Opinion: Does Apple iPhone Exclusivity deal with AT&T represent the real axis of evil?
May 11, 2010 - By Justin E. Gehrke
On this past Tuesday, the evening’s big tech news was the revelation by Engadget that Apple and AT&T were confirmed to have entered into a five year deal, beginning upon the iPhone’s initial release back in 2007. That would mean that AT&T’s honeymoon extends through 2010, all of 2011 and part of 2012. For some, spelling it out like that actually causes you mental, if not physical, pain. Was the confirmation really any more than a formality?
According to the original post on Engadget entitled Confirmed: Apple and AT&T signed five-year iPhone exclusivity deal — but is it still valid?, Apple documents defend the company against claims laid out in a 2007 Class Action Lawsuit filed in California. Specifically, the complainant alleges that AT&T and Apple entered monopolized the device and the carrier on which it would operate by forcing customers to enter into a two-year service contract. The sticking point of the suit is that both companies knew the exclusivity would extend three years beyond the expiration of the contract. Based on their mutually agreed upon contract, some would surmise that the companies were enticing customers to enter into a Catch-22 situation. You want the iPhone? Sign the contract for two years. You want to keep using the iPhone after two years? Either renew your contract to get a new model (like the iPhone 4G) or keep your current device and stay on contract-free. The question with which we’re left is if AT&T and Apple’s deal really represents the axis of evil about which former U.S. President George W. Bush warned us?
It should obvious to many an analytical thinker that there is a reason that Apple has stuck it out this long, in spite of the much publicized drama surrounding AT&T’s coverage, dropped calls, inadequate infrastructure, etc. All of these things have been covered and recovered by those who obviously have a disdain for the company or a financial interest in a competing carrier. In reality, none of the complaints laid out against AT&T can be confirmed to be anything more than creative interpretation of statistical data that likely applies to even the best of carriers. An external, independent source may conduct a study of AT&T customers and publish results saying that customers are unhappy with dropped calls. It may cite statistics showing consumers are unhappy with the sporadic 3G network outages. In the end, though, the results of any study can be interpreted to reflect the desired outcome.
The reality is that AT&T obviously agreed to a deal that Apple found financially beneficial. It could be a per unit cut on top of the actual cost of the device. Alternatively, it could be that Apple receives a 2-3% cut of the annual cost of the data plan. Whatever the case is, Apple found it in their best interest to enter into the deal. In truth, other carriers like Verizon or T-Mobile would have happily entered into the same deal. It isn’t realistic to think that representatives from any carrier would have stood up at the negotiating table and said, “No, we’re not going to enter into what could be construed as a monopolistic business practice.” The current complaints, lawsuits and other legal wrangling are simply a product of professional jealousy. In any event, neither AT&T nor Apple are likely to share the details with the public. Whether the public likes it or not, it’s simply how business works. Companies don’t divulge every detail of how they conduct operations. For that matter, there is no real, reasonable expectation that they should.
Is it possible that there exists a monopoly perpetuated by AT&T and Apple? Of course it is, but until someone proves in a court of law that either one or both companies are in violation of fair trade or other state or federal laws, things will remain as they are. Any defendant is considered innocent until proven guilty…even if that defendant is Apple or AT&T. Eventually, even if the legal actions are unsuccessful, Apple is likely to break free of its exclusivity bonds. When they do, all of these claims will magically disappear, unless of course Apple enters into another exclusivity agreement with another carrier. It isn’t probable, but, if it were to happen, one can be certain that the bad guys would suddenly become the good guys and vice-versa.
For consumers who are determined to have an iPhone now, they will either enter into a contract with AT&T or buy the device free of contract from the Apple Store. If they are on another SIM-enabled network, they can jailbreak their iPhone, invalidate the device’s warrant, and sign up for a data plan on their own carrier. If neither of these scenarios is an option, then the only available option is to find another device, like Google’s Nexus One or another Android-based smartphone that provides much of the same functionality of an iPhone. If and when exclusivity does end, perhaps then customers will finally have the option to freely and easily use the iPhone on their own network of choice.
At the end of the day, it all comes down to one thing. Consumers do have a choice. This just reaffirms what we learned as children. Life is about choices and the consequences of those choices. Smartphones and other gadgets are no different. We either choose to buy them or keep our money in our pockets. Either way, it just seems a lot easier to be content with what we have. In the end, we’re all left with the truth as expressed by the Rolling Stones, “You can’t always get what you want.” Listen to Mick. Hopefully, he’ll give us gadget closure, so we can move on to more important things…like fixing our Facebook privacy settings.
Update: As of the writing of this post, rumors have again resurfaced regarding a potential iPhone HD model that could be released through Verizon Wireless. See the CrunchGear post here.
