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Democrats criticize AT&T's exclusive iPhone deal
CNet News ^ | July 11, 2007 9:28 AM PDT | by Anne Broache

Posted on 07/11/2007 8:31:58 PM PDT by Swordmaker

WASHINGTON--AT&T's exclusive right to sell the Apple iPhone drew complaints on Wednesday from Democratic politicians, though it was unclear whether they were planning to do anything about it.

"The problem with the iPhone is that the iPhone with AT&T is kind of like a 'Hotel California' service," Massachusetts Rep. Ed Markey said--in a nod to the Eagles hit, of course--during a hearing. "You can check out any time you like, but you can never leave."

Even though the hearing before the House of Representatives subcommittee on the Internet was supposed to be about "wireless innovation and consumer protection," the iPhone popped up among Democrats as a subject of criticism--and, among Republicans, as an example of the free market and consumer choice in action.

Neither Apple nor AT&T testified at the hearing.

To be clear, there are no proposed laws, or even talk of proposed laws, that would forcibly divorce Apple from AT&T. The wireless carrier reportedly has an exclusive deal to sell the iPhone in the United States for the next five years.


Rep. Ed Markey brandishes an
iPhone while discussing the device
at a Wednesday Capitol Hill event.
(Credit: U.S. House of Representatives)

Michigan Rep. Fred Upton, the top Republican on the subcommittee, said of the iPhone: "Its early success is an indication that the wireless market is in fact working. That iPhone is the newest mousetrap and now other carriers will be working to top it."

A more likely possibility is for federal regulators to require an open network standard (that would permit all sorts of mobile devices from all kinds of companies to operate) when some of the valuable slice of spectrum known as the 700 MHz band is auctioned off early next year.

"I think it's time that a consumer become the decider of what their phones do, not their cell provider," said Rep. Mike Doyle, a Pennsylvania Democrat.

Google has been lobbying the Federal Communications Commission to permit just that, and FCC Chairman Kevin Martin seemed to confirm the agency was headed in that direction in an interview published Monday in USA Today.

On Wednesday, Markey applauded that approach. The FCC "should seize this opportunity to create open access opportunity for wireless service," he said, and brought up the agency's 1968 Carterfone decision, which allowed non-AT&T devices to be connected to the telephone network.

Update: Just to be clear, despite their gripes about the AT&T exclusivity and the $175 fee that accompanies ending the mandatory two-year contract early, Markey and some of his Democratic colleagues appeared perfectly smitten with the iPhone itself.

Markey said it "demonstrates the sheer brilliance and wizardry of the new technologies which are available in wireless today" and commented that its Wi-Fi capabilities were a "welcome addition."

The Massachusetts Democrat even gripped the gadget in his right hand while he delivered the iPhone-related portion of his opening statement, although it became evident upon later questioning from his fellow politicos that it wasn't actually his property.

"It's just to hint to my wife as to what I do want for my birthday," quipped the congressman, who turned 61 Wednesday.

Perhaps it belonged to the chairman of the full House Energy and Commerce Committee, Rep. John Dingell (D-Mich.). (A Markey aide said she wasn't sure.) Dingell--who, at 81, also happens to be the House's most senior, albeit not quite its oldest, member--remarked that he was still BlackBerry-reliant but was also "enjoying my new iPhone."

"Is there any reason why, if technical questions can be addressed, that consumers ought not have the ability to determine the devices they're going to have on the network?" he asked.

Consumers vs. carriers

Most Republicans present said they believed the wireless market is a competition "success story" and thus warrants no additional rules. "When we micromanage, when we regulate, we discourage capital flow," said Rep. John Shimkus (D-Ill.)

By contrast, most Democrats and at least one Republican said the FCC may need to take steps during the upcoming 700 MHz auction that they feel would better promote consumer choice.

Rep. Chip Pickering (R-Miss.) and Jane Harman (D-Calif.) said they urged the FCC in a recent letter to force the operators of at least some of the soon-to-be-auctioned-off airwaves to allow customers to hook up whatever devices they please and to offer that band at wholesale prices to companies that want to get into the wireless broadband space.

Those ideas drew renewed resistance from the two wireless carrier representatives on the panel--Ed Evans, the head of a start-up called Stelera Wireless, and Verizon Wireless general counsel Steven Zipperstein.

Both executives said there's nothing wrong with allowing the auction winners to institute open access rules if they please, but they argued that forcing such a business model is inappropriate when there's no evidence of consumer discontent.

Of the thousands of phone calls and e-mails that Verizon Wireless's 60 million customers place to the company each day, "we have not heard from our customers very much about the desire to bring other devices onto our network or the desire to enable Wi-Fi," Zipperstein said.

Pressured later by Rep. Lois Capps (D-Calif.), Zipperstein denied that Verizon Wireless offers its U.S. customers "fewer" features on their phones than does the European carrier Vodafone, which owns almost half of his firm. "We offer different features," he said.

But Jason Devitt, a Silicon Valley entrepreneur who founded the wireless applications start-up Skydeck, argued there's a significant difference in the freedom granted to wireless product developers in the United States vis-a-vis in Europe. He belongs to a coalition that wants the FCC to set aside a chunk of spectrum as an open "sandbox" where innovators could experiment with new wireless technologies without having to secure permission first from carriers.

"If I want to produce a GSM device that will work on Vodafone's network, I don't have to ask Vodafone's permission," which he claimed has led to some 800 devices that could work on that network, he told the politicians. By contrast, "if I want to produce a CDMA device that works on Verizon's network, I have to ask Verizon's permission."

CNET News.com's Declan McCullagh contributed to this report.


TOPICS: Business/Economy; Computers/Internet
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To: Terpfen

“iChat would be the iPhone’s AIM application.”

AIM supplies it’s own software for the Mac according to their website, but the iphone does not allow any third party apps to be installed, even IF it could run. How much functionality Apple and AT&T will allow ichat to have remains to be seen. They could very well turn it into something like you have on your t-mobile, where you burn through units, but at least on t-mobile you are not paying also for “unlimited” internet.

Apple has your money and AT&T has a contract for 2 years - their only incentive to putting ANY money and effort into givng you something that will cut into their profit would be the expectation of more profit down the road.

How many NEW customers will this entice into the system vs. the loss of income from the existing ones that pay extra for unlimited texting or go over their 200 ?


41 posted on 07/13/2007 6:52:39 PM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
How much functionality Apple and AT&T will allow ichat to have remains to be seen.

iChat by default uses AIM.
42 posted on 07/14/2007 1:22:04 AM PDT by Terpfen (It's your fault, not Pelosi's.)
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To: Swordmaker
I LOVE mine....I LOVE mine....I LOVE mine....

MY PRECIOUS!


43 posted on 07/14/2007 4:07:06 AM PDT by rxgalfl
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To: Terpfen
I don’t believe that the current implementation of ichat can simply be dropped onto an iphone, so it will have to be recoded. Apple could easily make it so that it uses the SMS system in the phone rather then avoiding it ... preserving AT&T’s profits.
44 posted on 07/14/2007 9:30:35 AM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
Obviously not since Apple purposely left out features that consumers would want but would effect the profitability of the cellular provider.

In this case it was a manufacturer who left out features, not a carrier who demanded they not be included.

45 posted on 07/14/2007 9:27:00 PM PDT by antiRepublicrat
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To: antiRepublicrat

“In this case it was a manufacturer who left out features, not a carrier who demanded they not be included.”

... and curiously, the manufacturer decided to leave out the exact features the carrier would have left out to maximise his profits -— what an unbelieveable coincidence !


46 posted on 07/15/2007 11:48:41 AM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
and curiously, the manufacturer decided to leave out the exact features the carrier would have left out to maximise his profits -— what an unbelieveable coincidence

Believable, since AT&T didn't know of the iPhone's capabilities until after it was a done deal.

47 posted on 07/15/2007 11:59:25 AM PDT by antiRepublicrat
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To: antiRepublicrat

“Believable, since AT&T didn’t know of the iPhone’s capabilities until after it was a done deal.”

?? THAT’S even more unbelievable ...

Jobs- “ Here AT&T sign this, then I’ll let you read it”

“Under the deal, AT&T is understood to have agreed to install Apple equipment in the heart of its network, giving Apple wide-ranging access to and information about each iPhone user. One much-touted application, Visual Voicemail, won’t work without the Apple-installed hardware. “

http://www.informatm.com/itmgcontent/icoms/s/sectors/mobile-markets/20017438277.html;jsessionid=80E83BD052DDD69858C8BE0C0A027674


48 posted on 07/15/2007 2:27:45 PM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
?? THAT’S even more unbelievable

That's why it's so revolutionary, Apple ran the show instead of the carrier. Apple let them see what they needed to make sure it would work on the network, but that's about it. They didn't even get full iPhones, just disguised circuit boards.

49 posted on 07/17/2007 7:11:53 AM PDT by antiRepublicrat
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To: antiRepublicrat

“They didn’t even get full iPhones, just disguised circuit boards.”

... with little mustaches painted on them ?

Where are you getting this from ?


50 posted on 07/17/2007 8:36:49 AM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
... with little mustaches painted on them ? Where are you getting this from ?

I see you haven't been following the story. Here's a hint.

Usually, carriers catch more than a glimpse of the products their handset partners are working on. They get to provide input on what applications or features might make the device more marketable.

Not this time. Several small teams within Cingular worked on the project, but each handled its own specific task without knowing what the other teams were up to. Employees had code-names for the project to avoid mentioning Apple by name, says a person familiar with the matter.

Cingular sent a team of technical personnel to Apple's offices to test the device, making it sure it would work on the carrier's network. That rigorous process is normal for the release of any phone. But this time, technicians weren't allowed to handle or see the actual phone. Instead, they were given access to a dummy version that would only allow them to do the necessary network tests.


51 posted on 07/17/2007 10:01:27 AM PDT by antiRepublicrat
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To: antiRepublicrat

LOL ... and you bought this ? Just how do you test hardware that has to connect to AT&T’s equipment without hooking it up to AT&T’s equipment ? Such “testing” means NO testing - the results can be manipulated to anything the showman wants.

But this is interesting - “ In July 2006, the two companies finalized a deal after 30 hours of negotiations over two days, a person familiar with the discussions says.”

You can bet that the “30 hours of negotiations” they had would include the agreeing to leave out consumer-friendly functions that would reduce the profitability of AT&T’s carrying the phone.


52 posted on 07/17/2007 10:31:42 AM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
LOL ... and you bought this ?

Yep. It falls right in line with Apple's normal secrecy and their poor experience with the ROKR in letting anyone else have a say in the design of the phone. To say that Jobs is an anally-retentive control freak is an understatement.

Just how do you test hardware that has to connect to AT&T’s equipment without hooking it up to AT&T’s equipment ?

Did you even read the article or my post where I quoted it?

You can bet

No I can't, given how much AT&T has had to bend over backwards in order to get the exclusive deal for the iPhone. And they were the only carrier willing to do it. 500,000-700,000 signed up in the first weekend alone, looks like a good deal for AT&T.

53 posted on 07/17/2007 12:00:33 PM PDT by antiRepublicrat
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To: Swordmaker
"Its early success is an indication that the wireless market is in fact working. That iPhone is the newest mousetrap and now other carriers will be working to top it."

Which is why, instead of complaining, you should be identifying those companies which make the components of the iPhone and investing in them as their sales are sure to grow as other carriers seek to clear a higher bar.
54 posted on 07/17/2007 12:02:42 PM PDT by Old_Mil (Duncan Hunter in 2008! A Veteran, A Patriot, A Reagan Republican... http://www.gohunter08.com/)
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To: antiRepublicrat

“Did you even read the article or my post where I quoted it?”

I read where they said they did, but no tech in their right mind would sign off on “testing” that leads to tens of millions of dollars of investment based on “testing” in the showman’s facility alone.

But to get back on point ... Since you think that AT&T had NO input on the decision to leave out streaming audio, VOIP or IM why do you think Job made the decision to leave these out of a so-called “breakthrough” consumer-oriented device ?

BTW - Early reports say 50% of people switched to at&t, more recent ones are saying 25%, so these were mostly not new customers.


55 posted on 07/17/2007 12:38:17 PM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: Old_Mil

“you should be identifying those companies which make the components of the iPhone and investing in them as their sales are sure to grow “

There is not really any new technology involved in the parts of the iphone, and most of the suppliers are allready making parts for the half billion or so other cellphones ( or laptops, pda’s etc. ) being sold.

For example, the bluetooth chip supplier says they supply 50% of the world market for bluetooth chips in consumer products. Any increase in orders by Apple may well be countered by a decrease in orders from other manufacturers.

The assembler may very well have a large increase, but the “Made in China” sticker on the iphone may pose a problem for investment.


56 posted on 07/17/2007 2:02:18 PM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: RS
I read where they said they did, but no tech in their right mind would sign off on “testing” that leads to tens of millions of dollars of investment based on “testing” in the showman’s facility alone.

They got enough electronics to test if it worked. They didn't need to see the full iPhone in order to do that. But that's classic Jobs for you.

But to get back on point ... Since you think that AT&T had NO input on the decision to leave out streaming audio, VOIP or IM why do you think Job made the decision to leave these out of a so-called “breakthrough” consumer-oriented device ?

Knowing how Jobs is, knowing how mad he was with the carrier meddling with the ROKR, the answer is yes. As far as leaving out features, this is only version 1. Other features are missing, too (like apparently GPS, and it would make an excellent navigator if they would just put the software in). VOIP or IM is just a software update too. But for streaming audio, why not just browse to an Internet radio site with Safari?

BTW - Early reports say 50% of people switched to at&t, more recent ones are saying 25%, so these were mostly not new customers.

Fine with me. I don't particularly like AT&T anyway. Their willingness to buck the trend with their concessions to the iPhone is about the only thing I like about them.

57 posted on 07/17/2007 9:36:34 PM PDT by antiRepublicrat
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To: antiRepublicrat
“Knowing how Jobs is, knowing how mad he was with the carrier meddling with the ROKR, the answer is yes.”

Apple didn’t build the ROKR, it was Motorola existing designs with itunes accessibility that I’m sure they simply licensed from Apple, and enough memory for about 100 tunes.

The only part of the ROKR that was Apple was the download ability, and HE LEFT OUT that consumer-friendly feature from the iphone. Who’d a thunk it ?

Leaving out GPS is an easy answer - it takes battery power and a lot of board space ... same reason it dosen’t have a hard drive ... it would not be so cute.

Leaving out software functions is a different matter, they are specific decisions to do that, based mainly on marketing.

“But for streaming audio, why not just browse to an Internet radio site with Safari?”

Try it ...

It seems like the only concessions made by AT&T were giving an ongoing piece of the action to APPLE, while APPLE left out features that would cut into that action and instituting the decidedly UN-consumer-friendly action of making it impossible to get service elsewhere.

58 posted on 07/18/2007 10:04:22 AM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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To: Swordmaker

Looks like the’ve got it hacked to activate with ANY AT&T sim - so you don’t need to sign up with a new account.
Works with the prepaid cards and seems like it would also work with existing business accounts,

http://www.tuaw.com/2007/07/18/iphone-disposable-cellphone-prepaid-cards-new-activation-t/

Apple’s not going to be happy if it loses it’s cut of the mandatory two-year contract. Boo Hoo


59 posted on 07/19/2007 4:24:57 PM PDT by RS ("I took the drugs because I liked them and I found excuses to take them, so I'm not weaseling.")
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