AT&T has an exclusive deal with Apple to sell the iPhone to cellphone customers in the US. If you don’t like AT&T you won’t be using an iPhone. The Wall Street Journal reports that the US Justice Department is investigating large US carriers to see if they’re abusing their power. Well, duh. It’s what they do. What took you so long?
The Journal writer seems to think that government interference is a bad thing. Whether good or bad is left to the history books, but I sure do want an iPhone on Verizon, not AT&T, but that’s a choice I don’t have.
The government has stepped in to review the AT&T and Verizon’s exclusive deals with handset makers like BlackBerry, Apple, and the new Palm Pre. All the cellphone carriers have such deals. The Journal:
Device makers like such arrangements because they can share the financial risks of developing and marketing new products. The partnerships lead to more choices and lower prices.
How much sharing did AT&T do with Apple on the iPhone’s development? How much development did Sprint do for the Palm Pre? “More choices and lower prices” is laughable. My cellphone bill hasn’t gone down. My only iPhone choice is AT&T (or, move to Europe).
Level Playing Field
The reality is that the playing field among carriers and handset makers is not level. Exclusive deals keep a few mountains with a scale unmatched by competitors.
Some smaller carriers that lack the scale and resources to cut similar deals want Congress to ban them for everyone. To advance their argument, these carriers claim today’s wireless markets are increasingly uncompetitive and underserving rural areas.
Try using your shiny new 3G cellphone in rural America. Try finding a 3G data plan that is more than a few dollars different than another plan on a different carrier. Try using an iPhone on any carrier except AT&T.
How is it that AT&T’s exclusive arrangement to sell Apple’s hot iPhone is beneficial to anyone except AT&T? Would Apple like to sell the iPhone through other channels in the US?
Is there a polite way to say Duh? The iPhone is available on multiple carriers in many countries in Europe and Asia. Why not the US? Because AT&T doesn’t want the competition.
In fact, the wireless marketplace has never been more competitive. Eight years ago there were 100 million U.S. wireless customers. Today there are more than 270 million.
And that explains competitiveness exactly how? What it shows is that AT&T and Verizon rule, and everyone else used to be competitive.
What these smaller carriers really want Congress to do is prevent bigger rivals from reaping the benefits of scale. But the government’s role is to ensure competition, not protect competitors.
Hello! I’m a customer. How about my needs? Right now the government allows exclusive handset deals for cellphone carriers. How is that good for me or for competition?
The Journal is regurgitating PowerPoint bullet points from an AT&T or Verizon marketing meeting. It doesn’t matter which. Why no author on the article? Someone is afraid that the name would be traced back to a cellphone company.
There’s also no denying that these distribution deals have benefited consumers. More than 30 devices have been introduced to compete with the iPhone since its debut in 2007. The fact that one carrier has an exclusive has forced other companies to find partners and innovate. In response, the price of the iPhone has steadily fallen. The earliest iPhones cost more than $500; last month, Apple introduced a $99 model.
More rubbish. Dozens of handsets get introduced each year. Do all 30 compete against the iPhone? Of course not. What about that iPhone price? It’s fallen, you say? I think not. The first version was a gouging price. It’s rock solid steady since.
Remember, when you buy a $99 iPhone it’s not really $99 since you’re on a payment plan to AT&T to pay the hidden higher sticker price. I’m not in favor of the government messing with success. When I can buy an iPhone and use it wherever I want, that’s success. Until then, mess it up a little.