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iPhone Buzz Puts Focus on Carrier Practices

Wednesday, July 11th, 2007 at 2:55 PM - by

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.

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Bosco said:

member since 03 Jun 2002 with 1002 posts, unranked, send him a message or view his profile

Wed Jul 11, 2007 3:16 pm

This is very interesting. Nobody is talking about using the law or the courts to put a kibosh on the Apple/AT&T deal, rumored to be a 5 year US exclusive. But they are talking about open access requirements on the 700MHz spectrum. If that band becomes popular with mobile devices, which it may at least regionally because of how signals travel, an open access requirement would keep iPhone out of that space. Also, it's very funny to have Dems criticizing Apple and Republicans supporting Apple. What's next? Will Jobs start doing lunch at the Outback across the street from the Apple campus?

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Biff said:

member since 08 Apr 2004 with 1479 posts, unranked, send him a message or view his profile

Wed Jul 11, 2007 3:32 pm

Well any decent Republican (that is those of us who are more interested in the traditional ideals of the Republican party vs. those who spend all their time scaring people away with crazy radical religious conservatism) would find themself preferring the idea of allowing businesses the freedom to operating as they choose instead of having the government take yet more freedom away for the sake of guranteed security. We've seen plenty of examples lately of small startup companies innovating and forcing the big boys to follow suit. Good thing for Netflix or else the government would have had to step in and start regulating video rentals. If the cellular providers are THAT big of a problem, America will eventually shift to something else as technology evolves. Which of course is not to say whether or not this is necessarily the correct opinion on the matter, but it certainly explains why the idea has been raised by a Democrat. Why educate people when you can just make all of their decisions for them?

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A guest said: (hide)

Wed Jul 11, 2007 4:46 pm

No one cared when the phones that were locked were crappy. There was no mention of Motorola's exclusive deal with Cingular/AT&T over the Razr, no congressional hearings. ALL cell phones sold in this country are locked to a carrier. Some can be unlocked fairly easily, some can't. Boo Hoo. I suppose the folks who are on Verizon's CDMA network would like for congress to pass regulations that all cell phones must operate on all available networks? And it is not at all odd that the Dems are complaining. They invented political correctness and the "it is not my fault, I'll sue" mentality so pervasive in this country. You know the scariest phrase in English? "I'm from the government and I am here to help!"

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Terrin said:

member since 29 Jan 2006 with 414 posts, unranked, send him a message or view his profile

Wed Jul 11, 2007 4:54 pm

What a bunch of BS. Carriers do not like State regulations because States are more consumer friendly. Consumers are pretty powerless to compete with federal lobbyists.

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chicknfood said:

member since 13 May 2004 with 15 posts, unranked, send him a message or view his profile

Wed Jul 11, 2007 7:40 pm

Verizon is retarded.. the rumor is that Apple first went to them to get a deal for the iPhone but they didn't agree with the terms of the partnership. Now we will have a huge ATT (Bell telephone anyone?) monopoly on the cell phone market instead of having two or three viable provider competitors. I highly approve of forcing Apple to make iPhone available for other carriers, however, from what i understand you won't have visual voicemail with the other networks.

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jdevaney said:

member since 10 Jul 2007 with 2 posts, unranked, send him a message or view his profile

Wed Jul 11, 2007 7:50 pm

Visual Voice Mail = AT&T sends the recording to the iPhone memory over EDGE and the messages are stored locally on the phone. Try going someplace without EDGE access and if you miss a call you will need to call voice mail like on any other phone. THis is not some great invention. Verizon could probably have this up and running in no time.

Don't get me wrong I own an iPhone and left verizon to get one all I am saying is VVM is not magic.

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deasys said:

member since 08 Apr 2003 with 296 posts, unranked, send him a message or view his profile

Thu Jul 12, 2007 1:33 am

Quote:
all I am saying is VVM is not magic

It just seems like magic, especially when the iPhone has the only viable implementation.

Why is that?

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Intruder said:

member since 07 Jul 2004 with 3149 posts, TMO Mac Specialist, send him a message or view his profile

Thu Jul 12, 2007 9:47 am

Maybe it is currently the only phone with enough built-in storage to hold the voice messages? Since they are basically sound files that have been pushed out to the phone, vice listening to them over the phone connection.

Just guessing, though.

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A guest said: (hide)

Thu Jul 12, 2007 9:47 am

Expensive paperweight? Hardly.

The paperweight is the AT&T service, not the iPhone. I know people who are already considering ditching the phone service and using the cool iPhone as a PDA, webserver, email device, primarily at WiFi sites.

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A guest said: (hide)

Thu Jul 12, 2007 9:49 am

I don't think Verizon would be happy at all about having an open network, since they seem to be the ones spending the most money on network upgrades, how nice to have all that investment suddenly a become a public commodity! I think open networks would almost instantly lead to Cellular company mergers. What is the competitive advantage of any cell phone company if anyone can cell a working phone that works the same as everywhere else? Billing? Service? new ring tones?

I do think it's terrible that america is in the stone age of cell phones and that such a huge percentage of all phones sold in america can't work anywhere else (thank you CDMA). One other ground shattering phenomena of the iphone that no one is really mentioning is how the iphone wasn't first seen in So. Korea or japan first.

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vasic said:

member since 09 Aug 2005 with 279 posts, unranked, send him a message or view his profile

Thu Jul 12, 2007 12:02 pm

Biff wrote:
Well any decent Republican ... would find themself preferring the idea of allowing businesses the freedom to operating as they choose instead of having the government take yet more freedom away for the sake of guranteed security. We've seen plenty of examples lately of small startup companies innovating and forcing the big boys to follow suit. ... If the cellular providers are THAT big of a problem, America will eventually shift to something else as technology evolves. ...
(quote edited for brevity; see above for the whole thing)

Unfortunately, this argument is flawed, and the subject at matter (wireless telephony) is precisely the perfect example. The US mobile telephony is so much behind the rest of the world and not catching up precisely because companies were allowed to build anti-competitive businesses without any government oversight or control. Even Serbia (remember, the US bombed it to oblivion in '99) has larger 3G coverage (percentage of the territory) than the US, not to mention the number of users! They have several competing GSM carriers, investing in build-up of network and services.

Meanwhile, US carriers have successfully convinced their customers that it is normal to have your phone locked, to have 2-year contracts, to have $175 'early termination' fees... Minuscule percentage of US consumers are actually aware that they can easily request their GSM carriers (T-Mobile or AT&T at this point) to provide them with instructions to unlock their phones (I've done it many times). Obviously, carriers are extremely skillful in guarding this information as a trade secret.

And to answer 'guest', the only reason the iPhone didn't show up in Japan or Korea first is because Steve Jobs is and American and builds products primarily for American market first, then global market second.

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