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

[samab]

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.

Just because those carriers sell iphones unlocked for commercial reasons --- absent any governmental regulations --- doesn't mean that those countries have "healthier" mobile telecom markets.

France is the perfect example of that --- a very unhealthy mobile telecom market where there are only 3 national carriers, all 3 are French owned, zero foreign competitors enter the French mobile telecom market --- and all 3 French carriers were fined hundreds of millions of dollars for price fixing.

http://www.itu.int/ituweblogs/treg/Consumer+Group+Seeking+Damages+On+Mobile+Price+Fixing.aspx

In terms of the G7 countries, UK has the best iphone plan followed closely by the US iphone plan --- both O2 and AT&T don't plan to give out unlocking codes for the iphone even after the iphone contract is over. That's the healthy telecom market.

 

[pika2000]

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?

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.

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

Why does the government have to meddle with what contract a company wants to put out? You are against government intervention, yet you want government to meddle with specific details of contracts?

Okay, let's play the assumption game. Let's say, based on your proposal, that the government decide to meddle with contracts, with pro-rated ETF and such. Then what? Carriers would still be locking their phones. In the end, contracts are still there, and phones are still locked. Sure, you can leave early, pay pro-rated ETF, but then what? The phone is still locked. You can buy a non-subsidized phone without contract, but it's provider locked (just like today). I don't see change there.

I do agree about forcing people going into contract with their own phone is not fair. However, there's already an alternative for that today, pre-paid. I see that you think some unfair contract/ETF practices being the problem. Although they are a problem by themselves, to me simlocking is the bigger problem.

I have no problems with the current contracts/ETF themselves, as they are well disclosed to consumers. Consumers can choose to sign it or not. However, provider-locked phones are deceptive and not clearly disclosed. AT&T prohibit the use of the device on other networks, even after it's technically mine. It's an obvious anti-competitive practice and deceptions. If the DoJ want to scrutinize the market, that is the obvious sticking thumb.

People that are okay with simlocking are the ones that drink the kool-aid. Simlocking has no logic behind it. None. It's only an anti-competitive practice, and should be illegal. Period. Dealing the details about contracts/ETF are only dealing with the superficial issues. We already see pro-rated ETFs being introduced without any meddling from the government required.

Consumer education? Who's going to do that? The carriers? Sony Ericsson did this a while back, and it didn't do anything. US consumers have been brainwashed that locked phones are the norm, and they have to pay big $$$ for unlocked phones. In a not-so-free market, and where simlocking is the established standard, we need a bigger force to change it.

 

[pika2000]

Just because those carriers sell iphones unlocked for commercial reasons --- absent any governmental regulations --- doesn't mean that those countries have "healthier" mobile telecom markets.

France is the perfect example of that --- a very unhealthy mobile telecom market where there are only 3 national carriers, all 3 are French owned, zero foreign competitors enter the French mobile telecom market --- and all 3 French carriers were fined hundreds of millions of dollars for price fixing.

http://www.itu.int/ituweblogs/treg/Consumer+Group+Seeking+Damages+On+Mobile+Price+Fixing.aspx

In terms of the G7 countries, UK has the best iphone plan followed closely by the US iphone plan --- both O2 and AT&T don't plan to give out unlocking codes for the iphone even after the iphone contract is over. That's the healthy telecom market.

So, are we going to argue on a per-country basis now? You still have not explained what "regulation" that Apple "defeated," per your previous statement. Are you implying that government regulation is needed for a healthy market? I appreciate your points and knowledge, but you yourself never answer any of my questions, and keep going round and round the discussion.

Fact remains, there are some countries where cellphones are being sold unlocked out of the box, with or without subsidy/contract. This is the starting point. People were arguing that provider-locked phones are necessary for subsidy since unlocked phones = paying full price. I stated that having subsidy != locking, and stated examples where iPhones are being sold unlocked, with or without subsidy. My point is, provider-locking is anti-competitive, and if the DoJ is going to do anything, they should scrutinize that practice.

 

[pika2000]

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.

Use Google Voice or Email. Problem solved. Current SMS practice may be an extortion, but imo not a big deal, not as big as simlocking.

 

[samab]

So, are we going to argue on a per-country basis now? You still have not explained what "regulation" that Apple "defeated," per your previous statement. Are you implying that government regulation is needed for a healthy market? I appreciate your points and knowledge, but you yourself never answer any of my questions, and keep going round and round the discussion.

Fact remains, there are some countries where cellphones are being sold unlocked out of the box, with or without subsidy/contract. This is the starting point. People were arguing that provider-locked phones are necessary for subsidy since unlocked phones = paying full price. I stated that having subsidy != locking, and stated examples where iPhones are being sold unlocked, with or without subsidy. My point is, provider-locking is anti-competitive, and if the DoJ is going to do anything, they should scrutinize that practice.

Most of the European regulations basically said 2-3 thngs --- the carriers can simlock, the carriers should give out unlocking codes for free after x months (usually 12 months), that the carriers (i.e. Italy) should list the exact subsidies beforehand.

How do those European regulations help the US at all --- when Americans already have official carrier unlocking FOR FREE after 90 days? If Americans impose European style regulations, all you will see is the carriers start charging for unlocking codes for everybody else within the first year.

I am saying that there is a limited amount of political goodwill to spend on these policy issues --- and those goodwill should be spent on the really mundane stuff that helps the most number of people. The starting point should be whether the general population can get affordable mobile service prices, not whether the needs of gadget geeks are satisfied.

 

[samab]

Use Google Voice or Email. Problem solved. Current SMS practice may be an extortion, but imo not a big deal, not as big as simlocking.

Especially when American carriers charge the same price for MMS as SMS. In Europe, many carriers charge double or 4x the price for MMS.

 

[samab]

Okay, let's play the assumption game. Let's say, based on your proposal, that the government decide to meddle with contracts, with pro-rated ETF and such. Then what? Carriers would still be locking their phones. In the end, contracts are still there, and phones are still locked. Sure, you can leave early, pay pro-rated ETF, but then what? The phone is still locked. You can buy a non-subsidized phone without contract, but it's provider locked (just like today). I don't see change there.

Then what do you want the US government to do? Because your slate of proposals won't change a single thing either.

Do you want the US government to force the carriers to also sell an unlocked version along with simlocked versions? The carriers are just going to price the unlocked version very high --- the $1000 iphone vs. $200 iphone. So all that political goodwill is spent on stuff that would benefit a few thousand Americans who would spend that much money on a mobile phone (i.e. it would only benefit people that actually go to Nokia's flagship store in NYC to buy a $1000 N-series phone).

Do you want the US government to force the carriers to unlock for free at the end of contract? American carriers already unlock 99% of the phones that they sell. So all that political goodwill is spent on the 1% of the phones that are sold in the US.

What do you want the US government do?

 

[JoeG4]

I've never seen an unlocked cellphone, lol.

 

[pika2000]

How do those European regulations help the US at all --- when Americans already have official carrier unlocking FOR FREE after 90 days? If Americans impose European style regulations, all you will see is the carriers start charging for unlocking codes for everybody else within the first year.

Gosh, how many time are we going to go back and forth like this? There is no official 90day unlocking policy. That's just T-Mobile's unadvertised consideration. AT&T has no such policy. Heck, look at the iPhone. Why should US impose the whole European style regulations down to its bits and pieces? All I want to see is prohibition of simlocking, as it is obviously anti-competitive and deceptive. Charging for unlocking codes should not be an issue if the phones are not locked in the first place.

 

[pika2000]

Then what do you want the US government to do? Because your slate of proposals won't change a single thing either.

Do you want the US government to force the carriers to also sell an unlocked version along with simlocked versions? The carriers are just going to price the unlocked version very high --- the $1000 iphone vs. $200 iphone. So all that political goodwill is spent on stuff that would benefit a few thousand Americans who would spend that much money on a mobile phone (i.e. it would only benefit people that actually go to Nokia's flagship store in NYC to buy a $1000 N-series phone).

Do you want the US government to force the carriers to unlock for free at the end of contract? American carriers already unlock 99% of the phones that they sell. So all that political goodwill is spent on the 1% of the phones that are sold in the US.

What do you want the US government do?

Simple, prohibit simlocking, period. It's anti competitive and deceptive business practice. Simply outlaw provider locking. Why do you like making things appear more complicated than they are? None of your potential problems would be an issue. Carriers can still subsidize phones, do contracts, whatever they do right now. The only difference is none of the phones would be provider locked from the get go, period. No confusion about having to unlock phones or whatnot. Compare that to your idea of government meddling on how companies should write their contracts, ETFs, etc. Today, no carriers are selling unlocked phones. They only sell no-contract phones, which are full-priced yet are still provider locked.

Your statement of US carriers unlocking 99% of phones is simply false. Try getting AT&T to unlock any of their phones. The only lesser evil is T-Mobile, which has the unadvertised 90day unlocking policy. Try finding a pay-as-you-go phone that is not locked. Beside, why do we have to deal with this secretive unlocking policy? Why can't carriers simply sell all of their phones unlocked in the first place? That's my point. All of these issues become a concern because simlocking has become the standard in the US. Simply prohibit that from the get go, one less problem. Why do you want simlocking anyway? Show me a logic behind simlocking.

 

[pika2000]

Especially when American carriers charge the same price for MMS as SMS. In Europe, many carriers charge double or 4x the price for MMS.

Okay, I fail to see your argument there. I already pointed out alternatives like Google Voice or email that simply use the data rate. Sure, SMS/MMS pricing are ridiculous, but that is not what the DoJ should be looking at.

 

[samab]

Gosh, how many time are we going to go back and forth like this? There is no official 90day unlocking policy. That's just T-Mobile's unadvertised consideration. AT&T has no such policy. Heck, look at the iPhone. Why should US impose the whole European style regulations down to its bits and pieces? All I want to see is prohibition of simlocking, as it is obviously anti-competitive and deceptive. Charging for unlocking codes should not be an issue if the phones are not locked in the first place.

Europe is a very diverse continent with dozens and dozens of different permutations of simlocking laws --- none of which are effective.

No country in the world --- other than Singapore --- explicitly prohibits simlocking. And Singapore's rationale for such prohibition is based on outdated European policies that even Europeans don't follow anymore. (Well, there is always UAE who thinks that it's totally immoral for Apple to screw with their people with iphone monopoly, but have absolutely zero reservation being in the OPEC and screwing the rest of the world).

What you want --- have been rejected by countries worldwide.

 

[samab]

Okay, I fail to see your argument there. I already pointed out alternatives like Google Voice or email that simply use the data rate. Sure, SMS/MMS pricing are ridiculous, but that is not what the DoJ should be looking at.

Who said I was arguing with you on it --- I was agreeing with you that American pricing of SMS/MMS is not ridiculous.

 

[charlituna]

If Apple wants the iPhone to be "provider-locked," then why are they selling it unlocked in many other countries?

the ATT lock in the US is part of the contract given to ATT in return for R&D money. so in the US, Apple has no choice. but in other countries ATT has no control, so it's the local carrier and/or laws that are the issue

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.

Apple is selling it unlocked in the countries that have laws requiring it that way. in ones that don't, it varies but generally it has been locked because that was the only way to get a carrier to sign up to sell it.

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.

all well and good. but before the recent laws, companies were charging an ETF that was well over the amounts they claimed they were owned for a device. they would take, for example, a $199 phone and offer it to you 'for free' (really for the cost of an activation fee and the sales tax but whatever) in return for a two year contract. but they would make you agree to a $400 ETF. AND to top it off, they would charge you the same ETF amount one month into your contract and one month before the end. That's robbery. It was determined since they claimed it was to repay the device over the course of the contract, they could only charge as an ETF the amount of the device they had paid and they had to pro-rate it over the course of the contract.

 

[macintoshtoffy]

Apple New Zealand is now selling the iPhone 3G S directly to the public through their online store (prices include GST which is 12.5%):

http://store.apple.com/nz/browse/home/shop_iphone/family/iphone?mco=MTE2OTU

Btw, the lack of simlocking in New Zealand was a combination of pressure by government and the two main carriers voluntarily choosing to do so.

 

[xIGmanIx]

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.

GSM is GSM, doesn't matter what carrier in the US, its a spec that you build to

 

[str1f3]

I would actually like them to investigate the price gouging that goes on with the prices of unlocked phones. How in hell on earth are these phones $600-$700 when parts are 1/3 the price?

People would not pay for these ridiculous contracts if not for exhorbitant unlocked prices.

 

[pika2000]

Europe is a very diverse continent with dozens and dozens of different permutations of simlocking laws --- none of which are effective.

No country in the world --- other than Singapore --- explicitly prohibits simlocking. And Singapore's rationale for such prohibition is based on outdated European policies that even Europeans don't follow anymore. (Well, there is always UAE who thinks that it's totally immoral for Apple to screw with their people with iphone monopoly, but have absolutely zero reservation being in the OPEC and screwing the rest of the world).

What you want --- have been rejected by countries worldwide.

How does simlocking law not effective? You already pointed out Singapore. Cellphones there are not locked. How's that "not effective"? It is obviously "effective" in some countries as it sets a precedence of unlocked being the norm/standard, thus even if the law is not valid anymore, the market still expect unlocked phones and will not accept provider-locking. Not the case in the US, where provider locking is actually the norm/standard.
Based on what you're saying, simlocking is okay with you because laws that prohibits simlocking is old? I don't get it. Please tell me why do you want cellphones to be locked. Point a logic behind simlocking. Please, as it seems I'm the only one that thinks it's anti-competitive and deceptive.

 

[pika2000]

all well and good. but before the recent laws, companies were charging an ETF that was well over the amounts they claimed they were owned for a device. they would take, for example, a $199 phone and offer it to you 'for free' (really for the cost of an activation fee and the sales tax but whatever) in return for a two year contract. but they would make you agree to a $400 ETF. AND to top it off, they would charge you the same ETF amount one month into your contract and one month before the end. That's robbery. It was determined since they claimed it was to repay the device over the course of the contract, they could only charge as an ETF the amount of the device they had paid and they had to pro-rate it over the course of the contract.

What's wrong with that? ETF and the terms of the contract are clearly disclosed when you sign it. Consumers still have the choice to sign a contract or not. Whether you think the ETF is fair or not, it's not up to the government to meddle. However, having the phone provider locked, which are not readily disclosed, even after the contract ends which means the phone is yours, that's deceptive, thus my point against provider locking in the first place. As for pro-rating, it's been introduced already without any need of regulation.

 

[pika2000]

I would actually like them to investigate the price gouging that goes on with the prices of unlocked phones. How in hell on earth are these phones $600-$700 when parts are 1/3 the price?

People would not pay for these ridiculous contracts if not for exhorbitant unlocked prices.

Why should there be an investigation about prices? I think BMWs are overpriced. Should the government investigate BMW? I think Monster cables are hella overpriced. Should the government investigate them too?

Besides, in countries where unlocked phones are the norm, there's a second hand market, where people are buying older/last year's high end phones at cheaper prices. Also, the prices are more flexible, and you almost always see a downward trend throughout the phone's life. That second hand market is very limited in the US where the phones are provider locked. "Subsidy" pricing in the US is also pretty rigid, where subsidized pricing remains mostly constant throughout time, even for old/last year's models.

 

[diamond.g]

What's wrong with that? ETF and the terms of the contract are clearly disclosed when you sign it. Consumers still have the choice to sign a contract or not. Whether you think the ETF is fair or not, it's not up to the government to meddle. However, having the phone provider locked, which are not readily disclosed, even after the contract ends which means the phone is yours, that's deceptive, thus my point against provider locking in the first place. As for pro-rating, it's been introduced already without any need of regulation.

I thought it was done under the threat of regulation and all the class action lawsuits that were supposedly filed.

 

[rjohnstone]

GSM is GSM, doesn't matter what carrier in the US, its a spec that you build to

That only covers the voice side. Your average GSM phone will already work with any GSM carrier in the US, but the data side is different.

 

[pdjudd]

That only covers the voice side. Your average GSM phone will already work with any GSM carrier in the US, but the data side is different.

Indeed. A good example is that T-Mobile's implementation of 3G technology is different from what is done by AT&T and incompatible with that of the iPhone's chipset. GSM is a set of standards.

 

[samab]

How does simlocking law not effective? You already pointed out Singapore. Cellphones there are not locked. How's that "not effective"? It is obviously "effective" in some countries as it sets a precedence of unlocked being the norm/standard, thus even if the law is not valid anymore, the market still expect unlocked phones and will not accept provider-locking. Not the case in the US, where provider locking is actually the norm/standard.
Based on what you're saying, simlocking is okay with you because laws that prohibits simlocking is old? I don't get it. Please tell me why do you want cellphones to be locked. Point a logic behind simlocking. Please, as it seems I'm the only one that thinks it's anti-competitive and deceptive.

Government is supposed to regulate to help the little guys, not the gadget geeks. How effective is a completely unlocked cell phone in Singapore for the last 10 years when you couldn't get your numbers ported until last year, and when you finally can get your numbers ported --- you are facing $800 in ETF.

How effective is Singapore's law to consumer protection when instead of just comparing handset price (via subsidies) and monthly plans, now the average Singapore consumers have to learn about the pricing of a free tv or a free mp3 player as well. Pricing simplicity (when you just have to look at handset prices and monthly plans) helps the average consumer to compare prices --- when you add a free tv or a free mp3 player to the equation, that's just more way for corporations to scam the average consumer. The average Singapore citizen would have been far more better if their government focused on the real mundane stuff 10 years ago --- like numbers portability and ETF.

I didn't say simlocking is okay because laws that prohibits simlocking is old --- I said that Singapore's rationale for the prohibitation of simlocking came from outdated European policy papers that even Europeans themselves have no longer even follow. There are legitimate reasons why Europeans no longer follow their own old policy papers.

You won't find a single government in the first world --- that explicitly prohibits simlocking AND provide legitimate reasons behind such policy. Go to Singapore's telecom regulator website (IDA) and you won't find even a single policy paper outlining their reasons for the prohibition. They just felt like it --- so they decided to ban simlocking (just like how Singapore banned chewing gum because they thought that chewing gum cause littering).

 

[samab]

I thought it was done under the threat of regulation and all the class action lawsuits that were supposedly filed.

Yes, you are correct.

Stuff like pro-rated ETF's started because the State of California has some laws on the books that allowed their public utility commissions to have a say, and then class action lawsuits started against all the major carriers in California.

After the carriers started losing those class action lawsuits, then they started to lobby the FCC to implement very weak national ETF standards to try to get California off their backs.

http://www.dslreports.com/shownews/95264

Instead of spending valuable time and energy on simlocking laws that only benefits the gadget geeks --- we should be getting the FCC to implement very strong national standards on ETF.