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A Heavy Hand on Our Cell Phones
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07/17/09 07:09 AM ET
Since recently joining the ranks of iPhone users, I've been increasingly fascinated with the ongoing phone wars in this country.
Last week, The Washington Post reported what has the makings to be a major firefight in the phone wars over the coming months. A recent fiery letter by Sen. Herb Kohl (D-Wis.) to the Federal Communications Commission (FCC) reflects the frustrations of rural communities across the country and the inability of some customers to access smartphones such as Apple’s popular iPhone. The reason is not because Joe Six-Pack lives in some sleepy hollow where he barely gets an AM station. Rather, AT&T has a contract with Apple that won’t permit other carriers to offer the iPhone in those pockets of the country.
Recognizing that AT&T and Verizon combined have a stranglehold on 60 percent of the domestic cell phone market, the powerful Chairman Kohl wants the FCC to investigate what sort of impact that market dominance is having on other carriers and their customers. As a result of these “exclusive” handset contracts, consumers in rural areas are put at a technological disadvantage compared to urban consumers, since very often they cannot acquire the advanced smartphones increasingly in demand and necessary for today’s commerce.
Because of the restrictive arrangement between Apple and AT&T, many consumers are faced with a Hobson’s Choice: You can have the latest technology if you’d like, but if so, you are forced to pay onerous fees, comply with burdensome terms of service and be relegated to using what some deem an unsatisfactory wireless network. In fact, in many parts of the country, AT&T provides rural customers no service at all.
The bottom line is that a consumer who does not want AT&T but does want an iPhone is left no choice at all. In a country born with a thirst for freedom, a handcuffed industry is unacceptable.
Now, let me be clear: I don’t have a gripe with AT&T. They obviously do a lot of things right, because they have millions of paying customers. My question is: How much of that is by consumer choice, and how much is because the consumer is forced to carry their service in order to get the phone he or she wants?
Some within the company spin the exclusive handset arrangement with frightening Orwellian zeal, claiming the current arrangement that limits consumer choice in fact provides consumers more options. As the argument goes, exclusive arrangements allow wireless carriers to share the cost of research and development with handset manufacturers, and without these arrangements innovation would be stifled.
Consumers have a right to be angry at such statements. The juggernauts of the wireless market would like Congress and the public to believe that less is more, that anti-competitive and borderline monopolistic relationships foster innovation. Tell that to the fella in rural Montana.
Sen. Kohl has it right. When businesses compete, the consumer wins. If every smartphone were available through all networks, there would be more smartphones sold. An enlarged pool of competition would surely drop handset prices while increasing available features. Just as surely, the public will benefit if carriers competed on a level playing field where price and service were the determinants of success.
Visit www.armstrongwilliams.com .
Last week, The Washington Post reported what has the makings to be a major firefight in the phone wars over the coming months. A recent fiery letter by Sen. Herb Kohl (D-Wis.) to the Federal Communications Commission (FCC) reflects the frustrations of rural communities across the country and the inability of some customers to access smartphones such as Apple’s popular iPhone. The reason is not because Joe Six-Pack lives in some sleepy hollow where he barely gets an AM station. Rather, AT&T has a contract with Apple that won’t permit other carriers to offer the iPhone in those pockets of the country.
Recognizing that AT&T and Verizon combined have a stranglehold on 60 percent of the domestic cell phone market, the powerful Chairman Kohl wants the FCC to investigate what sort of impact that market dominance is having on other carriers and their customers. As a result of these “exclusive” handset contracts, consumers in rural areas are put at a technological disadvantage compared to urban consumers, since very often they cannot acquire the advanced smartphones increasingly in demand and necessary for today’s commerce.
Because of the restrictive arrangement between Apple and AT&T, many consumers are faced with a Hobson’s Choice: You can have the latest technology if you’d like, but if so, you are forced to pay onerous fees, comply with burdensome terms of service and be relegated to using what some deem an unsatisfactory wireless network. In fact, in many parts of the country, AT&T provides rural customers no service at all.
The bottom line is that a consumer who does not want AT&T but does want an iPhone is left no choice at all. In a country born with a thirst for freedom, a handcuffed industry is unacceptable.
Now, let me be clear: I don’t have a gripe with AT&T. They obviously do a lot of things right, because they have millions of paying customers. My question is: How much of that is by consumer choice, and how much is because the consumer is forced to carry their service in order to get the phone he or she wants?
Some within the company spin the exclusive handset arrangement with frightening Orwellian zeal, claiming the current arrangement that limits consumer choice in fact provides consumers more options. As the argument goes, exclusive arrangements allow wireless carriers to share the cost of research and development with handset manufacturers, and without these arrangements innovation would be stifled.
Consumers have a right to be angry at such statements. The juggernauts of the wireless market would like Congress and the public to believe that less is more, that anti-competitive and borderline monopolistic relationships foster innovation. Tell that to the fella in rural Montana.
Sen. Kohl has it right. When businesses compete, the consumer wins. If every smartphone were available through all networks, there would be more smartphones sold. An enlarged pool of competition would surely drop handset prices while increasing available features. Just as surely, the public will benefit if carriers competed on a level playing field where price and service were the determinants of success.
Visit www.armstrongwilliams.com
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