“As the exclusive U.S. carrier for the Apple iPhone, AT&T has had a lot to celebrate. Rivals hope to crash the party,” Olga Kharif reports for BusinessWeek.
“A growing number of public interest groups want an end to the partnership that forces buyers of Apple’s iPhone to buy their mobile-phone service only from AT&T. And they’re taking their case to the highest levels of government,” Kharif reports.
“The Consumers Union, the New America Foundation, and the Electronic Frontier Foundation, as well as software provider Mozilla and small wireless carriers MetroPCS and Leap Wireless International (LEAP), are lining up in opposition not only to the Apple-AT&T partnership, but to all manner of arrangements whereby mobile phones are tethered exclusively to a single wireless service provider,” Kharif reports.
“Consumer groups are reaching out to the Federal Communications Commission, the Copyright Office, the Federal Trade Commission, and congressional leaders, asking them to outlaw exclusive handset and software deals. Judging from the track record of Julius Genachowski, the newly nominated head of the FCC, petitioners may get a sympathetic hearing, at least at that agency,” Kharif reports.
“Opponents also take issue with Apple’s insistence that iPhone users download software only from the Apple iTunes App Store. The argument is that these and other “exclusivity” pairings are anticompetitive and limit consumer choice. “It is unthinkable that you could only use a Macintosh on an AT&T connection,” says Michael Calabrese, vice-president at the New America Foundation, which is chaired by Google Chief Executive Officer Eric Schmidt,” Kharif reports.
MacDailyNews Take: Apple Board of Directors member Eric Schmidt should go a step further than his current position of sitting out iPhone-related meetings. Eric Schmidt should resign from Apple’s Board. Apple shareholders should have rejected him when Android first came to light; Schmidt’s conflict of interest is just too appalling.
Kharif reports, “AT&T believes that exclusive deals actually drive other carriers’ innovation. ‘Exclusive arrangements are an important form of competition,’ AT&T said in a statement. ‘The popularity of the iPhone and its innovative features and applications have provoked a strong competitive response, accelerating not only handset innovation but also the pace of wireless broadband investment and applications development.’ Indeed, most carriers nowadays offer iPhone look-alikes. If consumer advocates have their way, rivals may eventually offer the iPhone itself.”
Full article here.
MacDailyNews Take: By SteveJack (yes, I’m still alive)
Apple’s iPhone sure is popular! No other device could have precipitated such desire.
Such a move would hurt AT&T far more than Apple (it would actually help Apple move more units). However, I did not wake up this morning saying to myself, “You know, what we really need is more government control of/meddling in private industries; especially forced contract nullifications.” That said, proper regulation of business is obviously necessary, however when the government steps in, it almost always goes too far (see: promoting home ownership for people who cannot afford homes which helped lead us to today’s forked up economy). And, then, when government does go too far, it never seems to fix the mess it created until it blows up in everyone’s faces (see previous example; a few lonely voices long called for the mortgage mess to be fixed and they were ignored).
Government is full of people promoting ideas with good intentions whose ramifications are almost never fully considered. Elected officials usually aren’t really the best (or they’d be in the private sector) and brightest (just listen to the average U.S. congressperson) and they often seem to end up getting drunk on power. This goes for all political parties. Once you give the government control of something, have fun trying to wrest it back. It’s usually gone forever.
Now, many people will rejoice at the prospect of the news above; especially those who live in areas where Verizon has better 3G coverage and who want a real iPhone, not a look-alike-not-workalike fake iPhone. All I’m saying is that we should think very hard before we ask the government to step into any matter. Be careful what you ask of the government, for most governments, and certainly the U.S. government in most matters (military excluded), have the uncanny ability to make Microsoft look nimble, efficient, and innovative.
One thing’s for sure: an iPhone without carrier exclusivity will result in higher-priced iPhones since carriers will have much less incentive to subsidize the iPhone’s true cost (hundreds of dollars more per unit) as much as AT&T does today.
What do you think? Should the U.S. government outlaw exclusive deals between mobile device makers and carriers? If so, what if a carrier decides to offer their own branded device(s), do they have to allow competitors to sell them, too? “Buy an AT&T iPhone at your local Verizon store today!” Would that be a loophole Apple and AT&T or any other device-maker and carrier could utilize or would that be outlawed, too? Back to the original point: should the U.S. government force Apple to make iPhone models for each carriers’ chosen standard (GMS, CDMA, etc.)? Even if some models are not profitable? Will the government reimburse Apple for lost revenue for full compliance? Where is the cutoff where Apple wouldn’t have to make a model compatible with a certain standard? Would that be based on a carriers’ market share or geographical coverage or something else? If the government reimbursed Apple for unprofitable models created to comply with the new law(s), where would that money come from? Higher taxes on carriers or device sales or both? I could go on all day, but you get the point: It’s a can of worms. As it almost always is. Unintended consequences pop up everywhere which usually require more regulations and, rather quickly, the whole thing goes from sounding like a nice idea to snowballing into a ridiculous wasteful morass of red tape and lost productivity (see: Washington D.C.).
The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries. – Winston Churchill
SteveJack is a long-time Macintosh user, web designer, multimedia producer and a regular contributor to the MacDailyNews Opinion section.
[Thanks to MacDailyNews Reader “JES42” for the heads up.]