If a current iPhone customer terminates the service agreement with AT&T, the iPhone then becomes an expensive paperweight. That has Edward Markey (D-Mass.) chairman of the House subcommittee on telecommunications and the Internet annoyed, according to the Associated Press on Wednesday.

In addition, for the privilege of turning the iPhone into a paperweight, the customer is billed a US$175.00 early termination fee.

Congressman Markey described that as "Hotel California Service. You can check out any time you like, but you can never leave — you’re stuck with your iPhone and you can’t take it anywhere."

The issue came up during a hearing whether Congress should grant a wish of the mobile phone industry and divest the states of some power to regulate them. Currently, states have the authority to regulate the terms and conditions of wireless service agreements.

Perhaps the carriers’ requests are not completely self-serving. What they object to is the patchwork of regulation that varies from state to state. What they would like to see is a uniform federal regulation while preserving the states’ rights to protect customers against unfair and deceptive practices.

Even so, the division of authority is sure to benefit the carriers and the states will not be eager to relinquish their authority.

Against this background, a discussion has emerged regarding AT&Ts; exclusive arrangement with Apple until 2012. Sooner or later, other carriers, eager to cash in on the popularity of the iPhone will raise objections.

Timothy Wu, a law professor at Columbia University, described the mobile phone industry as a " "spectrum-based oligopoly" in which consumers have given up their property rights. "Imagine buying a television that stopped working if you decided to switch to satellite," Mr. Wu said. "Or a toaster that died if you switched from Potomac Power to ConEd."

The practice of competing by abusing customers, taking away their rights, and creating exclusive agreements with suppliers of attractive products is coming under close and closer scrutiny by Congress. As carriers other than AT&T and customers put the heat on to obtain access to the desirable iPhone, that practice may have to change.