Smartphone Exclusivity Deals Should Be a Thing of the Past

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 but doesn't allow access to Twitter and other popular social applications.

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 out.

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 fans).

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 locked out.

Chief Technology Analyst Jim Rapoza can be reached at [email protected]