Full FeedVerizon’s iPhone a dream of legislators?
In light of a federal inquiry into mobile carriers and exclusive deals like the one AT&T has for the iPhone, Verizon has jumped the gun and announced they will not sign onto any exclusives longer than six months. The move comes as the federal authorities look to help smaller carriers survive as they’ve been locked out of the latest and greatest phones. Verizon is the first to stem any appearance of wrong doing.
From GigaOM:
Verizon said today it will offer smaller carriers access to any cell phone model it uses — even those exclusive to Verizon. Carriers who have fewer than 500,000 subscribers will have access to phones after only six months, according to a letter sent by Verizon to Rick Boucher, the chairman of the Subcommittee on Communications, Technology and the Internet in the House.
The question quickly becomes, does the government have any business regulating phone exclusives and if so, what are the ramifications?
For two different perspectives, I questioned our Editor, Iyaz. His take:
“With the deals running out in 6 months, think of it this way—the carriers have less leverage and the phone manufacturer has more incentive to make a lot of money by having the next great phone on every carrier (Palm Pre?)
If the iPhone wasn’t exclusive on AT&T, so many people would have the Vz version. AT&T couldn’t lean on the iPhone and would have to pump up its network.”
So in short, Iyaz sees a beautiful utopia filled with iPhones on every network where users are thrilled to have the phone of their choosing on the network of their choosing. It might be interesting to note, Iyaz did a bit more than dabble in legal studies.
For the polar opposite, here are my views:
I’d argue that without AT&T to back the iPhone for 2 years, Apple wouldn’t have made the phone in the first place. If others follow suit in light of federal scrutiny we’ll see a the incentive for OEMS to develop game changing phones diminish. With no big cash cow, why bother? Cell carriers pay more for handsets to be exclusive. There is higher incentive for phone makers to make an exclusive model and the best way to sell an exclusive model is to make it better than everyone else.
This could be just what Android needed. Hee hee, Google benefiting from federal scrutiny. With less incentive to put R&D dollars into a product where revenue will be limited as no carrier is going to risk pimping it as it will get released in just 6 months time, we’ll see lots less innovative phones.
One new line of thought is emerging: this is purely a marketing move by Verizon as a way to shake the iPhone free from AT&T’s grasp. Verizon was so quick to jump at this (do they really care about an exclusive with the Bold?) that it seems a bit more than just fear of regulation. This looks to be a jump at getting the iPhone on their network, something that many users (both Verizon and AT&T customers would love to see happen). It is a long shot that this would help get the iPhone on Verizon but it looks like their hopes for the start of that road.
Source: [GigaOm]
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Verizon phone-exclusivity offer “virtually meaningless,” says consumer advocate
http://blogs.consumerreports.org/electronics/2009/07/cell-phones-carriers-lockout-exclusivity-iphone-palm-pre-congress-legislation-verizon.html
An offer by Verizon Wireless to allow smaller carriers to sell cell phones for which it has exclusive arrangements is “virtually meaningless,” according to a spokesman for Consumers Union, the nonprofit publisher of Consumer Reports magazine.
In a letter addressed to Rep. Rick Boucher, chairman of the House Subcommittee on Communications, Technology, and the Internet, Verizon today said smaller wireless carriers with 500,000 customers or less would be able to offer phones after a six-month period of exclusivity for Verizon.
Joel Kelsey, a policy analyst with CU, said that, “at best,” the Verizon decision helps only a small number of consumers. “This does nothing to correct the anti-competitive effects of exclusivity. Exclusive [phone arrangements] continue to blunt the force of consumer demand, and consumers continue to face limited choices in the marketplace.”
Verizon’s announcement comes as scrutiny is growing in Washington of arrangements in which phones, including such eagerly awaited models as the iPhone and Palm Pre, are available only from a single carrier, at least for a period.
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on July 19, 2009 at 12:13 PM - LINKI see a lot of fuzzy thinking here. It seems as though the writer thinks that the iPhone could be used on Verizon’s network, if only Apple would unlock it. Not so, Verizon uses CDMA technologies and the iPhone uses GSM. The two are incompatible and the frequencies are different.
Apple, if it wanted to serve Verizon, would need to make an iPhone especially for CDMA. Until the technology changes, as it slowly is, so that a mobile phone can use all technologies and frequencies, then Apple is locked out of the Verizon market by choosing the World’s standard—GSM.
Also, if the contracts are for a shorter period, then the subsidies must be less. Therefore, this means that the initial price of a $199 iPhone must be closer to its cost to manufacture, which is over $400, plus a reasonable profit. Therefore, an unlocked and unsubsidized iPhone should cost around $699.
The People who jailbreak their iPhones are thieves who want to steal the difference between a subsidized and unsubsidized iPhone. Why should they not be incarcerated?
on July 19, 2009 at 05:33 PM - LINKYou missed the point. It has nothing to do with GSM vs. CDMA. Even if Apple made a CDMA version, because of their exclusivity arrangement with AT&T, it couldn’t be sold. Thanks though for your input.
on July 19, 2009 at 10:31 PM - LINKLouis,
on July 20, 2009 at 09:36 AM - LINKYes, thanks for your input. It was right on target.