An FCC Investigation: Just What Apple Wants?
Monday, June 22, 2009 at 10:05AM 
Last week, news broke that Senator John Kerry and three colleagues have requested the FCC to look into the arrangements behind cell phone exclusives for certain carriers. Of course the highest profile exclusive right now is the iPhone being locked into AT&T in the United States.
Apple has an unknown, but assumed 2-5 years of exclusivity with AT&T (based upon a rumored 3-5 year initial agreement that may have been renewed.) At WWDC, some people made note of the fact that Apple remained largely silent, or at least said nothing positive about AT&T in their keynote. Could it be that things are not all sunshine and puppy dogs between the two companies?
A contract is a contract though, and without significant buyouts, or legal proceedings, Apple might be stuck with AT&T for some time. Unless of course, such arrangements were deemed illegal. If the FCC were to rule (and there's some debate about whether the FCC even has authority in this case) that these deals were bad for consumers, then Apple would be free.
It's hard to imagine Apple testifying in AT&T's defense if things get that far. Stay tuned...
Reader Comments (3)
If they really want to investigate something how about the way the telecoms cripple phones they sell to force the user to purchase overpriced services from them instead of getting the full benefit of the built-in features of the phone.
Disclaimer: I would love to have an iPhone, but don't because the AT&T coverage sucks in my area. However, I harbor no delusions that Verizon would be any better in the long run and possibly worse, re: phone crippling.
As usual Kerry has his head up his....
Dopey investigation and a waste of taxpayer money. Until Verizon and AT&T start using the same 4G network protocol in 2 or 3 years, it is completely pointless.
I see no proof that Apple has a disagreement with AT&T concerning its exclusive deal. Apple needed an ISP and mobile service provider when the iPhone was introduced. Verizon said that its management had turned Apple down. This may because Apple demanded a game changing business plan for the iPhone. Apple required its mobile service provider to upgrade its service -- first to EDGE, then 3G, and HSDPA. Unfortunately, AT&T has not been able to cover the US well yet, but it will.
Apple turned out to be more innovative than many mobile service providers wanted. Telephone service in America had long been a monopoly. Breaking up Ma Bell merely created local monopolies. The US had been balkanized to prevent competition between mobile service providers. The problem is that the hardware is different between AT&T and Verizon. GSM, which AT&T uses, is the technology used by most of the world, so striking a deal with AT&T was best for Apple. It will be another two to three years before there will be a convergence in technologies which will allow the iPhone to be used with all companies. Apple's iPhone may have hurried up this convergence.
Those local phone monopolies are now ending as all companies are spreading into each others local service areas. The success of the iPhone has forced the mobile ISP's to adopt new ways. Increasingly mobile phones are trying to catch up with Apple and not succeeding.
No one knows what the FCC will demand. Apple's exclusive deal with AT&T is not unusual for the industry. It would be best if the FCC does nothing, because the technology is moving toward convergence. The iPhone in two to three years will be able to use all frequencies and encoding. Apple's exclusive deal with AT&T will be history, so Apple can allow the iPhone to be activated on any mobile service provider. Apple is likely to want that, because all they need do is sell their hardware.