AT&T Haters May Get Their Chance at Senate Hearing

Posted by: Stephen Wildstrom on June 15, 2009

People who love the iPhone and hate AT&T may get a chance to do some vicarious venting on Wednesday when the communications subcommittee of the Senate Commerce Committee convenes a hearing that will examine whether exclusivity agreements, like the one that binds the iPhone to AT&T, harm consumers. On June 15, four senators—subcommittee Chair John Kerry (D-Mass.), and members Roger Wicker (R-Miss.), Amy Klobuchar (D-Minn.), and Byron Dorgan (D-N.D.) wrote to acting FCC Chair Michael Copps to consider the issue when dealing with a challenge to exclusivity from the Rural Cellular Assn.

The problem that the senators, as well as the vocal critics of the ATT-Apple arrangement overlook, is that AT&T’s iPhone exclusive is technical as well as contractual, at least in the U.S. The four leading U.S. carriers split into two technology camps. Verizon and Sprint (excluding Nextel, which relies an oddball system all its own)run CDMA networks based on technology developed by Qualcomm. AT&T and T-Mobile use the GSM technology standard in Europe and most of the rest of the world. The two systems are completely incompatible at the radio level. And while T-Mo and AT&T use the same basic technology, they offer 3G service on different frequencies.

So the bottom line is that even if Congress were to outlaw exclusivity arrangements, the lawmakers couldn’t make the iPhone work properly on anyone’s U.S. network but AT&T’s and they can’t order Apple to produce a compatible it doesn’t want to make. The best thing that could come out of an exclusivity ban would be an iPhone that would sort of limp along on the T-Mo network, plus perhaps the availability of the iPhone on some tiny rural carriers.

Actually, the most interesting result of an end to exclusivity—which seems highly unlikely anyway—would be that Palm would be forced to make its new Pre available to Verizon, something it is not planning to do until next year.

Reader Comments

Ken

June 16, 2009 3:41 PM

At least get your facts straight. GSM wise, The Iphone Will work on t-Mobile as it is a quad band phone. T-Mobile network does not have the coverage that att has. But, It WILL work! A choice for all... better competition will make for better prices to the customer. We do not need to have a monthly bill for phone service that is like a car payment. The carriers have been raping the consumer for years. Come on now is the time to speak up!

Steve Wildstrom

June 16, 2009 4:03 PM

@Ken--OK, you're making get into the gory details of T-Mobile USA's 3G service and why it is such a pain. Most of the GSM world offers 3G (HSPA/UMTS) service at 2100 MHz. AT&T runs 3G at 850 and 1900 Mhz. T-Mo, which ended up last in line for 3G spectrum, uses an odd subspecies of 3G called AWS that requires handsets to receive at 1700 MHz and transmit at 2100. The iPhone provides UMTS/HSPA Tx/Rx at 850, 1900, and 2100 Mhz--no 1700. The bottom line is that an unlocked iPhone would sort of work on the T-Mo network but would not perform very well, especially on 3G receive.

ken

June 16, 2009 5:24 PM

It will still work. Try it...U will be surprised! I have. Yes But, Its about Choice. Allow consumers to purchase equipment to do with as they see fit!Quit subsidizing them, If the person would like to unlock it to go elsewhere hey, they are buying it. att does not even support MMS nor tethering yet. BUT, They want everyone to pay for it Now! and pay more for it. Never mind its available for other phones on other plans. Iphone users need to pay more according to att. They need to realize that the handset is the most important thing to the customer and that the service is what supports it. A $30 mandatory data charge for each Iphone is crazy. That's before voice call plan. Oh then add for texting also! For a family 2 to 3 lines, data, texting, and ouch! a car payment for phone service. And yet other phones are offered for less.
att you think $100.00+ a month is fair per phone? With realistic amount of talk time. Get real. Hell, you
can't even provide speeds to meet the handset. MMS, Sorry later this year.
Pay for it now. Data plans "REQUIRED"? Why, if you don't want it. allow the
customer to disable it. Yet you expect the customer to just smile and grab
their ankles and wait for att to do us again. Tether? Oh,NO that costs
more also. We'll get back to you on how much that will add to your bill for each line. Again you EXPECT customers to pay for it before you can deliver?
Come on people we are all customers at some point.
We need to be heard and that we are tired of the crap. att has been feeding
it to us with 2 scoops. Congress, Senate, Washington, Someone needs to start
looking out for the people. att and the carriers sure are not!

Rand

June 16, 2009 5:52 PM

Ironic that people now want to be able to press their case to the government decrying exclusivity on AT&T when the problem stems from the fact that Verizon and the CDMA carriers are out of the technological mainstream, have been for some time, and initially chose that path to make switching costs prohibitive for subscribers. They made their bed and they should lie in it. As you rightly pointed out, the issue amounts to a technical one related to choice of air-interface technologies. Many of the carriers that are complaining have only themselves to blame for standardizing around an orphan technology. Considering the government didn't have the good sense to standardize around the global consensus the first time, why now force OEM's to support carriers that chose poorly in their choice of network standards. This will be an incentive to align with the mainstream come 4G and perhaps to retrofit existing networks to work they do everywhere else in the world.

Mo

June 16, 2009 5:52 PM

@Steve, with an end to exclusivity, dont you think Apple would have more of an incentive to make the iPhone compatiboe with other networks? I mean the market for the iPhone wouldnt just be limited to ATT. There wouldnt be any need to force Apple to make their phones compatible with at least T-Mobile - infact it would be foolish of Apple not to do it.

Steve Wildstrom

June 16, 2009 6:37 PM

@Ma--Rand explains some of the problem in his post. I think it is extraordinarily unlikely that Apple will do a CDMA/EV-DO iPhone, one that would work on the Verizon and Sprint networks. The problem is that developing a CDMA version is not at all trivial at the radio level; it is a tricky business and one where Apple would have to go out and hire new expertise. It might make sense if it were a long-term investment with a big payoff down the road. But the fact is that CDMA/EV-DO technology is nearing the end of the line. Verizon will begin trials of LTE, a 4G technology, late this year and should begin rolling it out commercially in 2010. Carriers in most of the developed world (except Sprint, which is committed to WiMAX for 4G) have announced plans to go to LTE. So that's the logical direction for Apple to be taking the iPhone. But it also means that we are very unlikely to see an iPhone for Verizon before LTE deployment.

Ethan

June 16, 2009 8:06 PM

My issue with ATT and Apple is that they will not legitimately unlock my 1st gen IPhone after 2 years of service. I bought and paid the full price of the Iphone and kept my service for 2 years. Do I not own the device I paid for? Am I force to keep ATT even after my contract is up? So I'm hoping that even if the exclusive deal between att and Apple are not ban in this meeting; then at least make them unlock my phone after my contract is up.

Steve Wildstrom

June 16, 2009 10:27 PM

@Ethan--The legal status of phone unlocking is a bit murky. There is no legal requirement that a carrier unlock a phone when your contract obligation is up. AT&T will do it for most phones--not not the iPhone, and it's impossible to say whether the responsibility for this is AT&T's or Apple's. There currently an exemption from the Digital Millennium Copyright Act that at least says that unlocking a phone is not illegal circumvention of copyright law, but the exemption expires this year and the Copyright Office has not yet ruled on a pending request for an extension. There are, of course, plenty of ways to unlock your phone--just do a search for "unlock iphone"--but there's no guarantee Apple won;t relock it or brick it with the next software release.

Paul

June 17, 2009 8:25 PM

I use a BlackBerry Global on Verizon and love it but would rather have an iPhone on Verizon. I pay a small flat fee here or in the GSM world. AT&T costs a lot more. Even AT&T Wireless employees complain about the cost overseas. What is the problem? If BB can do it technologically so can Apple. AT&T is holding Apple hostage.

citracyde

June 18, 2009 10:21 AM

Exclusivity is the key to exclusivity Part of the mystic of the Iphone is its exclusivity. If you mess with that it will be tomorrow's Moto RAZR and be in everyone' pocket and quickly become a blip in time. Then everyone will cry - what happened to Apple? Apple has thrived for years based on their ability to manage their products intangibles (design, technology, hype, reliability, simplicity, and exclusivity). Mess with that basic formula and everyone's love affair with their product is over. It's all about exclusivity and being "different" - you can see that even in their ads.

eman3d

June 20, 2009 2:07 AM

The problem is that most people are sheep. They follow mindlessly without question just to look and feel cooler then the other person. AT&T is charging people for features that don't even work on their network, how can you do that??!!! Is that even legal? I really would like to have an iphone but if i can't use the mms, which is very important to me, then why get it? AT&T are crooks and shows just how business do not care about people.

Who freaking cares?

June 26, 2009 1:37 AM

Quick question. Who gives a flying crap? It's a crappy phone and the screen gets damaged too easily, Why the hell do you even need MMS? The concept of the phone was to talk on it to other people. If I don't want to talk to someone I don't answer it.

American People

July 7, 2009 12:21 PM

Hi!

We have seen your news article on antitrust review of wireless. Thanks for the knowledge shared and research done on it. This is another news article for you.
You can verify its authenticity by talking with any contractor working in AT&T. Yes, this news has great information on highly unethical practices, misuse of policies, mismanagement in AT&T to do anything they want to the customers.

We were the victims of AT&T misuse of policies to take highly unethical decisions. If federal government really investigates the incident, they can understand how unethical and trustless their practices are. And hope one day federal government helps and protects common people, rather than big companies.
To provide you/federal government evidence or clues on this, this is what happened to those contractors:
AT&T employees get discounts on phones and phone plans. Same way many other companies, provide discount on AT&T phones and plans, by collaborating with AT&T.
It was a common expectation that the contractors or any person working for AT&T would get discount at one point of time. On a Friday news came within the company that AT&T is giving discounts to contractors. An internet link was sent to 1000s of people with the access to discount.
That was AT&T global log on website, a trusted website of AT&T till then. Many logged in without hesitation and trusted the website and thought they are getting offer too. There was no mention of anything wrong or problem in AT&T web releases. So many took the phones and phone plans on that discount, thinking that AT&T is giving that to them.
Till the Monday it was good news. Later AT&T realized that website release was wrong. Website management team did wrong in the release, by placing the wrong codes in database. No one knew it. As it caused a lot of financial transactions, they did not take responsibility and simply blamed the contractors. But those contractors were simple users of a trusted website, not knowing website would be wrong.
AT&T without any work ethics, just with the misuse of policies was ready to fire 1000s of people. Later after several protests they fired only people who accepted phone plan discounts. In those discounts there was no clear mention that it was not for contractors. And website was offering them.
It caused job loss, loss of trust from friends and society, loss of future opportunities to 100s of people. Did they really deserve that for someone else’s mistake? Is it ethical to portray those many people as thieves before everyone, though they were the victims of AT&T website? How trustful is AT&T website? Just being a customer of AT&T was a grave mistake in the life for many people. Just as many of them would not be US citizens AT&T dared to do such UNETHICAL act. And everyone in AT&T supported it. How ethical is the company? Do you expect such company to be nice to other people without price hikes and contracts?
A federal investigation into this issue can be easily proven if they can track the time frame of those contract terminations. Or just talking with many people working as Contractors in AT&T, you can get the whole unethical practices information. Hope you are in a stronger position to help your future generations by preventing unethical practices of wireless carriers.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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