The AT&T-iPhone deal is just one example of consumers losing out because they can't run the hardware they want on the networks they want. Lawmakers are starting to take a hard look at these deals, and not a moment too soon.
I'm looking to buy some servers. Along with my standard concerns
about hardware specifications and what software I'll run on the
servers, I also have to consider what ISPs the servers can work with.
This Hewlett-Packard server is really nice, but HP has an
exclusivity deal with Comcast. And while I also like the IBM server, it
works only on that corporate fiber network, which has exclusive access
to Salesforce.com but doesn't allow access to Twitter and other popular
OK, I'm kidding--none of this is true in the server market. When you
buy a server or any piece of PC technology, you are free to run it on
any ISP that is available in your area.
However, the same can't be said of your smartphone (and, possibly,
in the future, of your netbook). In the world of smartphones,
exclusivity is all the rage, with the iPhone-AT&T deal being the
biggest example. The end result: Consumers can't run the piece of
hardware that they want to own on the networks they want to use.
The big carriers, of course, love these deals. The iPhone has
probably been responsible for more people switching to AT&T than
all of AT&T's previous sales and promotions combined.
However, the carriers may have begun to go too far in how they limit
the rights of their users, and we may start to see a push to change
these exclusivity deals.
Recently, several senators--all members of the Commerce
Committee--asked the FCC chairman to look into these exclusivity deals,
specifically asking if they unfairly restrict consumer choice and if
they adversely impact marketplace competition.
Most logical people would say, "Of course these deals unfairly
restrict consumer choice and impact competition." But that doesn't mean
the FCC or Congress will find this to be true. There are many examples
in American business of unfair and anti-competitive practices, but
whether a business gets in trouble often hinges on how they carry them
That's why AT&T has no one but itself to blame for the attention
it is now getting from lawmakers. It seems as if AT&T is on a
mission to alienate and annoy every current and potential user of the
iPhone and the AT&T networks. On a regular basis, the carrier
announces and enacts new policies and restrictions that anger users,
especially those inclined to be power users (and the most rabid tech
Carriers will trot out their regular arguments about why these
exclusivity deals are necessary. They'll say that these deals help fund
and improve innovation. (Yeah, preventing larger numbers of businesses,
users and networks from having access to something improves
innovation.) And they will claim that it is technically difficult to
have a phone work on multiple networks.
The latter point is a good argument for the United States to have
European-style standardization for network technology. But even without
that, many cell-phone hardware vendors somehow provide phones that work
on both GSM and CDMA networks and that easily move among carriers.
I'm not sure if this movement to get the carriers to end their
exclusivity deals will go anywhere. The carriers will bring out their
big legal guns and lobbyists to try to stem any change that would force
them to actually compete fairly.
But at a certain point, if enough people are unhappy with a situation, it can change no matter what the biggest companies do.
This would be a good thing. Because we want the future Internet of
mobile devices to be as open and flexible as the current PC-oriented
Internet-and not one in which special deals keep us all locked up and
Chief Technology Analyst Jim Rapoza can be reached at email@example.com.