U.S. Department of Justice Reviewing Wireless Carrier Exclusivity Agreements

[nkawtg72]

Well I do feel that the carriers should provide a cheaper level of service (basically sans subsidy repayment) after you fulfill the contract. It is too bad Americans as a whole like the whole subsidy thing. With it being so ingrained in our culture it is near impossible to break. Note how Apple tried (and failed miserably) to get out of the whole subsidy thing.

i believe we have our consumers to blame for the subsidies, again at least in the US. i am an American and damn proud of it, but ill be the first to admit that we are a society based on consumption and possessions.

as such, in the technology arena, that means having the newest gadgets. well, technology is never cheap to start with. and more times than not, people (Americans in this case) want things they cant afford and are willing to sell their souls for them.

carriers recognize this desire of the consumers and know that if they can provide a cheaper alternative to the consumer, that they will buy. and when the consumer buys, it generates a source of cash flow, through activation, for the carrier.

so carriers provide subsidies, and in turn contracts to ensure the consumer sticks around long enough for them to recover their investment.

what a lot of people forget is that even though companies do care about making money, they sometimes care more about generating cash flow, even if in the long run, they at best break even.

for investors, a company's cash demonstrates potential for growth as well as stability.

so im not of the opinion that subsidies were a cruel and devious trick on the part of carriers to suck consumers into a downward spiral of financial hardship. the carriers simply gave the consumers what they were asking for, whether they realized they were asking for it or not.

 

[seedster2]

My problem with AT&T is that you buy a phone outright or bring in a phone, they are charging you an early termination fee if you decide to leave early.

Fine but what is the termination fee covering? is it for the subsidization? can't be as I bought the phone outright or brought the device to ATT they subsidized nothing.

If it is for breaking the contract, why do i pay the same as someone who has had their device subsidized?

And after satisfying your contract, why wont ATT provide an unlock code to your iphone? it's yours and you completed your contract. It's an absolute joke and everyone is willing to bend over and take it because they partner with Apple.

 

[nkawtg72]

well, its been great throwing back and forth with you guys, but i think im done with this topic

i never set out to convince others to change their minds, just to provide my side of the story.

i must say though, this is a pretty hot topic with regard to the politics of government and private industry. we'll see where it ends up i guess.

 

[windywoo]

i know others have already responded to this, but let me give it a stab too.

i pay for service with comcast. i chose comcast over several other options. some people only have one option, i luckily had many. i digress.

i pay for digital cable, and high speed internet with comcast. i get a specific set of channels with my purchase.

i have a friend who lives just an hour and a half away from me. he has comcast too. as a matter of fact, he has the same selection of services as i do. we've even compared our contracts, and their exactly the same.

HOWEVER, he's getting several channels in HD that i don't in his area. he's also getting channels in standard def that i dont get at all.

my point to this is that yes you are right, i can buy pretty much any tv and use it on comcast, but that is still no guarantee that ill get the same functionality out of it as someone else even if i have the same contract as they do with comcast.

cable content providers, broadcasters, cable companies, etc etc all have these same exclusivity contracts between themselves as the cell carriers and manufacturers do, which ultimately determines exactly what the consumers are able to do with their devices.

if my friend can get SpeedHD on his Comcast, why cant I?

once again, there is nothing new or on the surface wrong with these types of agreements. at least in the US, they are an integral part of our economy.

OK I don't know a great deal about American TV providers, but the point is still there that you can choose which provider you go with when you buy a television. Televisions or telephones are just tools to get the job done, locking them to one provider is making them less effective tools.

 

[MarkAK]

the problem with arguments like this is they tend to ignore one major fact:
you, as an individual, ARE CHOOSING to participate in the market.

no one is forcing you to buy a tv, and when you do buy one, no one is telling you where you have to buy it from. i would like to buy brand X of a tv from best buy, but they only carry brands Y and Z. should the government step in and tell brand X and best buy, that they must sell brand X to me because im able to get brand X at WalMart?

no one is forcing you to buy a car. your decision to buy a car, means you will have to invest in it to continue to use it. that means buying gas, and again, you have a choice on where to buy gas. do i have the "right" to complain that i can't get Chevron gas at a BP?! if you had your way, it sounds like i should. i think chevron gas is better, but i like the hot dogs at BP better, so i would rather shop there. before you say, but Ford cant tell me i have to use BP gas. do they, no. can they require it? believe or not, yes. if when you bought the car from Ford you signed a contract, and made an agreement, that for X number of years, or for the life of the car, or for the duration of the warranty, or for the duration of the Ford financing, that you would use only BP gas, then by contract (enforceable by law) you would have to do that. and going back to that warranty point for a moment. when you buy a car, it comes with a manufacturers warranty (sometimes you even buy an additional or extended) and in the terms of that warranty it defines how you must use the car, and take care of the car, in order for the warranty to cover any problems with the car. racing, is a good example. most warranties come right out and say that if they determine that you used the vehicle for extreme duty situations like that, the warranty is void. but wait, i paid for the warranty!!! and isnt it my car!!!! dont i have the RIGHT to take that car racing?!?! answers: YES, YES, and YES. but Ford also has the right to say you violated the contract, so they wont fix the transmission.

buying a computer, again is a choice. using that computer on the internet, again is a choice. buying the computer is one market. getting on the internet is another. the two markets are independent of one another. believe it or not, i can actually make a choice to participate in the Internet market, and also choose NOT to participate in the Computer market. i can choose to go to the public library, and browse the internet for free. or go to a friends house and use his. or go to my school and use a computer lab.

to carry that out further. those are all choices and options i have to participate in the internet market, but they all come with a "price", i must agree to specific terms of use when i do it. to use the library or school, i may have to agree to a time limit, or even a restriction on the sites i can go to (ie NO PORN). or to use my friends, i must agree to only be there during times of the day that are convenient to him and may not be that convenient to me.

like my previous posts have said, at least in the US, you do NOT have the Right to a product or even a Right to participate in a Market. i will not rehash that here, if it matters to you, go back to page 18 or 19 on this forum and read my post discussing it.

ive tried to stay away from too many analogies, but i am reminded of one.

if i were to walk up to you on the street and tackle you face first into the pavement, i would have violated your Rights. my Rights end where yours begin. however, if you and i were on a football field during a game and i did the same thing, there would be nothing wrong with that. why is that?! because you and i agreed to participate in the game and to the terms (rules) of engagement. if these rules are not pleasant to you, then get off the field of play and out of the game.

choosing to own a cell phone and having cellular service, and participating in that market, means agreeing to certain rules. those rules are presented to you in the form of a contract, and terms of service, when you buy your phone or activate service. if you do not like those terms, dont agree to them. i dont like the way a lot of carriers run their businesses any more than the rest of you, but i still recognize that they are within their "right" to do so.

I’m not disagreeing with the definition of free market.

I’m saying that at some point we as customers are saying enough. We are voicing our opinions, feelings, issues, frustrations....That's also allowed in a free society.

I don’t want the government to come in and change a thing. I'm waiting for the first cell service provider to say "We are going to concentrate on building the best cell service infrastructure and leave the device design, support and sales to the experts (manufacturers)".

 

[rjohnstone]

But the hardware IS limiting you in this case, so that's not applicable.

The iPhone doesn't work on T-Mobile's, Centennial's, or anyone else's 3G network, and you can't use it on Verizon, Sprint, or any of the local CDMA providers at all.

That was Apple's decision, not AT&T's.
As for the provider lock argument seedster2 mentioned, Apple controls the lock, not AT&T.
That is why AT&T can't/won't unlock your iPhone once the contract is up. They simply don't have the ability too.

 

[samab]

The 2 year upgrade cycle becomes a trend simply because that's the average contract length in the US. I don't see what relevance that is into carriers locking phones. Besides, whatever I want to do with the phone that I already pay for should not have anything to do with the carrier. As for unlocking codes, why does the iPhone have to be different? Why don't carriers simply advertise upfront that users can ask for unlock codes for free? Why does it have to be a "secret"? Why do users have to beg/go through difficult conversation to get their phones unlocked? (this is with AT&T, T-mobile has the unadvertised 90day policy and is pretty lenient) Why prepaid phones are still provider-locked? Why don't the carriers simply unlock the phones in the first place? In short, provider-locking have no logic behind it. It's simply an anti-competitive business practice. That's my point. We don't see PCs being locked on Comcast as the sole ISP. We don't see landline phones being locked into QWEST. The lay consumers don't care about those things either, but we don't see provider-locking-kind of business practices with those markets. Why cellphones have to be different?

Okay, now we're talking about Bush. This is actually a good thing, especially for those people that are claiming US cellular market is a free market. Fact is, it's not a free market, as the government is already involved like you have stated. The least they should do now is prevent anti-competitive practices and put more consumer protection.

Hong Kong is the perfect example of how you can treat the actual disease --- foster competitive telecom environment by giving out new telecom licenses to newcomers. When you treat the actual disease, you don't need simlocking laws and other handset subsidies laws.

What you talk about is treating the symptoms --- much like how France treat the symptoms of the iphone by disallowing Apple to have the exclusive and how they have real rigid regulations on when/how unlocking codes are given out to consumers. Guess what? They don't work because France is a country where there are only 3 national carriers, all French owned, zero international giants (like Vodafone and T-Mobile) operating in France's mobile market.

Without any regulation at all, AT&T and T-Mobile manage to give out unlocking codes for free to their customers (the iphone being the exception). Not bad for such regulatory environment. Meanwhile when you look at Europe where the regulators spent all their time and energy crafting simlocking laws and handset subsidies laws --- all were defeated by Apple.

 

[pdjudd]

Hong Kong is the perfect example of how you can treat the actual disease --- foster competitive telecom environment by giving out new telecom licenses to newcomers. When you treat the actual disease, you don't need simlocking laws and other handset subsidies laws.

I would love to see that happen along with ISP's as well. Regrettably the ones that are out there are massively large and happen to be major lobbyists in politics. They are the ones that do not want this to happen and will invest there monies into making sure it won't. Very regrettable.

 

[pika2000]

Hong Kong is the perfect example of how you can treat the actual disease --- foster competitive telecom environment by giving out new telecom licenses to newcomers. When you treat the actual disease, you don't need simlocking laws and other handset subsidies laws.

What you talk about is treating the symptoms --- much like how France treat the symptoms of the iphone by disallowing Apple to have the exclusive and how they have real rigid regulations on when/how unlocking codes are given out to consumers. Guess what? They don't work because France is a country where there are only 3 national carriers, all French owned, zero international giants (like Vodafone and T-Mobile) operating in France's mobile market.

Without any regulation at all, AT&T and T-Mobile manage to give out unlocking codes for free to their customers (the iphone being the exception). Not bad for such regulatory environment. Meanwhile when you look at Europe where the regulators spent all their time and energy crafting simlocking laws and handset subsidies laws --- all were defeated by Apple.

I see what you're saying. However, please be realistic. Do you think at this point, the major telcos will open up for new competitors? Hell no. Sure, the government was at fault here, like you said. As you have stated, the government is already involved. The market is no longer a free market. The damage is done. The least they should do now is enact anti-competitive and consumer protection laws. If what you said could be done, I'm all for it, reversing the cause of the problem. But like I said, let's be realistic here. Do you think that's possible? The government already did the damage. Not doing anything after creating a non-free market situation will make the market even worse.

All in all, I still don't see any relevance of those with why there should be provider locking. I already said, I have no problem with contracts, subsidy, exclusivity, etc. Provider locking, however, has no logic behind it other than an anti-competitive business practice. AT&T already tied customers with the contract, why should the device itself be provider-locked? Why don't both AT&T and T-Mobile explicitly tell customers that they are provider locked, and there's unlocking policy? Of course, then why the iPhone should be different?

 

[samab]

I see what you're saying. However, please be realistic. Do you think at this point, the major telcos will open up for new competitors? Hell no. Sure, the government was at fault here, like you said. As you have stated, the government is already involved. The market is no longer a free market. The damage is done. The least they should do now is enact anti-competitive and consumer protection laws. If what you said could be done, I'm all for it, reversing the cause of the problem. But like I said, let's be realistic here. Do you think that's possible? The government already did the damage. Not doing anything after creating a non-free market situation will make the market even worse.

All in all, I still don't see any relevance of those with why there should be provider locking. I already said, I have no problem with contracts, subsidy, exclusivity, etc. Provider locking, however, has no logic behind it other than an anti-competitive business practice. AT&T already tied customers with the contract, why should the device itself be provider-locked? Why don't both AT&T and T-Mobile explicitly tell customers that they are provider locked, and there's unlocking policy? Of course, then why the iPhone should be different?

I think that you have to be realistic as well.

If the damage has already been done by reducing from 6 national carriers down to 4 national carriers, then the "symptoms treating" regulations on simlocking won't help the general American public much anyway. Apple has already defeated those kinds of regulations with the $1000 iphone.

Instead of spending time and energy of your slate of "consumer protection laws" (which has been proven to be ineffective worldwide), the US government should concentrate on the really "mundane" stuff --- uniform national ETF rules (even though the big carriers do offer pro-rated ETF's, they are doing it voluntarily with widely different standards), uniform deposit returning rules (forcing the carriers to return your deposit after 1 year of service), uniform contract extension rules (i.e. preventing carriers to automatically extend your contract for 2 years if you make a minor change on your plans --- at the very least, tell you about it first)...

 

[flar]

i cant speak for everyone, but even though i may agree with you and that an open system for cell phone purchase and activation would be great, i at the same time do not believe in a government interfering in a market. a consumers choice in participating in a market is exactly that, a choice. as long as the consumer as been properly informed of the terms of agreements or contracts, then i believe both parties (consumer and carrier) have behaved appropriately and nothing is wrong.

Perhaps it doesn't take legal interference at all. All it takes is the people exercising their free market rights and the right contracts.

When I want a cell phone I go to one of a small handful of providers and they all say the same thing "sell us your soul and you can have a working phone". My choice is to enter into a ridiculous contract or use an overpriced pay-as-you-go phone which typically doesn't offer much in terms of data services. It sucks, but if I go down the street I find another company doing the same thing. There are a few small regional companies that will provide basic cell phones with a reasonable plan, but again their offerings are as low-featured as the pay-as-you-go plans. Perhaps this is collusion, and perhaps that might raise the question of potential legal solutions, or perhaps not. But, it doesn't matter. In either case the consumer's "free market decision" pressure has been totally defused in practice on this front, but it isn't the only pressure that can be exerted here.

You see, those companies doing business that way? The ones providing a service that depends on transmission rights that have to be licensed? They have a contract and it will run out. In time when they go to the FCC, a part of the government which represents the interests of the people, the FCC will just say to them "completely change your business practices and you can continue to use those frequencies". And what are they going to do about it? Go down the street to another frequency licensing agency?

Either way, we technically own the airwaves. There is a way for us to have what we want on those airwaves - the evidence of the feasibility of what we are asking for is in the way things are managed in other countries. The current crop of service providers are great at doing a lot of whining about how they are doing us a favor by not giving us choice, but they aren't totally unanswerable to us - even ignoring the DOJ.

Here's hoping the FCC wises up and starts expecting more from them.

In the meantime, even though I too am not a big fan of government interference in business, the providers are lying to us about what is necessary for their success in business and I don't care about their particular rights any more. Call it self-serving if you will, but I've never believed in completely unchecked business practices. I would get a great big belly laugh if the DOJ calls them all on their business practices. I just hope if they do act that they execute a few well-aimed surgical blows rather than imposing a huge regulative bureaucracy.

And, in the end, I would have been much happier if the general population had been much wiser all along as this situation developed and made choices which did not validate the current "evil contracts are required" nonsense that slowly became the norm. I, myself, am also to blame there. I saw the ridiculous nature of the contracts they were creating and still played the game. I saw the needlessness of locked phones and yet still bought phones that were locked. I have been a part of the developing problem, but I now also fully recognize the corner we've collectively allowed ourselves to be painted in. In my defense, I've stayed clear of the providers with the worst practices and pretty much stuck with the one provider in the US that has an open mind - T-Mobile has always had the least restrictive contracting options and has always been very up-front about unlocking phones for customers. The fact that they are a part of a global provider that provides service in other, more enlightened, countries probably has something to do with that. The fact that they are the underdog probably also doesn't hurt. For that, they've won my loyalty regardless of contracts. I just wish they weren't receiving pressure from the competition to up their contract ante to stay alive because all too many people are getting hypnotized by the amazing hardware locks that AT&T is able to wrestle out of the major hardware providers and their better business practices are starting to wane in competitive significance.

The situation we've let ourselves get caught in may be humorous and I think the big providers should be allowed to snicker at us, but I don't think they should be allowed to sit there and keep us pinned. They won round 1, fine. Let round 2 commence and we'll be that much wiser.

 

[wordoflife]

If AT&T doesn't offer unlock codes for the iPhone, I don't think any other provider will. Apple doesn't want it unlocked.

 

[flar]

Provider locking, however, has no logic behind it other than an anti-competitive business practice. AT&T already tied customers with the contract, why should the device itself be provider-locked? Why don't both AT&T and T-Mobile explicitly tell customers that they are provider locked, and there's unlocking policy? Of course, then why the iPhone should be different?

I can't speak about AT&T, though the one time I was with them (briefly) they refused to unlock a phone and apparently they will outright refuse to unlock an iPhone, but...

T-Mobile pretty much uses it just to control "flight risk" during the early part of a contract when their ability to go after their subsidy recovery fees is limited, and where you are still establishing your history of being able to actually pay your contract. Once you are a customer in good standing and their options to protect their subsidy are matured they have no problem with unlocking your phone. I haven't seen them go as far as advertising that the phones are locked, but they are pretty up front about it if you ask and they make it easy to get it unlocked once they can trust you to honor the contract.

Also, those saying "they should at least unlock it after your contract is up" are missing the point. "They" should really unlock it any time. Your contract is your obligation and it doesn't require a locked phone to enforce. And many people need to have an unlocked phone even while under the contract because if you travel abroad it costs much less to get a local phone SIM for local calls than anyone's international roaming charges. If your phone is locked then it is better to buy a foreign pay-as-you-go phone than to even incur 20 minutes of roaming charges. To me, 90 days of locking is probably statistically unnecessary, but reasonable. 2 years of locking is not necessary and reduces the value of the phone to me even while under the contract. Locked forever is just mean.

 

[flar]

so im not of the opinion that subsidies were a cruel and devious trick on the part of carriers to suck consumers into a downward spiral of financial hardship. the carriers simply gave the consumers what they were asking for, whether they realized they were asking for it or not.

Offering the subsidized contracts wasn't the evil part. That's a nice option to have and gets better hardware into more hands in general. We wouldn't be in the place we are now if that was the end of it.

The evil part was slowly removing any reasonable alternative. I guess if I was to point to one specific issue that demonstrates this it is the fact that you pay the same ETF whether your phone was subsidized or not. That's the evil here.

What started out as "we'll sell you the phone cheaper if you promise to be with us for a period of time" eventually became "if you want our service you have to promise to be with us for the same period of time or we'll penalize you". What????

Also, consider that this is (close to) an example of a Prisoner's Dilemma. Once one company starts locking customers in with contracts, the others must follow or they will simply hemorrhage customers to the one that does the locking. The way in which it differs from a Prisoner's Dilemma is that there is no grand collective advantage to none of them offering locking - there is an advantage to the public, but not to the companies.

I'd love to have the freedom to choose or not choose a subsidizing contract, but we don't have that choice. We are given a standard contract that is equally punishing and binding either way and we can choose to also receive a subsidy value from it or forfeit the value but pay the same price. How is that right or fair? People get the subsidized phones now because "what the heck, you might as well, you are paying for it anyway" and implicitly validate the fact that they are in a binding contract that they shouldn't have had to choose in the first place.

Locking also plays in here. Providing a subsidy doesn't require locking, but locking is easy to justify on the surface in the presence of a subsidy. They can say "We need the lock to protect our subsidy", but they are lying and most people don't think to call them on it. At that point the locking becomes part of the background noise of the subsidy and then over time it becomes part of the background noise of the whole industry, and then in the end consumers have no option to switch providers whether or not they paid a subsidy - scratch their heads. The point was that locking wasn't necessary in the first place, it was simply there to add to the bonds the company had over the customer to further remove the need to compete.

So, subsidy contracts may have been the sauce that allowed the cellular industry to distract us while it over-cooked our goose, but it was a good sauce and it's too bad that they used it for evil purposes... ;-)

 

[flar]

with all do respect, although this sounds like a convincing argument, it in actually has nothing to do with two entities agreeing to do business together. Apple agreeing to distribute their product through ATT has nothing to do with ATT and whether its living up to this quote bargain that you are speaking of to manage wireless spectrum. i wont even begin to argue with you that you have that twisted beyond reality with the way it really is.

With all "due" respect, my comment on Apple's agreement with AT&T had almost nothing to do with AT&T and its agreements with the FCC about its wireless assets. If you are trying to associate them then that is probably the source of the twists. The only association there is that due to the limited number of frequency bands for cellular providers to use and the way they have been licensed here there can only be a small number of wireless providers in any given market and that limited number does not provide a lot of alternatives for negotiating contracts.

also, at what point did someone put the gun to apple's head and tell them to make a phone in the first place? the choice you ask about, was a voluntary one on apple's part to enter in the market. its entrance into the market wasnt blocked by any monopoly that another cellphone manufacturer may have had on the market, nor did apple's entrance into the market (along with the agreement they made with att) create a monopoly preventing any other manufacturer from remaining or entering into the market as well. apple brought competition to the market, hence forcing other manufacturers as well as carriers to pay attention and to also make a voluntary choice to either continue down the path they were on or provide competition to apple's smartphone.

You are right that nobody put a gun to their head and asked them to do this. But, the small number of players in the market is what dictated how much flexibility they had in getting a good deal to enter. If the industry was more open then I'm sure they would have had a much more beneficial contract, but there were basically 2 main players to talk to and one wasn't interested so the other could play the "you need what we have and we're the only game left so you must give us what we want" card. Sure, they could have considered T-Mobile and Sprint, so it wasn't the end of the story, but they didn't have a totally open field here.

Apple did go to verizon, and couldnt get what they wanted, so they went to ATT and met with success. as my previous post suggests, there is NO RIGHT to happiness, only the pursuit of it. to say that the agreement that apple made was NOT in their best interest makes you sound pretty naive. you are suggesting then, that apple only agreed to the terms out of the goodness of their hearts because they wanted to see ATT make a crap load of money. forgive me, but apple's agreement with ATT may not have been perfect for them, but it was the best agreement any manufacturer had been able to get out of a cell carrier in decades.

No, I'm saying that Apple only agreed to the terms because they were at the last negotiating table worth considering. It wasn't ideal for them and given all of the evidence they are clearly hoping to break free from the terms they had to agree to, but they did agree to it. The problem wasn't a gun to their head so much as to the lack of choices and the need to make a deal in order to get started in the game.

And I will agree that the many "innovations" that they planned are a big part of the problem. If they had simply made a generic GSM device and sold it unlocked and offered to let the providers also sell it in their provider retail stores we likely wouldn't see the problem we have here. In my opinion, the fact that they were going for an "at-home" activation experience in the first place and the fact that they were negotiating for no branding indicates that their original hope and desire was to be provider-agnostic in the first place. But they had to get clever and the particular brand of cleverness required some compliance from the providers - and thus they needed a deal. But, none of the requirements were really that huge. They were annoying enough that it was distasteful to entertain, but if there had been more major providers then they may have been able to negotiate a 6 month exclusivity contract or no exclusivity like so many other phones. I really wish they had just guts'd it out and provided the phone and let the providers come crawling to their door when everyone went out asking "do you support VV? will you?" with the hottest pocket toy to hit the streets for years.

so dont try and pretend that apple didnt like or even benefit from this agreement that was "forced" (to use your words) down their throat.

I'm pretending nothing of the kind. This was a "necessary evil" for something that Apple did want, but I'm sure there were plenty of contracts they would have rather had if they'd had enough options to competitively shop for a partner.

Also, originally I was referring pretty much to the N-year exclusivity. Apple didn't "want" the exclusivity itself, they put up with the exclusivity to achieve some other goals. They probably did want a partner as they are a big believer in controlling a "total user experience", but they didn't necessarily want to be locked in contractually in case the agreement went sour. But, AT&T was the only major provider player that saw the value in the unproven hardware from a new hardware player at the table and they were able to get Apple to agree to a pretty tight collar in the US.

 

[pika2000]

I can't speak about AT&T, though the one time I was with them (briefly) they refused to unlock a phone and apparently they will outright refuse to unlock an iPhone, but...

T-Mobile pretty much uses it just to control "flight risk" during the early part of a contract when their ability to go after their subsidy recovery fees is limited, and where you are still establishing your history of being able to actually pay your contract. Once you are a customer in good standing and their options to protect their subsidy are matured they have no problem with unlocking your phone. I haven't seen them go as far as advertising that the phones are locked, but they are pretty up front about it if you ask and they make it easy to get it unlocked once they can trust you to honor the contract.

Also, those saying "they should at least unlock it after your contract is up" are missing the point. "They" should really unlock it any time. Your contract is your obligation and it doesn't require a locked phone to enforce. And many people need to have an unlocked phone even while under the contract because if you travel abroad it costs much less to get a local phone SIM for local calls than anyone's international roaming charges. If your phone is locked then it is better to buy a foreign pay-as-you-go phone than to even incur 20 minutes of roaming charges. To me, 90 days of locking is probably statistically unnecessary, but reasonable. 2 years of locking is not necessary and reduces the value of the phone to me even while under the contract. Locked forever is just mean.

I completely agree with you. Ideally, what you described is what should be happening. However, at this point, T-Mobile is the lesser evil as at least they have the 90day unlocking policy, albeit it's unadvertised. AT&T has no such unlocking policy at all.

 

[pika2000]

If AT&T doesn't offer unlock codes for the iPhone, I don't think any other provider will. Apple doesn't want it unlocked.

If Apple wants the iPhone to be "provider-locked," then why are they selling it unlocked in many other countries? There are countries that prohibits sim locking obviously, but then as stated above, Apple is selling the iPhone unlocked straight from the Apple store in Hong Kong.

 

[pika2000]

If the damage has already been done by reducing from 6 national carriers down to 4 national carriers, then the "symptoms treating" regulations on simlocking won't help the general American public much anyway. Apple has already defeated those kinds of regulations with the $1000 iphone.

Instead of spending time and energy of your slate of "consumer protection laws" (which has been proven to be ineffective worldwide), the US government should concentrate on the really "mundane" stuff --- uniform national ETF rules (even though the big carriers do offer pro-rated ETF's, they are doing it voluntarily with widely different standards), uniform deposit returning rules (forcing the carriers to return your deposit after 1 year of service), uniform contract extension rules (i.e. preventing carriers to automatically extend your contract for 2 years if you make a minor change on your plans --- at the very least, tell you about it first)...

How did Apple "defeat" those regulation? What is the $1000 iPhone have to do with anything? Fact is the iPhone is sold unlocked in some countries, like both of us have pointed out. What kind of regulation being "defeated" by Apple?

How do consumer protection laws "ineffective"? What kind of worldwide consumer protection law that is ineffective? Simlocking? Looks like it works just fine to me as Apple is selling iPhones unlocked in countries that require them to do so.

Tell me, what's wrong with ETF? Why should there be a "national" rule for ETF? What is wrong with the current contracts/ETF? When you want a subsidized phone, you're offered it with the trade-off of signing a contract. The length of the contract is clearly shown. The amount of ETF is clearly explained when you sign the contract. I don't see anything wrong with any of that. There's no deception. You want subsidy, there's contract & ETF. Fair enough. Also, like you stated on how most people have an upgrade cycle of 2 years, thus whatever amount of ETF won't affect most people as most will follow thru the length of the contract. You have not explained why you're so against ETF. Based on your proposal, the only think we will see is all carriers offering the exact same contracts terms with a max amount of ETF allowed per law. In fact, if the carriers feel that they're loosing money on pro-rated ETF, we would only see higher prices, less subsidy, and no unlocking possibilities. Doesn't really solve the problem now does it. Phones will still be locked, even after completing the contract.

On the other hand, the fact that the phone is provider-locked, and AT&T won't unlock the iPhone, currently are not readily disclosed. The fact that the phone is still locked after the contract is fulfilled is not readily disclosed. The fact that there are "secret" unlocking policies, or in case of AT&T, you-beg-&-scream-&-we-might-think-about-it-but-no-iPhone-unlocking policy, those are deceptions, and need to be scrutinized.

 

[sauer228]

Just what we need, the government entering the cellphone business. Exclusive contracts between Apple and ATT are just that and should include nobody else sticking their nose in their business. If Verizon wants the iPhone they need to pony up the capital to get that contract.

 

[Bubba Satori]

It's about time. The carriers are as bad as the music industry. Choice is good.

 

[pdjudd]

If Apple wants the iPhone to be "provider-locked," then why are they selling it unlocked in many other countries? There are countries that prohibits sim locking obviously, but then as stated above, Apple is selling the iPhone unlocked straight from the Apple store in Hong Kong.

As you said - in some countries, SIM locking is outright illegal in some areas , however, SIM locking is primarily a carrier decision obviously. We would need to see the details of the agreements made (unlikely as they are confidential) if we want to comment on Apple's motives in this matter.

 

[samab]

How did Apple "defeat" those regulation? What is the $1000 iPhone have to do with anything? Fact is the iPhone is sold unlocked in some countries, like both of us have pointed out. What kind of regulation being "defeated" by Apple?

How do consumer protection laws "ineffective"? What kind of worldwide consumer protection law that is ineffective? Simlocking? Looks like it works just fine to me as Apple is selling iPhones unlocked in countries that require them to do so.

Tell me, what's wrong with ETF? Why should there be a "national" rule for ETF? What is wrong with the current contracts/ETF? When you want a subsidized phone, you're offered it with the trade-off of signing a contract. The length of the contract is clearly shown. The amount of ETF is clearly explained when you sign the contract. I don't see anything wrong with any of that. There's no deception. You want subsidy, there's contract & ETF. Fair enough. Also, like you stated on how most people have an upgrade cycle of 2 years, thus whatever amount of ETF won't affect most people as most will follow thru the length of the contract. You have not explained why you're so against ETF. Based on your proposal, the only think we will see is all carriers offering the exact same contracts terms with a max amount of ETF allowed per law. In fact, if the carriers feel that they're loosing money on pro-rated ETF, we would only see higher prices, less subsidy, and no unlocking possibilities. Doesn't really solve the problem now does it. Phones will still be locked, even after completing the contract.

On the other hand, the fact that the phone is provider-locked, and AT&T won't unlock the iPhone, currently are not readily disclosed. The fact that the phone is still locked after the contract is fulfilled is not readily disclosed. The fact that there are "secret" unlocking policies, or in case of AT&T, you-beg-&-scream-&-we-might-think-about-it-but-no-iPhone-unlocking policy, those are deceptions, and need to be scrutinized.

iPhones are sold "unlocked" in most of the countries because the carriers decided to sell them unlocked --- not because they were forced by their governments to sell them unlocked.

Australia does allow carriers to sell simlocked phones. Italy does allow carriers to sell simlocked phones. France does allow carriers to sell simlocked phones. All of these countries sell unlocked iphones for commercial reasons --- not because of regulatory limitations.

The only country that explicitly forbids the selling of simlocked phones is Singapore --- and they based their regulations on old European laws that even Europeans don't follow anymore.

 

[flar]

Tell me, what's wrong with ETF? Why should there be a "national" rule for ETF? What is wrong with the current contracts/ETF? When you want a subsidized phone, you're offered it with the trade-off of signing a contract. The length of the contract is clearly shown. The amount of ETF is clearly explained when you sign the contract. I don't see anything wrong with any of that. There's no deception. You want subsidy, there's contract & ETF. Fair enough.

I have no issues with ETF on subsidized contracts and they are explained very well up front. I think they should be pro-rated, but most are not.

But, they also have ETF on contracts with no subsidy. If you go in, get a $200 discount on a phone and sign a contract you pay a $200 ETF. If you go in, get no phone whatsoever, but just want service - same $200 ETF. How is that necessary or fair?

Also, like you stated on how most people have an upgrade cycle of 2 years, thus whatever amount of ETF won't affect most people as most will follow thru the length of the contract.

Is the 2 year contract due to the 2 year upgrade cycle? Or is the 2 year upgrade cycle because of the 2 year contract (i.e. waiting to qualify for a reasonable upgrade price on a new phone)? If the full 2 years was required in order to recoup the subsidy, then why do the providers allow you to upgrade a couple of months before your contract is up? Those last few months can't be paying off the subsidy or they'd just shorten the required contract. The subsidy was likely paid off long before and now that they are under the threat of you being without a contract they quick throw you an upgrade bone to re-lock you before you become free. It's all a psychology game and has little to do with what they need to do to protect a return on their customer expenditures.

You have not explained why you're so against ETF. Based on your proposal, the only think we will see is all carriers offering the exact same contracts terms with a max amount of ETF allowed per law. In fact, if the carriers feel that they're loosing money on pro-rated ETF, we would only see higher prices, less subsidy, and no unlocking possibilities. Doesn't really solve the problem now does it. Phones will still be locked, even after completing the contract.

I, for one, am not against subsidies and ETF on contracts that came with a subsidy - or even a smaller ETF on a shorter contract for a new customer to establish monthly billing service (say 6 months with an ETF of $50 just to stop service hopping every month). But, if you think the ETFs really are scraping the bottom of the barrel and any change in the way they work is going to have to come out of higher prices or less subsidies then you've drunk the industry's kool-aid. Ask yourself why the ETF is the same on a contract that came with hardware regardless of how much of a discount was provided on that hardware. Ask yourself why the same ETF is required on a contract that came with no hardware. Ask yourself why they need a 2 year contract just to establish service in the first place. Ask yourself why the monthly bills are the same whether you are paying off a subsidy or not.

It's all just a game for them to lock customers in so that they don't have to provide decent service (or, more to they point, everyone hates their service and they know that and rather than fix the problem they institute contracts with ETF to shackle customers).

Now, I'm not necessarily saying that the government should regulate these contracts, but the reason they exist is because everyone believes the industry's sob stories and believes that they are a fair and necessary part of doing business.

Proper education of the US consumer and the presence of alternatives (which seem sadly lacking) would probably fix this as easily as government intervention...

 

[Kid Red]

Instead of being stupid and looking at exclusive contracts (Xbox, PS3, and so on) they need to look at THE PRICE OF TEXT MESSAGES!!!

WE ARE BEING EXTORTED over text messages, they need to look into that practice which has a greater impact on the consumer.

 

[pika2000]

iPhones are sold "unlocked" in most of the countries because the carriers decided to sell them unlocked --- not because they were forced by their governments to sell them unlocked.

Australia does allow carriers to sell simlocked phones. Italy does allow carriers to sell simlocked phones. France does allow carriers to sell simlocked phones. All of these countries sell unlocked iphones for commercial reasons --- not because of regulatory limitations.

So? What is your point then? You were saying that Apple is "defeating" some regulations, while you yourself are now saying that phones are not locked in those countries. So what "regulation" that Apple defeated? I don't get it. It seems you just go round and around pointing what my original point was, yet keep arguing outside the context and always ignoring my questions.

In those countries, one can argue that a "healthier" market have existed beforehand. Like you already said, the no simlocking law was established before. Even though it's not followed anymore today, in those countries, unlocked phones have become the norm. Carrier that decided to lock their phones would simply alienate consumers and be ignored. In the US, provider locking is the norm, and all the carriers do it, even on no-contract/no-subsidy/pay-as-you-go phones. If there is no force to prohibit simlocking, there will be no change at all. AT&T will not just decide to unlock their phones if they don't have any reason to.