iPhone To Be Offered From Multiple Carriers, eh

from the in-God-Phone-We-Anti-Trust dept

Given all the talk in DC lately about anti-competitive exclusive cellphone distribution arrangements, it's very interesting to see a rumor broken by the Globe and Mail about the iPhone in Canada. According to The Globe, Rogers will soon lose its iPhone exclusive as both TELUS and Bell Mobility add the iconic device to their Christmas line-up. Bell and TELUS are migrating away from the CDMA technology they have used up to 3G, towards the more globally compatible GSM evolutions. To minimize costs, the two carriers are building a single shared-infrastructure network, on which they will both sell services. While Rogers, the long-time GSM user, will have the wider network footprint and offer iPhones fall-back to their 2G data networks when out of 3G coverage, that advantage is countered by TELUS and Bell offering 3.5G HSPA+ speeds to Rogers' 3G. Under current coverage conditions, iPhone urbanites might prefer the new entrants, while sub-urbanites may prefer Rogers.

What is most interesting here is the break from Apple's conventional one-country-one-carrier strategy, which has attracted the attention of more than a few countries' regulators. The Canadian case will be the first market where competing carriers offer the iPhone, without a regulator forcing Apple's hand. Perhaps Germany will follow Canada: there are rumors that T-Mobile will lose their exclusive deal with Apple by year's end, and British/Spanish carrier O2 will enter the market with preferable iPhone plans. In the USA, most of the hot water Apple is swimming in is because the FTC isn't happy with the iPhone app approval process, which nixed the Google voice app. But while the FTC branch is focused on the App Store, some Congressional Reps are voicing their displeasure at the exclusive iPhone deal with AT&T. Governments around the world aren't sure what to make of exclusive phone distribution deals - which, strangely, never seemed to raise an eyebrow until the iPhone. In France, the Orange-Apple 5-yr exclusive was smacked down by the feds who argued that an exclusive arrangement would add "a new element of rigidity in the sector which is already suffering from a lack of competition." But here's where I'm not so clear.

I agree that exclusives, when examined in isolation, are anti-competitive. But overall, I'm not clear on how a 2007 new entrant (Apple), with a disruptive device that lit a fire under the incumbent vendors, could be perceived as "anti-competitive" in terms of net results. In fact, the exclusivity has undeniably forced the competing carriers to work their butts off to come up with a comparable device, seeking it from the likes of Nokia, Samsung (which are scrambling to respond, though they'd never admit it), or newer players like HTC or INQ. The exclusive deals seem to be spurring competition. In contrast, in a world where every telco carries the iPhone, the telcos actually can worry less about offering something else that's equal or better. I suppose someday it could make sense to go after Apple exclusives, but why not wait until the net effect on society is actually negative in some measurable way? A good rule for government should be, "When in doubt, leave it alone."

Meanwhile, the Canadian case will certainly offer Canadians more choice among iPhone providers, and most notably iPhone plans. Canadians tasted the bitter flavor of inadequate competition when iPhone data plans were first announced there in mid 2008. Three-year contracts, no unlimited data plan, high per-MB pricing, and a triple lock-in. Yes, Canada may soon see more service competition around the iPhone -- but will Canada see more or less device competition?


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    ChurchHatesTucker (profile), Oct 6th, 2009 @ 5:22pm

    Whatever

    The faster this leads to a non-exclusive deal with AT&T, the better.

     

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    John Doe, Oct 6th, 2009 @ 5:45pm

    iWho?

    While I hate the exclusive contracts, I don't know that the government needs to step in. I think the market is sorting it out. Verizon has the Blackberry Storm, says it will get the Pre next year and just announced Google Android phones. As soon as one carrier starts adding multiple smart phones, they will all have to do it. Once the iPhone has to compete with other smart phones on other networks, they will have to start loosening their grip on the app store. For now, AT&T and Apple are free to abuse their customer, who seem willing to put up with it, but that won't last forever.

     

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    PrometheeFeu (profile), Oct 6th, 2009 @ 6:09pm

    Hey, we don't have "feds" in France. It's a republic, not a federal republic...

     

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    Anonymous Coward, Oct 6th, 2009 @ 6:29pm

    I don't know how it happened, but 2 of the 3 major carriers in Argentina had the iPhone at the same time, and the 3rd is entering the game with iPhone 3GS. I doubt there's regulation here (there are exclusive phones by carrier, but I don't know if that's just some carriers not liking certain phones). Anyway, Canada is not the first and in a globalized world, a statement like that is almost never true.

     

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    rwahrens (profile), Oct 6th, 2009 @ 6:37pm

    Mike's got it

    I think Mike has hit it - the market will decide.

    Everywhere you went this last year, in whatever forum Canadians would gather, you heard nothing but complaints about the horrible vice Rogers has their customers in regarding prices. Many of them were most decidedly NOT complimentary towards Apple for partnering with such a vilified company.

    My guess is that Apple decided that, now the two other competitors are playing in the same technological sandbox, it is time to goose Rogers in the butt and get them a little bit more amenable to lower prices, the better to boost iPhone sales.

    Sure, Apple likes control, but they aren't stupid, and they've got economists on the payroll that can read sales charts. Management, needless to say, seems to have been listening.

    As for the US, the only other cell network provider that plays in that sandbox, T-Mobile (as Mike noted), is pretty small, is struggling to make ends meet, and probably wouldn't add much to Apple's bottom line.

    Since Verizon, as of today, seems to be counting on Android for the future, and won't have a compatible network until at least the end of 2011, can be counted out now, that doesn't leave many candidates, does it?

    Internationally, I'd bet that we will see additional carriers come on board as local market conditions warrant the move. As Mike noted, sometimes exclusivity is not conducive to competition, sometimes it is. But Apple is focusing on the bottom line, and how it will affect sales.

    Sometimes the two will coincide, sometimes they won't.

     

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    Mike, Oct 6th, 2009 @ 6:45pm

    Sole phone/carrier deals

    I just don't get the fact that every time I this subject comes up, no one bothers to mention that most phones are only designed to work on a single type of network - CDMA or whatever. Apple doesn't make a phone that will work on Verizon, or untill they recently upgraded their networks, on Bell Canada or the other new Canadian supplier. Rodgers and AT&T were the oly major players in either the US or Canada to have a network that the iPhone can work on!. Could it have been designed to work on CDMA and the original deal have been with Verizon? Of course it could have been then. But why would any firm put out a revolutionary new phone that (only) worked on a has-been net like CDMA? That's part of what killed Motorola. The world is almost done with CDMA. Only Palm would put out a new phone that only worked on CDMA - and then only because it is the only major supplier left - even they opted first for T-Mobile.

     

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    Anonymous Coward, Oct 6th, 2009 @ 7:12pm

    Maybe I'm misunderstanding, but I don't think there's ever been one-carrier exclusivity for the iPhone in Australia. As far as I'm aware, all (most?) carriers offer it.

     

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    nelsoncruz (profile), Oct 6th, 2009 @ 7:20pm

    Here in Portugal two carriers have been offering the iPhone from the start (Vodafone and Optimus). However, according to something I read when the original iPhone was launched here, Optimus might not be getting the iPhones directly from Apple but from a UK carrier.

    Only TMN, the biggest carrier with something like 60% market share, doesn't have the iPhone. And like Derek said, they have been very keen in launching touch phones from Samsung, Nokia and HTC. They where the first to launch an Android phone here, the HTC Magic, and they offered a 50% discount for it during the iPhone 3GS launch day. It sold out from the online store in less than 1 hour. I was one of the luck few that got one. 224€ without any "plan" or "contract" attached, I think it was a good deal.

     

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    Joe, Oct 6th, 2009 @ 7:34pm

    Not expecting much of a change

    Cellphone competition in Canada is very much an illusion. The major carriers (Bell, Telus, Rogers) will compete on a variety of features but not price. As a result we have 'competition' on the surface, but the reality is that all three enjoy milking fat profits and no one upsets the market by, oh, I don't know, competing?

    When the analogue bandwidth spectrum auction occurred, the government blocked off 40% for new entrants into the market. That is still in the setup process, but many, including me, are eagerly awaiting something new in the hopes of shaking up a very very static market. So even if the iphone comes to multiple carries, i don't think the incumbents will rock the gravy boat.

    I myself, would love an iphone but I refuse to pay $80/month plus a 3 year contract low data rates etc etc, so I sit here with my WinMo P.O.S. waiting for the day real competition comes to the great white north.

     

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    Dave, Oct 6th, 2009 @ 7:55pm

    All australian carriers offer the iPhone

    In aussieland we can get the iPhone on all of our carriers. There isn't that much competition in pricing plans. But there is a bit. As there are 2 major 3G frequencies here 850/900, once you buy an iphone your switching abilities are limited as no iPhone offers both of these frequencies.

     

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    Anonymous Coward, Oct 6th, 2009 @ 8:02pm

    Great quote

    When in doubt leave it alone - I've always felt that is the definition of conservatism, and that is exactly what government is NOT.

     

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    Anonymous Coward, Oct 6th, 2009 @ 8:18pm

    Well no

    iphone was the first phone (certainly the first US phone) that offered a web browsing experience like anything resembling a desktop.

    that changed things. a lot.

    FYI, the competing carriers are not what should be forcing HW makers. Customer demand is. The fact that other carriers couldn't get an iphone meant that they forced the HW to come up with something, because they were losing customers to ATT. However, those companies would still have been losing business to *all* carriers, regardless.

    Some have argued that it has put *less* pressure, since there are many people who can't or won't switch carriers. So there is less affect from the customer since they aren't able to switch.

    Essentially. The HW competition would have been better, since most everyone agrees that with iphone available through *all* carriers, Apple would have a larger market than they do. => more pressure on competing HW vendors. ATT had to *buy* that from Apple. Apple didn't grant them that exclusive without some payback. ATT paid for it because it did drive customers to them from other vendors.

    The whole thing stinks to high heaven and always did. It's just that before the iphone, most cell phones were pretty lame so everyone let it pass. Why fight for equity in shit piles?



    Even if iphone was available through all carriers

     

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    chas66, Oct 6th, 2009 @ 8:44pm

    Re: Australia

    Interestingly, isn't one of those carriers, Telstra, offering one of the most expensive iPhone contracts in the world? See http://www.mobilechoice.com.au/compare-iphone3g-plans-spreadsheet
    Competitive pressures did not seem to work for the consumer in Australia.

     

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    Anonymous Coward, Oct 6th, 2009 @ 9:04pm

    Re: Re: Australia

    I have recently been shopping for an iPhone-with-plan, and doing the comparisons gives you a "WTF!" moment when you hit Telstra. Their pricing seems to make...well, little sense, at least in competitive pricing terms. So, I'm not sure how indicative they are of the success or otherwise of "competitive pressures", especially if the details of the cheaper plans from the other carriers are not included in the comparison.

     

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    scarr (profile), Oct 6th, 2009 @ 9:23pm

    Derek makes a really good point about the Android, Pre and some other options popping up in the wake of the iPhone as other companies had to make a big step forward in design.

    I really don't know why anyone thinks this will substantially lower prices on either the iPhone or the service fees it carries. If people want a different carrier, they will change based on that, irrespective of price. It was the same when the RAZR (the last big "it" phone) came out on multiple carriers. Everyone offered the same plans with the same rates.

     

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    assuie, Oct 6th, 2009 @ 9:45pm

    australia

    we have always had the iphone on multiple carriers

     

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    Allen (profile), Oct 6th, 2009 @ 11:39pm

    "I agree that exclusives, when examined in isolation, are anti-competitive. But overall, I'm not clear on how a 2007 new entrant (Apple), with a disruptive device that lit a fire under the incumbent vendors, could be perceived as "anti-competitive" in terms of net results"

    If you're only thinking of handset manufacturers, sure, but the problem with exclusive deals is that they also distort competition between carriers. How much harder would ATT need to work without the iPhone exclusive? How much better could overall industry service have been if competition had been more open?

     

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    Anonymous Coward, Oct 7th, 2009 @ 3:33am

    Re: Sole phone/carrier deals

    Storm works on both.

     

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    MBraedley (profile), Oct 7th, 2009 @ 4:17am

    Higher competition in handsets, or higher competition in contracts? Personally, I'd prefer the later. And actually, the competition extends well beyond just the price for a given contract. It also includes the quality of service that you get, from customer service to cell coverage to data speeds. If Verizon had gotten the iPhone along with AT&T, they probably would have ran their new "There's a map for that" ads back then, differentiating their service.

    There's also the fact that even without exclusive deals, there is still plenty of competitive motivation to keep developing. You merely have to look at the Blackberry Storm to see that, which would have come out regardless of which carriers had the iPhone. Sure, it might not be as high as it would be with exclusive handsets, but the on the contract side, the difference is huge. The example in the post of Rogers charging large data rates shows just that. A little competition to gain iPhone customers would have forced them to offer unlimited (or at least a very high cap) data plan at a reasonable price. That sounds a whole lot better to me than a slightly less competitive handset market.

     

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    jsl4980 (profile), Oct 7th, 2009 @ 6:20am

    Re: Great quote

    I wanted to say the exact same thing. That quote needs it's own site.

     

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    Anonymous Coward, Oct 7th, 2009 @ 6:37am

    Rogers never signed an exclusive deal... that would have cost way more money. Instead Rogers correctly felt they had the only Canadian cell phone infrastructure to carrier the iphone... an advantage that can clearly be challenged.

     

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    WinMo Holdout, Oct 7th, 2009 @ 6:38am

    The Telcos actually offer nothing

    The article talks about competition surring the telcos to do this and that. I wonder why they are doing any of it at all. What a strange way this has deveoped. Why does Bell "offer" a phone, or AT&T. I do love how they can delay a phones release by months to get a corner more rounded or a button moved 0.3 inches and while their crack marketing teams come up with yet another silly name (or just jack a number on the end of the one they got)

    They are my service provider and nothing more. Why is this situation allowed to continue? Imagine if traditional telcos could still dictate what phones you had in your house. No going to radio shack to get a replacement, or getting a trendy football phone. What do you think prices would be like now? What kind of selection?

    Or imagine if we were talking now about choosing what computer to get from Comcast or Time Warner. Gee the one from Time Warner has a good hard drive but the Comcast one has that HUGE 9 inch screen we have ben waiting for. They are a barrier to innovation. Talk all you want about the carrier subsidies but that money is coming from somewhere. If the handset makers were connecting directly with us, the consumer, they would have to price accordingly. If anything that FAT carrier subsidy is keping prices artificially high.

    The market has to push back and get these wireless guys OUT of the hadset business and back into the traffic carrier business.

     

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    Whisk33, Oct 7th, 2009 @ 6:54am

    Competition of

    "In fact, the exclusivity has undeniably forced the competing carriers to work their butts off to come up with a comparable device" Competition of Hardware or Cell Phone Service. Which do you think is in more need of innovation/competition? By removing the hardware from the attributes of the service provider the service provider must focus on providing a better service. This seems more reasonable. What market are we in when we talk to Verizon/ATT/Tmobile? electronic devices or cell service? What if you could only get 1080Tvs(devices) from Comcast(service provider)? *shudder* Level the Hardware playing field... less good for devices more good for service = more good for everyone

     

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    Spanks, Oct 7th, 2009 @ 7:25am

    Whatever - TELUS and Bell are still on the old CDMA Network

    This is complete bullshit, lol.. Not that I stand up for Rogers/ or FIDO, I think they are both shitty cellular providers as well. Infact, Canada has the worst cellphone prices/plans than out of ANYWHERE else in the WORLD!

    If TELUS or BELL ever do get their shit together, it will much longer than before this Christmas that they will be offering the iPhone. And I still can't see that because ROGERS made an agreement with TELUS about having the iPhone specifically, and BELL/TELUS have other types of touch phones, but nothing near as good as the iPhone. Apple will always be #1, I knew that back in the late 80's, when people used to cuss out Apple. Well guess what, Apple is kicking Microsofts ass now, and EVERY SINGLE COMPANY OUT THERE tries to copy Apple. They try and copy the iPhone. Microsoft tries to copy the iPod by putting the Microsoft "Zen" out.. lol how lame.

    Anyhow, no. I doubt you will be seeing this before Christmas as Bell/TELUS are way behind when it comes to cellular, they don't even have a satellite network out yet. Their still using the old CDMA technology. So these rumours put out by them - they are full of shit.

     

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    falcon9, Oct 7th, 2009 @ 8:08am

    Re: Whatever - TELUS and Bell are still on the old CDMA Network

    Errr... Sorry to break your bubble, but Bell Mobility and Telus have both announced yesterday that they will offer the iPhone next month, just in time of their new network launch, which is going to be completed ahead of schedule.

     

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    John, Oct 7th, 2009 @ 8:31am

    Wrong type of competition

    I am a iphone user, actually a happy one.
    But you are confusing the types of competition, while the iphone has forced device makers to up the ante and try to offer more competative products, the exclusivity has actually harmed competition between providers, as AT&T does admittedly have a inferior 3G network compared to Verizon, but the exclusive deal has netted them higher revenue and growth, despite their failures, exclusive phone models, especially ones with as much hype as the iphone hurt provider competition on equal playing grounds which both AT&T and Verizon had the iphone, I think you'd see AT&T in a much worse position than it currently is.

     

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    watice, Oct 7th, 2009 @ 8:39am

    huh? FTC?

    Since when has the FTC been involved in the GV app store thing? I believe the acronym you're looking for is FCC, not FTC

     

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    Shienen, Oct 7th, 2009 @ 10:26am

    The UK's O2 exclusivity is coming to an end next month I believe, Orange has definately secured it and I'd heard that T-Mobile were picking it up too.

    It's a good thing it's going to other networks, but only because O2 might bring their prices down! They give the best network coverage so I'm going no-where, but £35 a month for 600 mins and 500 txts is plain awful!

     

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    Spankster, Oct 7th, 2009 @ 10:54am

    Canada has the HIGHEST PRICED CELLULAR PLANS in the World!

    Yeah, big deal, I know that TELUS and BELL have announced it. Just because they announce something, a rumour, does not necessarily mean that ITS going to happen. And I will tell you one thing, it definately will not be next month or anytime soon. They have to rebuild their network first of all, and also make an agreement with Apple.

    Apple 0wns, and Microsoft sucks shit. I always knew Apple was #1 since I first had my Apple Classic II back in the 1990. A lot of you users posting now, I bet you used to cuss out Apple, and Macintosh Computers. Well guess what, they have the Stablest operating system out now - Mac OS X Snow Leopard. Windows 7 tries to copy Apply, Microsoft tries to copy everything apple does, but they do a horrible job of it and their OS's always have exploits and wholes in them, and Windows will never be Virus/Spyware free.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 10:58am

    Re:

    It's not about how much harder AT&T would have to work without the iPhone...it's about how much harder every other carrier has to work *because* of it! Competition works best when one supplier comes up with an advantage. Then all the others need to scramble to match it. If all the players get the same advantage, there is no scrambling.

    I agree with the commenter two above, Scarr, who pointed out the contrary. When all the carriers had the Razr, they just offered it at similar prices. Competition pretty much stopped among the carriers, usually because so few carriers serve any given region (which is just an economic norm, given the concept of natural monopolies.)

    1)
    So, actually, when a single carrier like AT&T carries the iPhone, all the other carriers must scramble to match (even as they talk down the iPhone, and say it's nothing special). It's bloody obvious with Verizon right now - do you think VZW would have made yesterday's Google deal to offer Android phones if they weren't scrambling to compete with ATT/iPhone? They HATE Google! But competition makes strange bedfellows, and the consumer wins that round.

    1b)
    When a single carrier offers the iPhone, the other handset vendors also scramble to produce an equal or better phone, which they can sell to the ready market of the other carriers.

    2)
    But when all carriers can offer the iPhone, there is no longer a need for the carriers to compete aggressively. They are back in their happy state of oligopoly, product parity, and lower competition.

    2b)
    If all carries offer iPhone, other handset vendors must still compete aggressively to offer something equal or better, but they will find their customer (carriers) less interested in revolutionary products. I'm not saying "disinterested", just "less interested". The net effect is reduced innovation hitting the streets.

    And the total effect of iPhone's exclusive deal with AT&T is this, MORE competition. It's counter-intuitive, but my argument above is fairly straightforward. The real world results speak for themselves.

    Think about it: you're arguing that if Sprint, T-Mo, and VZW could only offer the same phone as AT&T, there would be more competition. Does ever provider offering the same thing sound like competition?

    You'll note that I refer to the carriers as the market for handsets. That's because they are the ones who actually buy the phones from the vendors -- NOT the end consumer (certainly so in a North American context.) Vendors sell a small portion of units direct to consumer. In this industry, there are, thus, two ways of looking at the "customer" of handsets.

     

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    Spankster, Oct 7th, 2009 @ 11:09am

    Canada has the HIGHEST PRICED CELLULAR PLANS in the World!

    Why are you morons talking about AT&T and US Cellular providers when the topic of this conversation is about TELUS and BELL (CANADIAN CELLULAR PROVIDERS) rumored to offer the iPhone in the next month. So why in the hell are you talking about US providers? Jesus Christ.. Some people are so fucking stupid on here.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 11:24am

    Re: iWho?

    It's their developers that they are abusing.

    They are only "abusing" their customers from the perspective of an uber-geek or a business analyst who understands the nature of their exclusive deal, and doesn't see the forest for the trees.

    Customers are being abused in the same way their masseuse abuses them as he mercilessly beats their back with shiatsu. From your perspective, it's abuse, but the customer's perception is what really matters.

    If you are a layman with an iPhone, you are too busy being delighted by the best phone you ever had. You are too happy about being exposed for the first time to a usable mobile Internet. You are too excited by the power to customize your device with downloadable apps presented in a very easy-to-install fashion.

    Side story: I remember when the Palm Pilot became wildly popular, and all my friends in finance got one allocated to them by the IT dept. The IT guys would configure the calendar and contacts functions into the PDAs. All these guys would walk around with one, but not really know how to take advantage of the power in their pocket. Palm offered 30,000 apps at the time, yet EVERY one of the people I spoke with who had the Palm issued to them by IT had NOT installed one single app. And it was fairly easy to do. It took, maybe, ten simple steps: find an app you want, pay or get free access to the download, download the small .prc file to your pc, double click to put it in the hotsync queue, connect, hotsync, then launch on the device. Seems simple enough. You know what...too hard for the mass market! So calendar and contacts it was.

     

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    Spankster, Oct 7th, 2009 @ 11:26am

    Derek Kerton Shut Up Already you are lame and boring

    Your threads are so lame. just leave and get the hell out of here. This isn't an AT&T discussion moron, read the top page.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 11:26am

    Re:

    Ah, putain! Donc, ARCEP.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 11:27am

    Re:

    You're right.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 11:32am

    Re: Derek Kerton Shut Up Already you are lame and boring

    Gee. I apologize for taking it off topic. My bad. Can we still be friends?

    BTW, what does "the top page" say?

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 11:49am

    Re:

    Yes, but we get that subscription plan competition even with the iPhone exclusive. Have you looked at T-Mo or Sprint's best smartphone "Everything" plans? Partly because of the popularity of the iPhone, Sprint is offering a great device, the Pre, with VERY competitive service plans.

    You are looking at just the specific case of a person who says "I must have an iPhone, and I want competition among the iPhone service options" and in that case, the exclusive is a negative for sure. But if you widened that to "I want competition among devices, and also among service plans." I think you would find the Apple/AT&T deal is a catalyst for increased competition.

     

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    Derek Kerton (profile), Oct 7th, 2009 @ 12:10pm

    Re: The Telcos actually offer nothing

    I agree with you in principle. But the market evolved in a certain way, and it was not through dirty pool (at least the subsidy aspect that we're discussing).

    People just weren't willing to buy phones for $500, EVER. The carriers, starting back in the 90s, could not get a market for their "traffic carrier business" because the customers could not see past the hurdle of the upfront expense. There is a standard business solution when a service provider's potential market doesn't want to fork out the up-front capital, but would otherwise subscribe. The answer is the subsidy you so dislike.

    While carriers often complain about the high cost of subsidies, they also realize that it is an incredible leash on control. With subsidies, the customer pays for the phone long-run anyway, but the carrier gets to decide on what models to sell, install software, test, and control app sales. And because the costs of the phone are hidden, customers tend to buy more phones than they otherwise would - upgrading more frequently, getting new 24mo contracts, and getting devices that access the latest carrier services.

    Yet despite that carrier stranglehold, still today the majority of customers would not want to fork out $500 for most devices, and customers repeatedly choose the contract+subsidy. But this reliance on the subsidy model has prevented our market from offering other options.

    I'm with you. I actually already buy my phones full retail price, and often straight from the OEM. I get a fair number of freebies, too, as in industry insider. This lets me try out more handsets. I don't have to wait for AT&T to re-brand, test, design bloatware, etc.

    What I would like to see is an option for customers to NOT participate in the subsidy, and to get lower subscriber rates as a result. "SIM card only" plans have popped up in many global regions over the past decade, but notably not North America. How great would that be? Choice. Bring your own phone and let carriers compete for your subscription, or if you're cash-strapped you could choose the subsidy model with a 24mo contract. Choice is good.

    So, I agree with you. But this has taken us off-topic of my original post about whether iPhone-ATT stimulates or hinders competition. My post is written in the context of a subsidy-dominated market, which for now, is the reality for North Americans.

     

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  39.  
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    Derek Kerton (profile), Oct 7th, 2009 @ 12:15pm

    Re: Competition of

    Except that the real world results show that T-Mo, Verizon, and Sprint are scrambling to compete with different devices AND cheaper service plans. Yet when everyone has the device, we're back to a comfortable oligopoly.

    It's a fact that this device actually churns Verizon customers to AT&T, and that quickly results in device AND plan competition from the non-ATT players. Without the exclusive, no churn. No churn, no competitive response needed. Prices stay high. (see the Scarr comment near the top RE Razr)

     

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  40.  
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    Derek Kerton (profile), Oct 7th, 2009 @ 12:23pm

    Re: Wrong type of competition

    What you said is true in the short term if you are an AT&T subscriber, and you are only referring to a short time period AFTER the iPhone was launched. You must be referring to after, because you will admit that ATT offered something of disruptive increased value at launch. After that, AT&T can rest on some laurels, if they choose. They could rely on their exclusive deal instead of hustling.

    But competition isn't done in lock step, with all carriers at once. Oh, yes, they often work in lock-step, but that is oligopoly, and the resulting steps aren't very fast.

    Competition works best in a ratcheting mode. One provider jumps ahead, in this case ATT. And while ATT could choose to rest, the others MUST scramble. Eventually, they excel and surpass. Then, ATT will need to respond. It is these ratcheting inequities that bring the market the benefits of competition.

     

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  41.  
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    Derek Kerton (profile), Oct 7th, 2009 @ 12:32pm

    Re: Canada has the HIGHEST PRICED CELLULAR PLANS in the World!

    No, this topic is about that...AND whether the economics determine that a market benefits from one carrier having an exclusive on a highly sought-after device, or whether the market benefits most by regulators blocking exclusive deals.

    Those "morons" are actually on topic, and you just don't understand them.

    I suppose I should have some right to ascertain what the topic is, having been the author.

    Further, your post directly above..you know, the well-rounded, dispassionate analysis on whether Apple Owns and MSFT sucks shit, well, that was pretty much the first off-topic comment in the thread.

    Please don't just troll the interwebs with the search term "iPhone" and feel the need to "add value" to whatever discussion pops up. If you don't understand economics, you'll have a hard time keeping up on this blog. This is neither the "iPhone lovers" nor "iPhone haters" blog.

     

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  42.  
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    Derek Kerton (profile), Oct 7th, 2009 @ 5:46pm

    Re: Re: Derek Kerton Shut Up Already you are lame and boring

    Based on your other point below, I have figured it out. You are saying "the top page" is about a different topic, and morons like me don't "get it", and are taking it off topic.

    Hey, did you notice who wrote the "top page"? Just a thought.

     

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  43.  
    identicon
    Anonymous Coward, Oct 9th, 2009 @ 3:01pm

    Huh?

    In fact, the exclusivity has undeniably forced the competing carriers to work their butts off to come up with a comparable device...

    Just who are these these carriers that are working so hard "to come up with a comparable device"? I'm unaware of any carriers that design and manufacture their own cell phones.

    ...seeking it from the likes of Nokia, Samsung (which are scrambling to respond, though they'd never admit it), or newer players like HTC or INQ.

    You know, I once met a guy claimed that he was an automobile designer and had designed his own car. It looked like pretty much any other Camaro to me and I asked him how long he had been an engineer for General Motors. After standing there with a dumb look on his face for while and me questioning him some more questions it turned that he had simply special ordered it with the options he wanted from the manufacturer through the dealer. Yet, he thought that qualified him to claim that he had designed his own car. I am of the type who disagrees.

    Likewise, ordering a phone from a manufacturer like Nokia, Samsung, HTC or INQ isn't "coming up with a new phone". The manufacturers are the ones who come up with the new phones and they would be driven to do so by market forces in order to compete with the iPhone, not exclusive contracts that actually hinder competition.

    And yeah, I've heard the old claims that monopolies actually encourage innovation because they reduce the risk involved and I don't buy that one either. I think it is the risk posed by competition that actually encourages innovation.

    Bottom line, I disagree with your view that these exclusive deals (monopolies) actually promote innovation in the market. Instead, I say that they only benefit those involved at the expense of society in general.

     

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  44.  
    identicon
    Anonymous Coward, Oct 9th, 2009 @ 3:06pm

    No Measurable Harm

    I suppose someday it could make sense to go after Apple exclusives, but why not wait until the net effect on society is actually negative in some measurable way? A good rule for government should be, "When in doubt, leave it alone."

    I am reminded of the way that the tobacco companies argued for so long that was no measurable harm from tobacco use. "When in doubt, leave it alone" seemed to be their mantra for quite a while.

     

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  45.  
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    Derek Kerton (profile), Oct 9th, 2009 @ 5:32pm

    Re: Huh?

    You arguing with me, though you are in agreement.

    "the old claims that monopolies encourage innovation"

    Agreed. But Where is the monopoly in this topic? Is it Apple/AT&T? There are other competitors for service (VZW, T-Mo...), other competitors for handsets (HTC, Motorola...). The others are not blocked from entry to the market, they offer direct substitute products, and they are actively responding to AT&T and the iPhone. This monopoly. This = competition.

    If you are saying that there is a monopoly on the specific device called the iPhone, that would be like saying Safeway has a monopoly on Safeway Select brand Oatey 'O's. Yes, they do, but there are other cereals out there, no?

    The other point you argue is also in violent agreement with me. You talk about some guy who claimed he was a car "designer and had designed his own car." I never claimed carriers were handset designers at all. I said carriers needed to "come up" with a comparable device. Obviously, they are not the handset makers. Their job is just to find it and bring it to market, which is why the sentence carries on, "seeking it from the likes of Nokia, Samsung...HTC or INQ."

    YOUR problem is just confusing the term "designing" with the more flexible expression "coming up with". If I asked you what the name of that movie was with Tim Robbins and Morgan Freeman in prison, where Robbins' character crawled through the sewer pipe to freedom. Could you "come up with" the name of the film? Does that imply that you wrote the screenplay, or just delivered the answer?

     

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  46.  
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    Derek Kerton (profile), Oct 9th, 2009 @ 5:39pm

    Re: No Measurable Harm

    The you are falsely reminded.

    There is a big gap between suppressing evidence and lacking evidence.

    In this case, I would say the evidence (in the US market) is that the competitors are actually being spurred onward, out of their comfort zone, by the competition presented by iPhone/AT&T.

     

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  47.  
    identicon
    Anonymous Coward, Oct 9th, 2009 @ 6:32pm

    Re: Re: No Measurable Harm

    The you are falsely reminded.

    No, that was their claim. I didn't know you were an apologist for them too.

     

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  48.  
    identicon
    Anonymous Coward, Oct 9th, 2009 @ 7:38pm

    Re: Re: Huh?

    The others are not blocked from entry to the market, they offer direct substitute products, and they are actively responding to AT&T and the iPhone. This monopoly. This = competition.

    It seems that whenever anyone mentions "monopoly" there is always disagreement on what constitutes a "monopoly", usually by varying the definition of "the market".

    Define "the market" widely enough and there is no such thing as a monopoly anywhere because we are all competing for the same dollar. So as long as someone with money to spend has a choice of at least two sellers to trade with, no monopoly exists.

    I, on the other hand, define monopoly with a narrow market. Down to, in fact, a specific type of goods. For example, just because there are other types of communication available does not mean, to me at least, that the telcos do not have local monopolies. Just because there are other widgets available does not mean that the holder of a patent on a particular type of widget does not have a govt granted monopoly on that type either.

    I do not, however, apply it to the "name" of a product as in your Safeway example. If other cereals the same as "Safeway Select brand Oatey 'O's" are available under a different name, then there is no monopoly. If someone else were to try selling another cereal with the same name then that would be fraud and a trademark violation and really nothing to do with monopolistic market practices.

    If, however, Safeway and all the oat suppliers were to get together and decide to refuse to sell oats to any other cereal maker then I would indeed call that a monopolistic practice even if the other cereal makers could still buy wheat to make wheat cereal. Wheat cereal isn't the same as oat cereal even if they are both competing for a slice of the same family grocery budget or "market".

    In the US cell phone market, AT&T got together with Apple who then refused to sell iPhones to anyone else, even if they are willing to pay the same as (or more than) AT&T. That's monopolistic.

    YOUR problem is just confusing the term "designing" with the more flexible expression "coming up with".

    I think that to most people "coming up with" something implies creating or finding something previously unknown.

    If I asked you what the name of that movie was with Tim Robbins and Morgan Freeman in prison, where Robbins' character crawled through the sewer pipe to freedom. Could you "come up with" the name of the film? Does that imply that you wrote the screenplay, or just delivered the answer?

    I think that it would be misleading if every time someone mentioned that movie I jumped up and blurted out "HEY, did you guys all know that I came up with the name for that movie?" when in fact all I had really done was "remember" it just then.

     

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  49.  
    identicon
    Bob, Oct 10th, 2009 @ 11:27am

    Re: Re: Re: Huh?

    I think that to most people "coming up with" something implies creating or finding something previously unknown.

    Especially when it was described as "working their butts off" to do so. Yeah, I think the meaning was both pretty clear and misleading.

     

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  50.  
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    Derek Kerton (profile), Oct 12th, 2009 @ 3:10pm

    Re: Re: Re: No Measurable Harm

    So...the cigarette companies made the argument "There is no evidence of harm".

    There was evidence, they were suppressing it, and they were lying.

    Therefore, you conclude, any completely different entity that argues "There is no evidence of harm" must also be lying.

    Good logic. As I said, you are triggering false memories.

    I have presented the case that the exclusive has actually been a catalyst for additional competition in the US, yet you think it "sounds like" the tobacco companies, so it must be bad. You, sir, are a formidable opponent.

     

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  51.  
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    Derek Kerton (profile), Oct 12th, 2009 @ 3:24pm

    Re: Re: Re: Re: Huh?

    But I wrote in the exact same sentence, specifically, that the carriers were "working their butts off" to come up with new phones by:

    "seeking it from the likes of Nokia, Samsung ... or newer players like HTC or INQ."

    Doesn't that imply -- no not imply, clearly state -- that the devices are actually coming from the device vendors?

    Isn't it clear with the including of the above IN THE SAME FREAKIN SENTENCE that AT&T doesn't invent phones? I mean, the first Anon Coward quoted half my sentence, conveniently ignoring the second half..which was rather pertinent to his beef.

    My original point is that the other carriers are scrambling to get competitive phones. He says I implied that carriers invent/design phones themselves. OK, if you only read the first half of the sentence, I can see where that would be a small nit one could pick with my writing. But it is not a consistent interpretation within the context of entire article...and it is not even correct in the context of that complete sentence.

     

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  52.  
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    Derek Kerton (profile), Oct 12th, 2009 @ 6:34pm

    Remember 2007?

    By the way, for those still disagreeing with me, here's a nice retrospective.

    http://www.wired.com/epicenter/2007/10/mossberg-likens/

    Wired (in 2007) talks about how the iPhone is the catalyst that is breaking up the stranglehold the telco oligopoly has on the US device market.

    You see, the iPhone entry is disruptive step 1. This was the dam-breaker. The price of it being so very disruptive was the exclusive deal, but the net effect was a HUGE benefit for US customers. Step 2 is the other carriers and handset vendors scrambling to match or beat the iphone. Another big benefit. Is this really the kind of "monopoly" that we want to discourage???

     

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  53.  
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    Derek Kerton (profile), Oct 12th, 2009 @ 7:36pm

    Hmm, Interesting Info from BusinessWeek

    http://www.businessweek.com/technology/content/oct2009/tc2009106_223553.htm

    The subtitle of the article is:
    "An Android mobile alliance between the two giants could soon result in formidable smartphone competition for the dominant iPhone and BlackBerry."

    First two paragraphs:
    "Move over Apple and Research In Motion. Rivalry in the smartphone market has just heated up.

    For a while it seemed the bloodiest battle in smartphones would be fought between Apple (AAPL), maker of the iPhone, and BlackBerry maker Research In Motion (RIMM). But an emerging alliance between Google (GOOG) and Verizon Wireless has the potential to create a potent alternative to the BlackBerry and iPhone in the U.S. smartphone market."


    It s very difficult to cotton to the hypothesis that iPhone/ATT is a monopoly that is "harming competition" in the US market.

     

    reply to this | link to this | view in thread ]


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