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Senators To Examine Exclusive Handset Deals 234

Posted by kdawson
from the baby-steps-toward-openness dept.
narramissic writes "Based on a request that a group of rural operators sent asking the FCC to examine the practice of handset exclusivity, four members of the Commerce Subcommittee on Communications, Technology and the Internet sent a letter to the FCC expressing their concern. Small operators, like U.S. Cellular argue (PDF) that 'exclusive handset contracts divide wireless customers into haves and have nots.' But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.' The Commerce Committee expects to hold a hearing on the issue tomorrow."
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Senators To Examine Exclusive Handset Deals

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  • by Anonymous Coward on Tuesday June 16, 2009 @09:40PM (#28356523)

    'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'

    I wasn't aware that the carriers were in the business of manufacturing...

    • by toppavak (943659) on Tuesday June 16, 2009 @09:45PM (#28356575)
      Maybe not directly, but carriers do dictate and direct a lot of handset development. Really its the "promote" part of that statement that matters- Verizon puts a lot of money into marketing the BBerry Storm, AT&T helps market the iPhone etc. The argument is that without exclusive handsets there's less motivation to do this. There is some truth to that argument, but a more open ecosystem when it comes to mobile phones in the United States can only be a good thing for consumers.
      • by shawn(at)fsu (447153) on Tuesday June 16, 2009 @09:55PM (#28356663) Homepage

        If the carrier doesn't market the phone then the manufacture will. These manufactures do just well in non US markets, in fact I doubt it would hurt the manufacture at all.

        • by Colin Smith (2679) on Wednesday June 17, 2009 @04:01AM (#28358777)

          If the carrier doesn't market the phone then the manufacture will

          There is no point manufacturing something and marketing it (both *hugely* expensive operations) if the carriers are not going to provide it to customers, and customers can't switch to competing carriers who will.

          US handsets are in general a year or two behind the handsets available in the rest of the world largely because of this. The US mobile comms market is a nice little walled garden for favoured (by the carriers) manufacturers. Take a look at the handsets which Verizon actually provides vs what the *same* manufacturer provides to the rest of the world.

          Nokia (largest phone manufacturer in the world) for example:

          Verizon:
          Nokia 7205 (silver keypad)
          Nokia 7205 (pink keypad) just LOOK at that innovation...
          Nokia 6205
          Nokia 2605 Mirage

          All (wow, a whole, 3 of them) of these are ancient.

          And take a look at the handsets available from Nokia:

          http://shop.nokia.co.uk/nokia-uk/searchresults.aspx?page=1&culture=en-GB&search_id=47&chka=0&chkp=1&pagesize=9999&sortorder=desc [nokia.co.uk]

          124 produced and available (in the UK) vs 3 from a carrier.

          The rest of the world, the carriers want the latest phones and network services because if they don't provide it, someone else will. The US, far less incentive, you take what you're given. I like the spin that monopoly promotes innovation though.

          I doubt it would hurt the manufacture at all.

          Not the manufacturer. You are the one getting the bad deal.
           

      • by davester666 (731373) on Tuesday June 16, 2009 @09:58PM (#28356683) Journal

        Well, if they couldn't strike these handset deals, the carriers might have to...focus on their damn networks...

        Because right now the carriers seem to just be playing lip service to their networks.

        Oh, you want an iPhone, but AT&T has a crappy network in your area. Right now, AT&T has a negligible incentive to upgrade their network in your area, but you have to take their network in your area to get the iPhone. If it weren't exclusive, AT&T might actually improve their network if they see a large group of people remaining on T-Mobile and using the iPhone instead of having a small group switch to AT&T anyways.

        And just maybe MMS and Tethering might have been possible for the past year if AT&T wasn't able to dictate to Apple that they couldn't be used.

      • Re: (Score:3, Funny)

        by Anonymous Coward

        AT&T helps market the iPhone

        Yeah! Where would Apple be without the PR geniuses at AT&T helping them to market their latest toys?

      • There would be less motivation for the carriers to develop or promote innovative handsets, but a lot more motivation for others to do so, who won't in an atmosphere of exclusivity agreements.

        It might not be as big a deal as certain other market forces, but exclusivity does tend to stifle innovation.
      • by tsm_sf (545316) on Tuesday June 16, 2009 @10:32PM (#28356941) Journal
        Maybe not directly, but carriers do dictate and direct a lot of handset development.

        "You know those phones they have in Japan? Make me a shitty version."
      • by humphrm (18130)

        Translation: They pay the companies that actually develop and promote innovative handsets a ton of money for exclusivity, and that money goes into further R&D.

      • by erroneus (253617) on Tuesday June 16, 2009 @11:32PM (#28357343) Homepage

        Yeah, it's the promote part. Forget about the other words they said... you know, the ones that aren't true? As long as there is a bit of truth to cling to, let's focus on that.

        The fact is, exclusive deals are very anti-competitive and is especially harmful to small carriers. Furthermore, the exclusivity of the iPhone to AT&T not only enables AT&T to gain an unfair advantage over the other carriers, more recently, it has been used to harm their existing customers. (These "start new plans with the new iPhone deal" is meant to bring in new customers, to hell with the loyal customers they already have -- they are on contract anyway.)

        I don't have a prediction on how this may turn out, but I will say that if legislators or courts end up saying "no, you can't do that any more" then my guess is the next time this thing happens, the carrier will buy or accept a range of patents on the exclusive handset and then start suing other carriers who try to sell the same handset.

        We have all been very annoyed at the way the carriers play games with handsets and have been doing so for decades. That behavior was halted when the POTS companies did it and I find it amazing that wireless carriers are permitted. It's time it all stops.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Really its the "promote" part of that statement that matters- Verizon puts a lot of money into marketing the BBerry Storm, AT&T helps market the iPhone etc.

        The carriers do not pay a dime for "marketing" the handsets. It's all paid for by the vendors via MDF (marketing development funds).

        The carriers are gate-keepers. Want your handset to be easily accessible to a captive market? Play ball with the carriers. Even Apple, with the brand behind them, has had to make concessions to AT&T. So has Palm with the Pre (no discussion of tethering on Sprint!!!)

        Many consumers would choke on the retail price for a non-subsidized phone with even moderate capability. J

      • Re: (Score:3, Insightful)

        by Nerdposeur (910128)

        Verizon puts a lot of money into marketing the BBerry Storm, AT&T helps market the iPhone etc. The argument is that without exclusive handsets there's less motivation to do this.

        Yes, without exclusivity, the carriers wouldn't be motivated to market themselves based on their exclusive handsets. That's not really an argument, though, just an observation.

        Instead, they'd have to compete based on the things THEY actually create - their network, their customer service, and their plans. Which would be great fo

    • by Octorian (14086) on Tuesday June 16, 2009 @09:48PM (#28356603) Homepage

      They sure seem to want to make all the customers think that they are. Heck, all their marketing seems to be about the "phones they offer" almost more so than the "service they provide".

      People need to wake up and realize that their beloved phones come from Apple, RIM, HTC, Palm, Nokia, etc, and *not* from AT&T, T-Mobile, Verizon, or Sprint.

      Of course in the US its a little more complicated in that every carrier seems to use a different radio technology, sometimes with overlap and sometimes without. (i.e. AT&T and T-Mobile are both GSM, but diverge for 3G) And of all the hot smartphones, it seems like only RIM actually cares about supporting all carriers and radio technologies (for the most part, as the Storm is an exception, sorta).

    • Re: (Score:3, Insightful)

      by digitalunity (19107)

      Not sure if you caught my comments on a previously posted related topic, but handset manufacturers currently serve the interests of the carriers, NOT the end users.

      This practice is merely exemplified by exclusivity contracts such as the iPhone or Palm Pre. The real issue here is that handset success is based largely on the whims of the carriers, not on functionality or usability. Exclusivity is a byproduct of the common subsidized handset for reduced contract rates system we have in the US. If this practice

    • by Brickwall (985910) on Tuesday June 16, 2009 @11:00PM (#28357147)
      Sorry, this again misses the point. You clearly don't understand that network modifications might need to be made, changes to billing systems, etc., all of which cost money. A CDMA network is as different from a TDSM one as a highway is from a railroad. So Union Pacific should demand that GM - well, maybe Toyota - build cars that can on railways as well? Or, since that example is backward from this case, let's turn it around - GM should demand that UP change their signals, sidings, billing, etc., so their "dual" cars could run on UP's tracks? Yeah, that makes a lot of sense.
      • by ckaminski (82854)
        WTF, we have an internet standard, a DSL standard, a DOCSIS standard. It's about time this nation decides on one network technology for Cellphones. since the rest of the world chose GSM and is loving it, I think we should heed their leadship, for once.
        • by andymadigan (792996) <amadigan@@@gmail...com> on Tuesday June 16, 2009 @11:29PM (#28357325)
          Didn't you just break your own argument? I can't very well use my cable modem with my DSL connection, but they both get me on the internet. Likewise, my T-Mobile G1 won't work with Verizon any more than my CDMA Nokia would work with T-Mobile, but they both get me on the phone network.

          That's how the cell phone companies see it. The only "features" on the phone for them are things that cost you money. E.g. $1/MB mobile web browsing, or text messaging.

          This argument from U.S. Cellular is a non-starter, or at least I hope it is. What we really need is to unbundle the phone from the service entirely. Make the plans cheaper because the company isn't paying for the phone, and end these ridiculous contracts. Sure, you'll have to pay more up front, and the phone manufacturers will have to compete on price in a very large market.
          • by Brickwall (985910) on Wednesday June 17, 2009 @12:11AM (#28357565)
            I don't disagree with you in general, but when companies started offering a bonus to sales agents for each new customer signed up - a not uncommon sales incentive, some agents quickly found that offering some of that rebate to the customer increased their gross sales dramatically. I remember a sales guy I worked with at a telecom firm after I left the cellular company complaining "You guys raped and pillaged us on handset prices". I thought this was a bit rich coming from a guy who charged $70,000 for a 4-channel voice mail system (and no, that's not a typo!), but it was indicative of consumer attitudes. Once they found some people offering lower prices on handsets, they were convinced that we were overcharging, and a few cents extra a minute on their contract seemed to be inconsequential. Never underestimate the inability of the general public to perform basic arithmetic! If Total Cost of Ownership had been a common process, Apple should have owned the business market after it introduced the Mac (shorter training, fewer crashes, etc.). But people looked at Macs, saw a $3500 price, looked at a PC-AT, saw a $2500 price, and the rest, as Bill Gates might say, is history.
      • by socsoc (1116769)

        Trains and cars? Minimal changes need to be made to the cellular systems to support new models (that are similar to existing models) and monitor usage. This isn't 1993.

        You are talking more about forcing a CDMA network into allowing my 802.11a adapter on, because hell, they both provide data. I get your analogy now. As soon as UP starts allowing GM cars on their tracks and not Toyota, then you would make sense.

        It's less of a forcing GM onto UP, but if they'll allow GM on UP rails only if GM won't als

    • "I wasn't aware that the carriers were in the business of manufacturing..."

      Oh, yes they ARE. Or rather, they dictate what features will be available in the handsets they sell. in particular, they dictate what the handsets WON'T do. They keep their customers from having the ability to load ringtones, download information, upload music, etc. Anything the providers think they can charge for, they keep the handsets from being able to do via any connectivity outside of communication with the carrier.

      Carriers

    • by jonwil (467024) on Wednesday June 17, 2009 @01:07AM (#28357831)

      The carriers exert a LOT of influence over the manufacturers. Carrier says "give us that phone but remove the WiFi chip and disable the GPS please". Manufacturer has to say "yes" else carrier says "OK, then, we wont sell your phones"

      Only manufacturers at this point that MIGHT be able to say NO to carriers would be RIM (because the Blackberry is so important to business customers and unlike Windows Mobile there is no alternative supplier) and Apple (who has a phone so hot that AT&T cant afford not to keep carrying it)

      • Re: (Score:3, Informative)

        by Zerth (26112)

        That's pretty much true. For awhile, Verizon could lock down BB GPS because they only used AGPS, so they needed Verizon's supplemental location servers. Now that most BBs have full GPS, I don't have to pay Verizon $5/month just to use somebody else's mapping software. And having full bluetooth is awesome.

  • by Anonymous Coward on Tuesday June 16, 2009 @09:41PM (#28356527)

    Um... yeah.. carriers would never disable features on cellphones, now would they?

    • by Octorian (14086)

      Thank goodness I don't use Verizon, and will continue to avoid them like the plague.

      I actually want my Wi-Fi and GPS (usable by 3rd party software), damnit!

      • by afidel (530433)
        Buy a Blackberry then, we see no hampering of functionality on the Verizon Blackberries we own for people with poor AT&T reception. They are subsidized just like other phones too, they just have a little higher starting price than some of the non-smartphones (though the 8830 world is $50 online with 2 year contract).
        • by PitaBred (632671)
          You may not now, but two years ago when I bought my 8800 Verizon had the GPS locked so you had to use their service, and their data plans prevented you from tethering, at least until you paid almost 50% more than competing carriers.
        • by d3ac0n (715594)

          we see no hampering of functionality on the Verizon Blackberries we own

          Then you aren't looking very closely. Verizon cripples BOTH the wifi capabilities AND the GPS capabilities of the phone so that they ONLY work with Verizon apps.

          Go ahead, try and use Google Maps with a Verizon blackberry. Oh, Google maps works, but the location info is gleaned from the closest cell tower. NOT the GPS. So it can be as much as a MILE off.

          AT&T does not do this, and I don't think Sprint does either (although I'm not

        • Re: (Score:3, Informative)

          by digitalunity (19107)

          My HUGE issue with both Verizon and AT&T is that if you purchase a PDA phone such as a Blackberry, they require you to also subscribe to a special data plan at $20-$30 per month. I don't disagree that data access should cost more than voice, but both carriers already offer a so-called "unlimited" data plan for non-PDA phones at a lower cost. However, they both feel you can charge more just because it's a PDA, despite the fact that a Blackberry is no more capable of utilizing bandwidth than any other net

    • by gaspar ilom (859751) on Wednesday June 17, 2009 @02:52AM (#28358395)

      Here is a something regulators should consider:

      Do any service providers disable *bluetooth* on their handsets?

      Why? Surely, bluetooth capabilities don't cause an extra burden of technology they need to support, since bluetooth doesn't impact the provider's wireless network, right? (like, say, transferring a photo from your phone to your laptop?)

  • by MidnightBrewer (97195) on Tuesday June 16, 2009 @09:43PM (#28356559)

    It seems to me that in the absence of exclusivity agreements the carriers would have greater incentive to introduce new features because they wouldn't be allowed to dictate terms to handset manufacturers in order to maintain their current level of mediocre offerings.

    • by sodul (833177) on Tuesday June 16, 2009 @10:10PM (#28356783) Homepage

      I used to work for a big name smart phone manufacturer. The versions for Sprint/Verizon were crippled at the carrier's request, i.e.: disabling internet sharing to your laptop. The unlocked (GSM) versions of the phones had all the features, not because they were more expensive, just because there was nobody requiring to remove the features.

      One of the problems with Sprint and Verizon is that the radio has to be specifically designed for them which mean you can only use a phone that they sell directly. With GSM providers (AT&T, T-Mobile, and most of the world) you just need to put the SIM card in and it works (granted the local frequencies are supported by the phone).

      Normally the manufacturer has no interest to cripple it's own product, but when the carrier control what devices will work on their network you don't have any choice but to comply. It is pretty much the same situation as when you had to use the land phone from the One phone company and were not allowed to plug you own.

      • One of the problems with Sprint and Verizon is that the radio has to be specifically designed for them which mean you can only use a phone that they sell directly

        And the manufacturers are enabling this behaviour. If Sprint and Verizon didn't have your help we wouldn't be in this mess. Sometimes you have to say "NO".

        • by sodul (833177) on Tuesday June 16, 2009 @11:05PM (#28357167) Homepage

          Sometimes you have to say "NO".

          Oh sure, and it would work for a company in a strong position, like Apple. If the company is hurting like Motorola, or Palm then you really cannot afford to not be sold by them. There is much more manufacturer competition than carrier competition and the big 4 carriers use that. Apple has reversed the roles a bit by having a true *must have* device. Sprint and Verizon got bitten by their own strategy and see a mass exodus to AT&T (I think customer support is not neutral on this).

          Look at the last Treo model that was sold without carrier support. Sure you can use it with AT&T and TMobile but you have to pay the full price for it. I'm not even sure they've recouped development cost on this one.

          As a customer I would much rather get lower monthly bill and no 2 year lock-in than getting a subsidized phone. This is pretty much paying a high interest perpetual loan on a device that is not that expensive anyway.

          • It is possible to add features to a product that everyone purchasing it gets. What I suppose I meant was that manufacturers could be selling fully capable phones to Sprint and Verizon that also have the changes they need to access their network. And they could be selling the exact same phones to everyone else at the same time.

            In an imaginary world where all manufacturers respected the spirit of the standards this kind of chicanery wouldn't be happening.

        • by Anonymous Coward on Tuesday June 16, 2009 @11:47PM (#28357443)

          And the manufacturers are enabling this behaviour.

          Bullshit. Nokia said "No", and look what happened to them! The carriers said, "Fine, no thanks, we'll get our phones from someone else." And now Nokia has just a fraction of the US market because of it. Nokia realized that it was a mistake, and now even it is playing by the carriers' rules.

      • One of the problems with Sprint and Verizon is that the radio has to be specifically designed for them

        What about the radio needs to be carrier-specific? An EV-DO radio is an EV-DO radio.

        The big US carriers are guilty of crippling, but it's got nothing to do with the air interface or the hardware. In the CDMA world, the same exact hardware is, more often than not, sold outside the US without crippled software. In fact, sometimes they're even sold as such inside the US, by smaller carriers that can't affor

  • by Anonymous Coward on Tuesday June 16, 2009 @09:43PM (#28356561)

    The Senators in question are probably trolling for campaign contributions.

  • Here's a game.. (Score:4, Insightful)

    by synthesizerpatel (1210598) on Tuesday June 16, 2009 @09:44PM (#28356563)

    Name one innovative handset developed by carriers such as Sprint, AT&T, et all.

    Nokia, RIM, Apple and (previously) Motorola have developed all the 'innovative handsets'.

    What'd sprint give us?

    Rebranded, OEM, disposable turds

    • by drinkypoo (153816)

      Name one innovative handset developed by carriers such as Sprint, AT&T, et all.

      And by "promote" they mean "force handset manufacturers to agree to our terms lest we go to extensive measures to prevent their hardware which is designed to the standard which our hardware supports from working correctly." (Except, oddly enough, AT&T.)

      • by b96miata (620163)

        Except AT&T? Right, that'd be why the slingplayer mobile for iPhone is the only one that can't utilize the cellular network.

  • What a crock (Score:5, Informative)

    by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Tuesday June 16, 2009 @09:44PM (#28356567)

    On a technical level American carriers care only that the phones pass GCF. If they want to bring innovation into this, they are going to have to argue that somehow the business model itself is innovative, but I don't think that is what they are saying.

    What is important in exclusivity is that users don't have a choice of carriers if they want to buy a specific phone. If you want the iPhone, you're stuck with AT&T, for example. But that doesn't bring any innovation to the phones themselves.

    Unlocking the phones isn't any better, though, technologically speaking. With a choice of carriers, you end up with a lot of choice, but the phones on the market are still the same old dreck. The reason for this is because the innovation must happen at the phone maker level. To support this, operating system vendors need to also be innovative. And to make sure that innovative operating systems can run, advanced chips are necessary.

    But none of that involves the carriers. Carriers are merely the pipes: A necessary component, but a wholly replaceable part. From a technical innovation standpoint, these guys are the road system. Cars are what we consider innovative, roads are only considered when they suck. And frankly, American cellular carriers suck.

    • Re: (Score:3, Interesting)

      by R3d M3rcury (871886)

      [...] innovation must happen at the phone maker level. To support this, operating system vendors need to also be innovative. And to make sure that innovative operating systems can run, advanced chips are necessary.

      But none of that involves the carriers. Carriers are merely the pipes: A necessary component, but a wholly replaceable part.

      Not entirely true.

      Consider the iPhone, as an example. What did AT&T bring to the table, besides their network? Visual Voicemail. My friend has an unlocked iPhone on T-Mobile and he's switching to AT&T and getting the iPhone 3G S (his employer will pay for it). And the the most exciting thing for him is that he finally has Visual Voicemail.

      I'll agree that so far, I haven't seen anything really great. Sprint's turn-by-turn directions, maybe. Verizon's V CAST looks ridiculous. But to say that th

      • Re:What a crock (Score:4, Insightful)

        by maglor_83 (856254) on Tuesday June 16, 2009 @10:39PM (#28356989)

        And this is exactly what should be happening. The carrier can develop technologies such as these to differentiate themselves from their competition, instead of relying on phone manufacturers. There is no reason they couldn't have done this without the iPhone. Phone manufacturers would much rather add features such as these to their phones, instead of the current situation of having to remove features because the networks demand it.

    • by hedwards (940851)
      Largely yes, they do suck, but a large part of that has to do with the difficulty of changing networks. Nearly all the people I call are with AT&T, were I to switch carriers, I'd suddenly have to care about how many minutes I'm getting. And as hard as it is for me to believe, the reception seems to be worse than when Cingular was holding my account.

      Phones are similar, if you're locked into a portion of the market making a more specialized phone is much less likely to turn a profit. Whereas it might d
  • by laughingcoyote (762272) <barghesthowlNO@SPAMexcite.com> on Tuesday June 16, 2009 @09:45PM (#28356577) Journal

    "Without longer than a century copyright, I would have no incentive to develop anything useful." "Without being able to patent walking using both feet, I wouldn't have incentive to make anything useful." "Without being able to grant myself a monopoly on something, I would have no incentive to create anything useful." "Without the Shoot Anyone Using Anything But My Stuff Act, I would have no incentive to develop anything useful."

    I am getting quite tired of seeing that, and we should really quit listening. If you don't want to, then by all means, don't, and feel free to fade away. In the meantime, those who still have plenty of incentive to do so (by finding creative ways to make money off of it, out of simply enjoying it, out of their own need for a tool to do something or a wish to create something for their own enjoyment, what have you), will do so.

    I'm getting less and less tolerant of this temper tantrum. And that's really all it is-"I don't WANNA share!!!!! I thought of it FIRST!!!!" If the dinosaurs mean it, then by all means, their time has come and we should let them go. Good riddance to them, something better suited to modern times will take their place. On the other hand, they do tend to like paying themselves those large bonuses, so I would wager they'll start getting really creative in the absence of these artificial restrictions enabling them to be lazy and rest on their laurels.

    • by ckaminski (82854)
      Obama needs to crank up the trust-busting engine and undo the damage the Bush administration has allowed to happen with the mega-mergers. It wasn't just Bush (some happened under Clinton) but the amnesty granted to Microsoft after the anti-trust debacle was the start (IMHO), the Verizon/BellAtlantic/BellSouth megamergers... they need to be undone.

      And I've been a die-hard Verizon Wireless customer for 12 years (trialling the Sprint/Pre service, which sucks in my area).
  • by jayhawk88 (160512) <jayhawk88@gmail.com> on Tuesday June 16, 2009 @09:47PM (#28356583)

    Since when does Verizon or any other carrier have anything to do with the development of a phone? They just take whatever you can get from HTC/Motorola/Samsung, throw a logo on it, change the name to something stupid, and pick 5 random features to cripple for no apparent reason. As for promotion, while I guess that charging customers 200% more for the phone than it's actually worth unless they sign a 2 year contract (if you let them but it unlocked at all) is technically "promotion", I don't think that is really in the spirit of the true definition.

    What a bunch of tools.

    • by spire3661 (1038968) on Tuesday June 16, 2009 @09:57PM (#28356677) Journal

      This is like saying Microsoft has no say in hardware development. Its simply not true. Netbook development is pretty severely curtailed by Microsoft's netbook licensing arrangement. You arent going to build a device that has features your biggest customer frowns upon/outright bans.

      • by jayhawk88 (160512)

        You arent going to build a device that has features your biggest customer frowns upon/outright bans.

        Yet this is exactly what carriers do with phones, especially smartphones. Verizon, for example, disables built-in GPS on almost all the handsets they offer, to force you to pay for their custom GPS app. And plenty of carriers have/continue to disable stuff like Bluetooth tethering.

        • Yeah, AT&T has done the same thing. I got an SE Z750 from AT not only did the AT&T branded OS look like shit for the 5 minutes I used it (some crappy orange AT&T color scheme), but AT&T's firmware disables the included GPS. In this case I think it's because they want to sell higher-end phones to people who want GPS (I payed $10 for this phone after a $60 rebate). Anyway, a quit trip to DaVinci team and less than $15, and I had restored an unbranded firmware that enabled GPS functionality.

          It

          • Re: (Score:3, Insightful)

            by dbcad7 (771464)
            It's especially bad when you consider that the GPS signal is not even provided by the carrier.. It's not like your costing them money by using it. They want you to think that by using their custom GPS software with a monthly fee you are using GPS signals sent by them.. (although AGPS is a signal from them I suppose) .. In reality their navigation services should only be a one time charge for the software.. Worse ripoff than text message charges !
        • Re: (Score:2, Informative)

          by ksheff (2406)

          The prepaid vendors are even worse. Even the one that promises "No Evil". Evil must be being able to get your damn contacts off the friggin phone or IF the phone can take pictures, they can't be downloaded directly to a computer. The phone's manufacture offers software to do all of the above? That's evil too, so the phone is lobotomized so these evil tools won't work with the phone. Being able to move a SIM card from one phone to another that you bought from them is evil too.

      • by kelnos (564113)
        That's part of the problem. The carriers shouldn't be the phone manufacturers' customers. The people who end up using the phones should be.
  • by ickleberry (864871) <web@pineapple.vg> on Tuesday June 16, 2009 @09:54PM (#28356647) Homepage
    .. someone stood up to this nonsensical practice. For nearly 20 years we've had GSM openness in Europe and this sort of exclusive nonsense is making its way across the water in the form of the iPhone. For a while I have been thinking this is an attempt by the mobile phone operators to usher in a new wave of proprietary phones.

    Heavy integration with online services, firmware branding and exclusive deals are nothing but bad news for us. I havn't bought a SIM-locked phone since 2001 and I hope to never have to buy one again. The openness of GSM is a great thing but people take it for granted here.

    A lot of people buy locked phones because they are cheaper, but they shouldn't be cheaper. This was acceptable 10 years ago when not everybody had a phone but now there are too many phones. Producing more phones only generates more e-waste. There should be more countries like Belgium around where this shit with subsidising phones doesn't fly. At least then my collection of unlocked Nokias will be worth more than 20 cents

    Exclusive handset deals are nothing more than a way of making people put up with a more expensive / lower quality network they wouldn't normally put up with.
    • One of the major problems over is that fact that we're not all GSM on this side of the pond, and therefore are not all that open simply because the radio chips are different. AT&T and T-Mobile are GSM. Verizon, Alltel, and US Cellular are all CDMA (iirc), and Sprint had PCS and Nextel had something else before they merged. So it's not like I can take an unlocked GSM phone and switch to Verizon.

      Now my understanding that 4G will all pretty much be the same technology. But we don't even have 3G here ye

  • by immel (699491) on Tuesday June 16, 2009 @10:04PM (#28356729)
    From TFA:

    the introduction of the iPhone has spurred many iPhone substitutes such as the HTC Touch, Blackberry Storm, Google G1, and several Samsung and LG models.
    -AT&T

    In other words, exclusivity deals breed ripoffs. Yeah, that's one form of competition, but it doesn't really seem like "innovation" to me when the release of one product that everyone wants causes every manufacturer to try to make an exact copy with a different exclusivity deal. If everyone carried the iPhone, these companies would be trying to differentiate themselves by coming up with the next big thing, not making copies of the last big thing.

    wireless carriers would have less incentive to develop and promote innovative handsets.

    I'm not from this industry, but I don't believe wireless providers develop handsets. Handset manufacturers (e.g. LG, Samsung, Motorola, etc.) do.

  • by jonwil (467024) on Tuesday June 16, 2009 @10:10PM (#28356785)

    It should be deals (including the way spectrum auctions are carried out and regulated) that result in carriers *cough*Verizon*cough* getting a monopoly (or near monopoly) in certain areas just because they are the only carrier with coverage. (like the deals various carriers have made to get exclusives in subway systems, high-rises and other places where extra equipment is needed to give sufficient coverage)

  • by rwwyatt (963545) on Tuesday June 16, 2009 @10:21PM (#28356859)

    There is competition amongst the operators to develop the best handsets.. Without the iphone, would we have seen the Storm, Omnia or others?

    Each device has it's good and bad points. The fact is that Cellular companies are only in charge of part of their network at best, and the and the handset shouldn't really be the determining factor of choosing an Provider At&T readily admits their network wasn't optimal for the number of users with the Iphone and they are now trying to remedy that so each user has a better experience. Only time will give a better indication

    Exclusive handsets aren't necessarily a bad thing. It is just one factor that should be measured..

    There really isn't enough spectrum to have true competition. The cost of the RF spectrum and cell site acquisition are the major factors for an operator.

    • by mjwx (966435)

      Without the iphone, would we have seen the Storm, Omnia or others?

      Yes,

      The same with Android. You forget that most of these products were in development long before anyone at apple even uttered the word iphone. Most of the new Nokia/Samsung designs are based on what has been available in Japan and Korea for years now. In mobile communications the west is so far behind the east it isn't funny.

  • Interesting tag (Score:5, Interesting)

    by earlymon (1116185) on Tuesday June 16, 2009 @10:22PM (#28356865) Homepage Journal

    The suddenoutbreakofcommonsense is very interesting, but I'm not sure which way:

    1. The handset sweetheart deals are creating haves and have nots and should stop.

    2. Without the handset manufacturers having to bend over backwards to please the carriers, there might have been fewer, lower-cost, higher-quality handsets available.

    When the handset makers can tell the carriers to take it or leave it, and when those handsets have features dictated by the consumers instead of the carriers (abysmal here in the US), and market competition irrespective of long-term contracts hits the handset pricing, then not only would that tag truly apply, but so would whatabreathoffreshairfinally.

  • by Dracos (107777) on Tuesday June 16, 2009 @10:44PM (#28357031)

    Then what do Motorola, LG, Samsung, RIM, Apple, Palm, Sony/Ericcson, Nokia, and all the other companies who aren't carriers but whose logos still appear on the handsets/batteries/chargers, contribute to the cell phone market?

  • Free Market? (Score:5, Insightful)

    by Bob9113 (14996) on Tuesday June 16, 2009 @10:47PM (#28357055) Homepage

    But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'

    Why are wireless carriers involved in the development and promotion of innovative handsets? Isn't the free market supposed to motivate handset developers to develop and promote innovative handsets?

    Or do the wireless carriers not believe in the free market? I, for one, think the free market is a pretty good thing. You know, when it genuinely lets the purse-holder freely decide.

    Aren't these the same corporations who cry "free market" every time the government tries to regulate them?

    Perhaps, and I don't want to sound like a conspiracy theorist here, but just maybe; the wireless carriers actually are not objective supporters of the free market? Maybe what they want is not the free market, but laissez-faire capitalism. But then must we not ask, without a free market, how can laissez faire capitalism seek efficiency?

    • Re:Free Market? (Score:5, Insightful)

      by magamiako1 (1026318) on Tuesday June 16, 2009 @11:10PM (#28357191)
      Bob:

      On a technical note, this is all something being done mostly under the "free market". That is, it's completely up to the handset providers and the carriers to decide, freely, for themselves, if they want to have exclusivity deals. And it's completely up to the end users if they want to purchase them or not within the constraints of these deals.

      Beyond that, you get into very hairy situations.

      The key point though, is "Free Market" does not necessarily mean "Fair Market".

      I am in no way a supporter of a "free market" and I believe in heavy regulation and oversight from 3rd parties to ensure that we have a fair market for consumers. I'm just simply pointing out that you can't have "free market" and "fair market"--it just doesn't work.

      Some people would argue that a free market is a fair market in that anyone who wants to enter the market can do so by coming up with a better product or service and offering that. But unfortunately, under a completely free market that wouldn't happen--since the larger providers would enter agreements to force you out of the market.

      So at the end of the day, a free market system is not the best--and a regulated, fair market, ran by 3rd parties unrelated to the corporate interests of those involved is the best type of market.

      Of course....whether or not we have that today is a completely different debate. I'm simply pointing out the flaws in a "free market" system.
      • Re:Free Market? (Score:4, Interesting)

        by Bob9113 (14996) on Wednesday June 17, 2009 @12:32AM (#28357663) Homepage

        I am in no way a supporter of a "free market" and I believe in heavy regulation and oversight from 3rd parties to ensure that we have a fair market for consumers. I'm just simply pointing out that you can't have "free market" and "fair market"--it just doesn't work.

        I suspect that we agree, but that I am using the term in a different way.

        By "free market", I intend what Adam Smith intended: That the only decider of how dollars are spent, on a per-transaction basis, is the person who opens his or her purse. The silent hand.

        Is the purse-holder the only decider here? No, the contract participants are making part of the decision. That is antithetical to the principles of a "free market".

        What I am trying to do is to wrest back the term "free market" from the "laissez-faire" corporatists. "Free market" necessarily implies that the silent hand is unfettered. And as you note, that requires our government to punish anti-competitive behavior from time to time. But the interference need not be falsely accused of being a step toward socialism. Let us stand on principle, call it what it is, seize the high ground: We call upon the government to defend the free market from those who would inhibit the free action of the silent hand.

        Also, consider this: Is the government not already interfering in this case? Whose courts, banks, jails, and guns give those contracts their force? Why it is the government. Of course, even in the absence of the government enforcement of those contracts, collusion would exist. But should we not first seize the high ground by calling this what it is? It is collusion, restraint-of-trade, anti-trust violation, &c. Do not let them hide behind the noble term "free market" or "contract." Contracts are obligations to perform services for consideration -- not restraints of trade that destroy the foundational silent hand of the free market.

        Do not give an inch. Do not let those who depend on government interference to destroy the free market accuse you of favoring government interference that destroys the free market. We are those who believe in free competition, the free market, and the noble objectives of Adam Smith. They are the ones who wish to suckle at the government teat at the expense of market efficiency.

        And if you have a minute more, allow me to share some Adam Smith quotes:

        "The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commo-dities much above the natural price."

        "The price of monopoly is upon every occasion the highest which can be got."

        "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

        "To widen the market and to narrow the competition is always the interest of the dealers ... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

        All those quotes come from The Wealth of Nations.

        It is not the free market which is flawed, it is those who bear false witness about it, who destroy it. They are not us. We are the noble ones, you and I.

  • by damn_registrars (1103043) <damn.registrars@gmail.com> on Tuesday June 16, 2009 @10:59PM (#28357137) Homepage Journal
    Why on earth would any reasonable person expect a letter to the FCC to accomplish anything? I've tried to contact the FCC before and they just respond with the same canned response every time, telling me they cannot do anything. Might as well send a letter to Santa.
  • typical... (Score:4, Insightful)

    by whipple-spree (1293834) on Tuesday June 16, 2009 @11:23PM (#28357273)
    It seems, when given the option, that most big business will try to strangle the hand that feeds them. Cheap and reliable communication has been a keystone of American business, both domestic and foreign and here we are trying to catch up because business is too damn greedy/short-sighted for their own good. Their argument has nothing to do with innovation. It has everything to do with making money by not rolling out a more expansive, more reliable network. Who suffers? America does and it's not like they can just pick up their network and plop it down somewhere else.
  • by freedom_india (780002) on Tuesday June 16, 2009 @11:24PM (#28357283) Homepage Journal

    Instead of debating it in Senate (which exists solely for debates), why put it to Commerce Committee and why now?
    The answer can b e got here. [benton.org] It says a former tech exec has joi ned the committee.
    Which means he is trying to pre-empt any legislation by the Congress by putting it for consideration in the committee.
    Which effectively kills any legislation and also protects the interests of telecoms.
    Sneaky, disgusting and probably illegal.
    But then the senate has a record of disgust. So nothing new here.

  • by cyn1c77 (928549) on Tuesday June 16, 2009 @11:53PM (#28357471)

    But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.'

    You've got to hand it to Verizon for trying to confuse the congressmen with idiot logic. Are wireless carriers really developing innovative handsets? (or handsets at all)

    I am trying to think of more than 3 revolutionary handset lines besides the iPhones, the Blackberries and Nokias. I guess we can throw in Motorola for their early efforts and Sony Ericsson for cute design too. But where are the carriers?

    I think Verizon is really pissing their pants because they are thinking "in the absence of exclusivity agreements, wireless carriers will have a harder time locking down good phones with carrier-specific crappy software."

    In theory, non-exclusive phones would also reduce the number of overall phones brought to market and increase the quality since the developers would be competing against a larger market.

    Really, with non-exclusive handsets, both consumers and cell phone companies win. Large carriers will be the only ones losing... they will have to choose between market share, profit, and handset control. Of course, who are we kidding, nothing is going to change because they probably own half of the senate.

  • Ugh! (Score:3, Interesting)

    by yoshi_mon (172895) on Wednesday June 17, 2009 @02:47AM (#28358363)

    The whole cell phone market and carriers is overall pretty twisted and generally nasty. I kept myself willfully ignorant of most of it until recently. (I was happy in my ignorance too...sigh.) But my old Palm IIIc was not going to live forever so I thought it was time to finally update my knowledge on ultra-mobile computing.

    What I found out right away was that what I really wanted was a Nokia n810 but that it was not going to be a phone. Nor was it going to be online unless I was tethered or on Wifi. Not a huge deal given that those were the only real major downsides. And to make a long story short I did finally end up with a n810 which I love. My biggest complaint is that it is a little big & heavy but overall I'm very pleased.

    But at a point the new n810's were out of stock everywhere. I looked around for a used one but it was slow going so I thought I should look at a smartphone option vs my old setup, dumbphone & PDA. Both setups have their pros and cons and at some point I might go smartphone & tablet (I guess calling the Nokia devices PDAs felt passe.) but I digress.

    Finally getting to my point here when I looked at the options with smartphones I got pretty annoyed pretty quick. The fact that they mask the price of the devices with rebates and contract requirements is not good. The fact that not only are not all of the devices available on all the carriers but that each carrier can have their own set of rules on how the devices will function is annoying. Nevermind that even if you do have a device that can be used by multiple carriers most if not all of them won't turn it on unless it has their tag on it.

    None the less I eventually found a smartphone that I thought I could live with and set about trying to negotiate upgrading my old phone to that with my carrier. I felt like I had walked into the sleezyest of used car dealerships with 'Mark' written on my forehead in glowing ink. The idea that I did not want to upgrade to a plan that was 2 to 3 times what I was currently paying for the privilege of using this phone resulted in political levels of feigned outrage.

    In fact when I would be asked about what I was looking for and outline my needs the idea that I don't spend half my day texting seemed downright shocking to these reps. The fact that what I really wanted was a block on all texting on my account had them looking for wooden stakes. For kicks I went to an AT&T rep at one point and worked in the term 'jailbreaking' as often as I could into our conversation. To his credit he did what he could to sell me but developed an unhealthy tick in his left eye.

    To me the whole cell carrier/phone business needs a lot of work because from top to bottom it's a mess right now. Hopefully that a light is being shown on some of their nonsense will clean some of it up.

    • Re:Ugh! (Score:5, Informative)

      by Renraku (518261) on Wednesday June 17, 2009 @05:12AM (#28359115) Homepage

      I doubt most people working in cell phone stores have any idea why their phones are crippled.

      They're there to sell FEATURES, not limitations. They don't say that this phone can't be tethered to your computer, they sell you an unlimited data plan (phone only) and a tethering cable. Then they cackle with glee when they see that $.75/kilobit charge on your bill to the tune of $750.00. Should have read the contract, eh?

      At any rate, you COULD use bluetooth to upload pictures or download ringtones from your computer to your phone, but its been disabled in the firmware. Also, you COULD use that built-in GPS with Google Maps to see where you're at, but that's disabled too unless you subscribe to whatever GPS mapping software they're getting kickbacks from this year.

      The whole market is a perfect example of what would happen if 'trusted computing' ever took off. There would be no more of this "I didn't like the drivers so I installed hacked ones" or "Hey my nVidia card is a higher model that's been flashed to be a lower model, let me reflash that so it can be awesome again"

      • Re: (Score:3, Insightful)

        by drinkypoo (153816)

        At any rate, you COULD use bluetooth to upload pictures or download ringtones from your computer to your phone, but its been disabled in the firmware. Also, you COULD use that built-in GPS with Google Maps to see where you're at, but that's disabled too unless you subscribe to whatever GPS mapping software they're getting kickbacks from this year.

        Stop. Patronizing. Verizon.

        I have had fairly smart phones (bluetooth, data etc) from T-Mobile, Edge Wireless, and AT&T. Each one has had all features enabled. Furthermore, except for my RAZR V3i from Edge, each phone was free. Right now I have an HTC Fuze which was free. The GPS works great with Garmin (which I added) and even the AGPS functionality works great.

  • by JSBiff (87824) on Wednesday June 17, 2009 @11:21AM (#28361917) Journal

    In my opinion, a far bigger problem than handset exlcusivity deals, is the practice of charging customers the same price for cell phone service whether or not they are or are not getting a contract for a phone. Most of the carriers will let you buy phones outright, and even pay month-to-month for service. The problem is, I'm paying the same monthly-fee as if I were on the contract. So, it ends up being financially stupid to buy a phone outright, because you're just paying an extra $200-$300 (in most cases), but not paying less for service than the people whose phones are subsidized by the contracts.

    If I'm not getting my phone subsidized, I should be seeing about a $10/mo discount on my service. But, no.

    Get rid of that nonsense, and also give people the legal right to modify their phones to unlock them from the original network, and you've solved the 'exclusivity' problem in the simplest possible fashion.

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