anti trust / mandatory data plans

[hipeye01]

tying definition

according to wikipedia:
Certain tying arrangements are illegal in the United States under both the Sherman Antitrust Act,[2] and Section 3 of the Clayton Act.[3] A tying arrangement is defined as "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees he will not purchase the product from any other supplier."[4] Tying may be the action of several companies as well as the work of just one firm. Success on a tying claim typically requires proof of four elements: (1) two separate products or services are involved; (2) the purchase of the tying product is conditioned on the additional purchase of the tied product; (3) the seller has sufficient market power in the market for the tying product; (4) a not insubstantial amount of interstate commerce in the tied product market is affected.[5]

 

[rjohnstone]

according to wikipedia:
Certain tying arrangements are illegal in the United States under both the Sherman Antitrust Act,[2] and Section 3 of the Clayton Act.[3] A tying arrangement is defined as "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees he will not purchase the product from any other supplier."[4] Tying may be the action of several companies as well as the work of just one firm. Success on a tying claim typically requires proof of four elements: (1) two separate products or services are involved; (2) the purchase of the tying product is conditioned on the additional purchase of the tied product; (3) the seller has sufficient market power in the market for the tying product; (4) a not insubstantial amount of interstate commerce in the tied product market is affected.[5]

Your point is?
Your "tying" argument has no merit.
You are free to go to another carrier.
There are four national and dozens of regional carriers to choose from.
And if you want to go with a very weak iPhone argument, go to T-Mobile.
They will support your iPhone without a data plan.
See... you have choices.

 

[mrockm01]

I agree with the point of pay per MB. If you don't use it, you pay little (and can even turn off cellular data to guarantee it).

They could even put a small monthly fee (Like $5.00 + $.10 MB)

 

[hipeye01]

Seems to me, the anti-trust laws would only apply if the carriers didn't offer any other types of phone that didn't require you to have a data plan. You don't have to get a phone that has a required data plan. It is your choice to do so.

The carries do offer other phones, but no wifi capable phones. The question is whether or not a wifi phone and a non-wifi phone are considered close enough to being the same product to satisfy the requirements.

 

[hipeye01]

market power

Your point is?
Your "tying" argument has no merit.
You are free to go to another carrier.
There are four national and dozens of regional carriers to choose from.
And if you want to go with a very weak iPhone argument, go to T-Mobile.
They will support your iPhone without a data plan.
See... you have choices.

So you would argue that the third element (that a company has "sufficient market power") would not be met. Is dividing the market between 4 or so carriers enough to allow the free market to take its course? I am pretty sure automotive companies are subject to antitrust laws - Do each of the major carriers have less of a market share than the major auto makers? The answers are certainly muddy enough to merit some debate, that's why this is an interesting topic.

 

[rjohnstone]

So you would argue that the third element (that a company has "sufficient market power") would not be met. Is dividing the market between 4 or so carriers enough to allow the free market to take its course? I am pretty sure automotive companies are subject to antitrust laws - Do each of the major carriers have less of a market share than the major auto makers? The answers are certainly muddy enough to merit some debate, that's why this is an interesting topic.

Correct. None of the carriers have sufficient market power to interfere with the free market enough to cause harm to the consumer.

Free market still prevails in that you still have alternatives in everything from pricing to services offered.
It's only when the influence of one can directly influence the rest to the point that consumer choice is harmed that it becomes an anti-trust issue.
And while you may not consider it an option, regional carriers also play a role in the equation.

 

[hipeye01]

Correct. None of the carriers have sufficient market power to interfere with the free market enough to cause harm to the consumer.

Free market still prevails in that you still have alternatives in everything from pricing to services offered.
It's only when the influence of one can directly influence the rest to the point that consumer choice is harmed that it becomes an anti-trust issue.
And while you may not consider it an option, regional carriers also play a role in the equation.

That of course applies only if the companies are acting without any collusion (no "I won't if you don't" conversations) But if you wanted to get all conspiracy theory about it.....JJ

 

[scaredpoet]

Your point is horrible. The appeal of an iPhone is that it's an all-in-one. So, you're saying he should get an iPod touch & a cell phone?

Nope. The OP doesn't want to pay AT&T. He can get an iPod touch and Skype, and accomplish what he's asking, without having to (incorrectly and improperly) invoke the Sherman Antitrust Act.

What I'm saying is, carriers should allow people to buy iPhones at a higher price & not require data (ex. 16GB iPhone 4 would be $299).

I'll agree that an ubsub'd iPhone shouldn't require a data plan. But an unsubsidized iPhone 4 won't cost $299. More like, $499.

 

[Le Big Mac]

That is incorrect. It doesn't matter how you get the iPhone, if you use it on at&t's network they require you to have a data plan.

Can you use a GoPhone SIM and turn off data?

 

[vant]

Cell phone carriers shouldn't have mandatory data plans for certain phones.

If I don't want to have data, that is my choice. Will I have reduced functionality? Possibly, but we should let customers decide, not the carriers.

Mandatory data plans exist due to greed.

Should we have mandatory text plans when a phone comes with a keyboard?

 

[DeaconGraves]

So you would argue that the third element (that a company has "sufficient market power") would not be met. Is dividing the market between 4 or so carriers enough to allow the free market to take its course? I am pretty sure automotive companies are subject to antitrust laws - Do each of the major carriers have less of a market share than the major auto makers? The answers are certainly muddy enough to merit some debate, that's why this is an interesting topic.

Technically, we're all subject to antitrust laws.

But you're on the right path, the key to any antitrust argument is defining the market. And if the market here is wireless phones, you can't win. None of the carriers has enough of a share of the market to establish that they control it. The only way you would be able to establish enough market power would be to claim that AT&T and Verizon (who togethr own a significant portion of the market) are colluding in requiring data plans (which would be extremely hard to prove). Otherwise, the argument fails becuase T-mobile (and probably several smaller carriers) offer the option to have data-free plans if you buy unsubsidized.

The only other way to win woud be to convince the courts to define the market as "iPhones only" but I don't see any court buying that.

 

[hipeye01]

This isn't about anti-trust, this is about not wanting them to do business. They provide a service that costs them billions to maintain. If you don't want to be a part of that convenience, dont pay the premium and go wireless-less.

3G data is a priveledge and a premium service, not a right.

Ten years ago there was no such thing.

We built this industry on our backs in a decade and made this national network possible with those 40$ fees.

So don't tell ME about fees...

The counter argument is that, because it does cost billions to maintain a network, competition is very limited. Anti trust laws were enacted with the idea that the government has a compelling interest in protecting consumers in situations that do not allow for "enough" competition in the free market. Of course there are people who argue against the value of having antitrust legislature at all, and that is a vast topic all by itself.

 

[rrandyy]

hipeye01,

I think you make a great argument. Also, I don't think all these "you can buy an ipod touch and use it with wifi" arguments are valid. An ipod touch is not in the same market as an iphone.

I think the biggest problem is market share. I'm not familiar enough to make a determination of what is the tying v. tied product or what marketshare we should be looking at (iphones? smartphones? cell service?). Either way, thanks for bringing this to my attention. Interesting to think about.

 

[DeaconGraves]

The counter argument is that, because it does cost billions to maintain a network, competition is very limited. Anti trust laws were enacted with the idea that the government has a compelling interest in protecting consumers in situations that do not allow for "enough" competition in the free market. Of course there are people who argue against the value of having antitrust legislature at all, and that is a vast topic all by itself.

Believe me, I'm with you that antitrust legislature is important. All I'm saying is that your position would, at the present time, lose in court. Courts are very cautious to not define the market too narrowly. It's how professional sports leagues, for the longest time, were able to dodge antitrust rules by saying they weren't one unit acting together but 30-something units competing against one another.

No one carrier in the US currently holds a dominant enough market share to where they can dictate the policy of the market. And the carriers would definitely try to "expand" the market by saying it also contained devices like Tablets and ipod touches, etc.

FYI, I do like your argument above, I'm just looking at this a bit more academically.

 

[hipeye01]

hipeye01,

I think you make a great argument. Also, I don't think all these "you can buy an ipod touch and use it with wifi" arguments are valid. An ipod touch is not in the same market as an iphone.

I think the biggest problem is market share. I'm not familiar enough to make a determination of what is the tying v. tied product or what marketshare we should be looking at (iphones? smartphones? cell service?). Either way, thanks for bringing this to my attention. Interesting to think about.

Having aroused my own curiosity, I looked around a little and couldn't quickly come up with what market share (I would think the market would be defined as "national cell phone service providers") threshold constitutes an unfair advantage per case law. Apparently Sprint appealed to the FTC against allowing ATT to combine with T-moble. I find that kind of humorous since it looks like once they do combine, the resulting 3 major players will have have roughly equal market shares. Because the FTC allowed the acquisition, it is safe to assume they consider competition to be healthy in this market. ...So here's to hoping they are right and one of the carriers "blinks first" when it comes to mandatory data plans in a grab for a bigger piece of the consumer pie. However, I can see how they would decide ("independently" since they are prohibited from actually discussing it) that there is more pie for all three if they keep things exactly as they are. It also seems unlikely there is any treat to their market shares from a new player entering the picture. So I'll cross my fingers, but won't hold my breath.

 

[DeaconGraves]

Having aroused my own curiosity, I looked around a little and couldn't quickly come up with what market share (I would think the market would be defined as "national cell phone service providers") threshold constitutes an unfair advantage per case law. Apparently Sprint appealed to the FTC against allowing ATT to combine with T-moble. I find that kind of humorous since it looks like once they do combine, the resulting 3 major players will have have roughly equal market shares. Because the FTC allowed the acquisition, it is safe to assume they consider competition to be healthy in this market. ...So here's to hoping they are right and one of the carriers "blinks first" when it comes to mandatory data plans in a grab for a bigger piece of the consumer pie. However, I can see how they would decide ("independently" since they are prohibited from actually discussing it) that there is more pie for all three if they keep things exactly as they are. It also seems unlikely there is any treat to their market shares from a new player entering the picture. So I'll cross my fingers, but won't hold my breath.

On the bright side, just because the FTC says it's "healthy" doesn't mean it is.

Congress passes laws all the time that end up being struck down by the courts as unconstitutional.

 

[hipeye01]

Believe me, I'm with you that antitrust legislature is important. All I'm saying is that your position would, at the present time, lose in court. Courts are very cautious to not define the market too narrowly. It's how professional sports leagues, for the longest time, were able to dodge antitrust rules by saying they weren't one unit acting together but 30-something units competing against one another.

No one carrier in the US currently holds a dominant enough market share to where they can dictate the policy of the market. And the carriers would definitely try to "expand" the market by saying it also contained devices like Tablets and ipod touches, etc.

FYI, I do like your argument above, I'm just looking at this a bit more academically.

I am liking the pro-sports analogy since the XFL stood about as much of a chance as a new carrier would stand entering the cell phone network market. Nice to see how well that "free market" worked out.

 

[mtnDewFTW]

What's the point of owning an iPhone, or any other smartphone, without a data plan? Here's your solution: Get an iPod Touch

 

[forcetactic]

What's the point of owning an iPhone, or any other smartphone, without a data plan? Here's your solution: Get an iPod Touch

iPod touches cannot make phone calls/text without wifi

 

[neko girl]

What's the point of owning an iPhone, or any other smartphone, without a data plan? Here's your solution: Get an iPod Touch

It's call voice and it's the biggest chunk of change on your wireless bill. Thanks for your "solution".

 

[rjohnstone]

Can you use a GoPhone SIM and turn off data?

Yes. It is not a contract plan, so they cannot force a data plan on you.

Having aroused my own curiosity, I looked around a little and couldn't quickly come up with what market share (I would think the market would be defined as "national cell phone service providers") threshold constitutes an unfair advantage per case law.

The FTC and FCC already have that covered. How do you think MVNO's exist? They certainly do not buy/build out their own networks.
The national carriers are required by law to sell/lease tower time to third party carriers. The third party carriers set their own contract terms for their customers.
There are 49 different MVNO's across the US. Some of which have national coverage by virtue of their partner networks.

Some examples:
Cricket and Amp'd use Verizon's network.
Boost and Virgin use Sprints network.
TracFone uses both AT&T and T-Mobiles networks.

 

[tigress666]

Nope. The OP doesn't want to pay AT&T. He can get an iPod touch and Skype, and accomplish what he's asking, without having to (incorrectly and improperly) invoke the Sherman Antitrust Act.

No he can't accomplish what he's asking. With your plan he can get kinda close but he's limited to using the phone only when he has wifi connection. He wants a cellphone where you can use it where you can use a cellphone (which believe me is a helluva lot wider coverage than just wi-fi spots. I had an ipaq once upon a time that was reliant on wi-fi for internet coverage. My iphone is a lot more versatile cause it does not rely on wi-fi and therefore I'm not really limited on where I can get internet connection).

I could see why some one might want an iphone but not want to pay extra for a data plan (I originally wanted to do something like that cause I'm on a budget and while having net connection anywhere I got cellphone connection was nice I couldn't justify it. I ended up justifying it by switching my plan to my roommate's and making it a family plan we split and using his corporate discount. But there are definitely aspects of my iphone that still make it quite useful for me without having constant internet access. But I wanted a combo PDA like my ipaq, which in general usally wasn't connected to the internet cause it could only get wi-fi access, along with phone for a few aspects because after getting a laptop I didn't use my ipaq enough to remember to charge it so I figured if it was my phone too I'd remember to charge it. So I didn't really need the data plan for what I wanted).

And I will say it's fair they require the data plan while under contract (after all that's how they are justifying subsidizing the device) but if you are no longer under contract, paid for the phone full price, or otherwise they didn't subsidize it or you paid your "dues", they should not require a data plan to get cellphone coverage with it.

 

[Tarzanman]

It always amazes me when people who don't know what they are talking about chime in on a thread.

No carrier has enough influence the market for consumers, eh? Lol. What country or planet do you live on?

 

[DeaconGraves]

It always amazes me when people who don't know what they are talking about chime in on a thread.

No carrier has enough influence the market for consumers, eh? Lol. What country or planet do you live on?

I can't speak for you, but I live in the US, where no one carrier (yet) has antitrust-level market dominance.

Moving outside of the mandatory data plans issue for a second, look at it this way. If AT&T were to do something outrageous with their pricing (let's say $75/month for a 250 MB data plan), any of the other carriers could turn around, offer something incredibily more reasonable, and remain competitive with AT&T (maybe even trounce them). You may not get the exact phone you want, but no court is going to define the market so narrowly to only include certain phones.

You have an antitrust situation when a company is so dominant in the marketplace that they can do pretty much whatever they want regarding pricing and the others in the market still can't compete.

As I noted earlier, you could potentially argue that the carriers are working in concert to fix prices, but that's a whole different burden.

With all the mergers that are happening, we're getting dangerously close to an antitrust situation, but we're not there yet, at least in the US.

 

[Bobby Corwen]

Again I am looking at this from the business perspective of the corporation and not the entitlement attitudes of the free people. I see nothing wrong with the way they do business. You can only encourage equality in business and allow it's potential, you can't force it.

It's interesting to point out that the only two major carriers that survived, had the most expensive prices. Verizon and Cingular/ATT had the most expensive price points compared to TMO, AT&T and their family plans, and Sprint.

So obviously they needed that much money.

This argument definitely would not apply in antitrust laws, but even from a basic reasoning standpoint of opinion. The point is they need that 40$ from everyone every month even if you use 5mb or 5gb otherwise they wouldn't be able to even function.

Again, reminding everyone that maintaining a network across all of the US landmass is one expensive expenses bill the nature of which is very uncommon in most industries. This isn't a typical scenario where it's just about unhealthy competition.

To me, everyone that doesn't want want to pay the 40$ and would rather have a tiered system that serves them and their conveniences are just trying to get somethin for nothing.

I'm sure you would like a little pay per use system so you can get in and out of the network at your convenience, to use the network we paid for and built on our backs with years of monthly fees, and now here comes along Paul Priveledge whining about anti trust because he doesn't even understand how hard it is to survive in the telecommunications industry as a company.

Until a company is pure profit like a Microsoft or an Electric Company, we shouldnt even go there.