t think contracts help the phone company sell even one more service plan then they otherwise would. It’s a system that is in very bad need of reform – for its own sake, not to mention the end user.
But, but, but… the Free Market™ is always right. Isn’t it?
The 700 MHz Band, coming to a city near you…..
Up until the 1970s, when the federal government intervened, you weren’t allowed to buy your own landline phone, and companies weren’t able to innovate, on price or features, in making and selling phones to the public. All Americans were forced to rent clumsy phones made by a subsidiary of the monopoly phone company, AT&T;, which claimed that, unless it controlled what was connected to its network, the network might suffer.
Same shit, different decade.
People, keep complaining. It makes you look so sad and petty.
-Sent from my iPhone.
The system represent by how the telcos do business now doesn’t represent a free market.
In a cell phone (telephony) free market, consumers would choose whatever phone (depending their wants and/or needs) and then separately pick the cell service provider they thought best provided for their wants/needs.
And another thing…if cell phones weren’t subsidised, people would have to pay the actual price of the phone. A lot of people would be unhappy about this (my spouse loves those “free” phones), but….there would be a lot less cell phones in general use, and I can think of a number of good things that would result from that.
@The Mac that Roared:
Apple will sell X number of iPhones, so it really doesn’t matter to Apple who the carrier is. The reality, however, of contract negotiations is that AT&T;, Verizon Wireless, or anyone else will not give you something for nothing.
Apple didn’t have the leverage to demand a cut of the monthly fees from all of the wireless carriers. So it did the next best thing – restrict the availability of the iPhone to one carrier. That way Apple could say, “Hey, AT&T;, you can be the EXCLUSIVE carrier of our fabulous new device, but we get a cut of the fees since you won’t be subsidizing our iPhone. And by the way, no other carrier gets to sell the iPhone. And if you don’t want it, we have an appointment with T-Mobile next week.”
NOW AT&T;has good reason to pay Apple for the exclusive right to carry the iPhone. In other words, Apple provided something valuable to AT&T;which it, and the general public, could not get elsewhere, and AT&T;was willing to pay for it.
What about people who were locked into a contract, you say? One of two choices: either they hate AT&T;more than they love the iPhone, so they really didn’t love the iPhone that much anyway; or they’ll be an AT&T;customer once their current service agreement expires.
Therefore, your statement is incorrect. Apple would not have made more money by having the iPhone with a variety of carriers, because the carriers would not be willing to pay Apple a portion of the service fees unless they had some other advantage over their competition.
The system represent by how the telcos do business now doesn’t represent a free market.
Why? Are they forced by government regulation to screw their customers over the way they do?
@Norm – I generally agree that less gov’t is better, but gov’t has a legitimate role in defining the environment for infrastructure. I’ll give you two examples 1. Everybody drives on the right, steering wheels on the left; 2. Electrical power is 110v, 60 Hz. Both rules enable consumers to be assured that devices they buy will work with the infrastructure. Neither of these examples is particulaly better than a number of alternatives, but they define the infrastructure. US citizens would be better off with one cell phone infrastructure technology and handsets from many vendors which are not locked to particular carriers. There is no benefit in having both CDMA and TDMA cell infrastructures.
What Mossberg doesn’t address in this article is the race for internet providers to move to a more segmented and stratified business model that will let them charge customers more based on content (Google “Network Nutrality”). Unfortunately, the internet players are the same as the cell phone players (at least there’s a big overlap in the Venn Diagrams) and they know how to make the FCC work for them rather than the citizens.
@lurker
Good perspective on federal regulations. They are indeed a double-edged sword. I recall the years it took for quartz halogen headlights to be made available in the U.S. (after being commonplace in Europe), even though they were superior, because of the D.O.T. regulations dictating sealed beam headlights (which were themselves a vast improvement on the separate bulb/reflectors that they replaced). Regs can be good as long as regulators are nimble enough keep up with technological advances. Something that has not happened with our telecommunication regs (at times being used to stifle entry into the market of competing companies). We would all be better off if there was a global consensus on these standards, but reality says that won’t happen for a long time, if ever.
AT&T;is 2 t’s
AT&T;is one t and one loud t
You guys in the US don’t even know you’re born!
Spend a week with a cellphone in Australia and you’ll be clamouring for the first flight home!!
“To my knowledge, only one phone maker, Apple Inc., has been permitted to introduce a cellphone with the cooperation of a U.S. carrier without that carrier having any say in the hardware and software design of the product. “
Dear old Walt: he must be getting senile. The Apple iPhone is about the only GSM phone sold in the USA that you can’t easily permanently unlock and move between carriers. And nothing stops you buying (at full price) the GSM phone of your choice and using it with TMobile and AT&T;.
It’s trivial to write and install an app for a Windows Mobile phone or a Blackberry, all without carrier permission.
Walt, look past your iPhone prision and get a grip on what’s actually happening in the real world.