Businessweek reports that a coalition of special-interest groups, otherwise known as consumer advocates, is hard at work to persuade the federal government to outlaw the exclusive deals that lock a specifc mobile phone to a single carrier's cellular network.
Such deals mean, for example, that buyers of an Apple iPhone are only authorized to use the device on AT&T's cellular network, though of course some number of users "jailbreak" their iPhones and use it on another network.
According to the Businessweek story, the coalition includes Consumers Union, the New America Foundation, the Electronic Frontier Foundation, software provider Mozilla and a pair of small wireless carriers, MetroPCS and Leap Wireless International, and allies like the Rural Cellular Association.
Their argument is that such exclusive arrangements are anti-competitive and limit consumer choice. They've vowed to work to persuade the Federal Communications Commission, the Copyright Office, the Federal Trade Commission, and, of course, Congress to ban these kinds of deals.
software deals.
The analogy these advocates offer is that of a desktop or laptop computer: users can connect their PC or Mac to the Internet over anyone's network. Therefore, they should be able to do the same with what is, after all, a mobile computer.
And they're not stopping there: they also object, according to the story, to Apple's insistence that iPhone applications be bought and downloaded from the company's online App Store. This, too, is anti-competitive and limits consumer choice.
The FCC last year asked for comments on this exclusivity issue. In February, the Rural Cellular Association filed its comments, arguing among other things that "Exclusive deals do not promote innovation in the handset device market."
The federal Copyright Office is getting into the act, according to Businessweek. "This year, it will review whether to extend a ruling that made unlocking cell phones—essentially, making them work on a network for which they are not intended—legal." The coalition of special interests want that ruling renewed and want the agency to allow jailbreaking -- allowing cell phones to run software that the owner's chose.
In various comments or filings, Apple, AT&T and Research in Motion have all argued that the current arrangements do in fact encourage innovation and competition.
Personally, I'm unpersuaded by these arguments. Every purchase choice a consumer is a self-limiting decision, and by definition limits subsequent choices. That's a question of trade-offs, and people value those trade-offs in different ways.
The argument that exclusive deals limits innovation seems hard to justify. The innovations that Apple and to some degree AT&T introduced with the iPhone are plain to see. As are the responses by their rivals.
What do you think? Take our poll and join in the comments.
Cox is a senior editor at Network World.
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Why buy something if you
Why buy something if you don't like a product offering? The idea of trying to make companies give you an option that you shouldn't necessarily be entitled to sounds interesting and I'm not sure that sounds reasonable given the fact that you have a choice.
I fell into the trap of buying an iphone because it was an incredibly cool device and I was willing to agree to the terms to have it. I knew that I was buying a device that was going to be a prisoner of AT&T's network, their opportunistic charges (extra $10 for data), and the dreaded 2 year contract.
I think companies have every right sell products this way because nobody is forcing you to buy their products and agree to their terms. If enough people refused to buy products with restrictive usage terms, then I'm sure that companies would stop offering such products in favor of things people prefer to buy instead.
Carriers often lock cell phones to their network to recoup the subsidy on the device they sell you at a lower price. Now, we all know that some get away with locking the device and selling it at full price due to demand as well.
Again, you have a choice when you are shopping for your phones. Why not opt for an unlocked GSM phone where you can buy a SIM from the carrier of your choosing? If you choose to do otherwise, then you are probably more of your own problem than the company who is selling the products you don't like.
Nobody ever complains about other carriers
People only seem to pick on AT&T. Not that I am a fan of AT&T but I am a satisfied customer (I have used ALL the major carriers in the past). They must have the worst PR firm in business. Every article about the iPhone has an anti-AT&T spin to it. Nobody ever says too bad the G1 is only available on T-Mobile.
"Nobody ever complains about other carriers"
In this specific case, the iPhone-AT&T relationship was intended to serve only as an example. I chose it because I think both Apple and AT&T successfully have forged that association in the public perception.
But the criticisms of the consumer special interest groups is aimed at these kinds of exclusive deals in principle, including the G1/T-Mobile relationship.
John W. Cox senior editor Network World
I don't know what an iPhone
I don't know what an iPhone is, but I would like to see this opened up for phones. Eventually, market forces will cause this to happen. The sooner the better
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