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IT AT&T Fires Back Against Antitrust Criticism
Michael Barkoviak - July 9, 2009 7:15 AM

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25 comment(s) - last by omnicronx.. on Jul 20 at 11:37 AM

AT&T has taken aim at politicians who are criticizing the company over several issues consumers have long cried foul about

AT&T has fired back against government criticism, led by Sen. Herb Kohl (D-Wis.), which says the current wireless industry in the United States is anti-competitive and bad for consumers.

"The popularity of the iPhone and its innovative features and applications has provoked an unprecedented competitive reaction," AT&T Senior VP of legislative affairs James Cicconi said in a letter to Kohl.

At the start of the week, Kohl pleaded with the Department of Justice (DoJ) to look into the legality of exclusive handset agreements that most phone owners have to deal with when purchasing new mobile phones.

"U.S. wireless prices are much lower than in any other major industrialized country," Cicconi also noted in his letter.

Apple and AT&T have been openly criticized by a number of consumers, especially those looking to use the popular iPhone on other networks, though both companies have largely ignored complaints. Even though AT&T has been successful luring some users away from Verizon Wireless, T-Mobile, and other carriers, there are still quite a few consumers who'd like the iPhone but refuse to switch to AT&T just to use it.

Research in Motion's BlackBerry smartphones normally are locked to a specific carrier, as are other popular phones, which hurts smaller carriers that are unable to use many of the most sought after phones.

“I am concerned that the concentrated nature of the cell phone marketplace could lead to future price increases for this and other cell phone services relied upon by millions of Americans,” Kohl noted in his letter on Monday.

Kohl hopes the Justice Department will more closely evaluate mergers between phone companies and to investigate if carriers are attempting to limit competition.

It's unsure how much legal pressure the DoJ can put against wireless carriers who have exclusive contracts to certain phones, but Sen. Kohl hopes, at the very least, that other lawmakers consider looking into the issue further.

Wireless operators in the U.S. are facing legal pressure on a number of topics, including the cost of SMS messaging and early termination fees. AT&T said early termination fees are a way for wireless companies to recoup money used to subsidize the cost of handsets for consumers.

Both AT&T and Verizon Wireless came forward and denied price-fixing the SMS market to gouge customers.

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Really?

By PCDesmond on 7/9/2009 9:53:00 AM , Rating: 1

This is just silly. There are tons of exclusive agreements out there.

What if I want to use OSX, but I don't want to buy a Mac to do so?
What if I want to play Halo 3, on my PS3?
What if I want NFL Sunday Ticket, on FIOS?

I can see both sides. I for one didn't get an iPhone until 6 months ago, because I didn't want to get AT&T. I gave in, and to tell you the truth it hasn't been any different from when I was on Verizon, except for the fact that I have the phone I wanted. I do think it hurts Apple, in the fact that they probably have tons of users on other carriers that would buy iPhones.

I really hope we don't escalate this into something the EU would do.

RE: Really?

By h0kiez on 7/9/2009 10:05:08 AM , Rating: 3

Your argument makes sense, but from a consumer's POV, yes...we would like OSX on PCs, Halo on the PS3 and Sunday Ticket on FIOS. Why not?

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RE: Really?

By MatthiasF on 7/9/2009 2:36:57 PM , Rating: 2

It's the owner's decision. If consumer's had their way, everything in the world would be free (and gone).

I'm sure there's a good reason behind most of the decisions listed, but they don't care to share (nor do they need to) the details.

For instance, on the OSX on PCs item, I highly doubt Apple wants to be bombarded by users calling their tech support or walking into their Apple stores trying to install OSX on non-Apple computers. Then there's the logistics of drivers and the tainting of it's operating system's reputation through a larger base of installations on hardware that might make it crash.

Then there's the catering to the elitists angle, but I'll leave that out. The elitists get fussy when people point out they've been suckered.

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RE: Really?

By sprockkets on 7/9/2009 5:37:58 PM , Rating: 2

quote:
For instance, on the OSX on PCs item, I highly doubt Apple wants to be bombarded by users calling their tech support or walking into their Apple stores trying to install OSX on non-Apple computers.

But they don't mind spending all that time getting Windows on their proprietary EFI laptops and getting them special drivers for them to work!

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RE: Really?

By BigPeen on 7/9/2009 12:37:47 PM , Rating: 2

Yes, all bundling is anti-competitive. That's the whole point of it. It's just a matter of drawing the line in sand where the all knowing gov't decides enough is enough.

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RE: Really?

By jkresh on 7/9/2009 1:42:10 PM , Rating: 1

I would agree with most of your argument (outside of Halo 3), OSX runs on x86 so running on a pc is not a hardware issue (outside of efi) but a choice by apple, NFL Sunday ticket could be on fios, Halo 3 would require a complete rewrite for the ps3. In terms of phones, as the iphone is gsm it should be able to run on AT&T or tmobile (and any other US gsm carrier), but requiring Apple to make a cdma version for Verizon/Sprint would be something different.

If they are going to look into this then some distinction should be made for locking based on choice (ie against carriers using same technology) and hardware (ie cdma vs gsm).

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RE: Really?

By MatthiasF on 7/9/09, Rating: 0

RE: Really?

By sprockkets on 7/9/2009 3:50:24 PM , Rating: 2

Since when did Verizon go GSM? You have no clue what you are talking about.

Verizon is going LTE which is going to be easier for them since it is based off of how CDMA works. They are not going to an inferior GSM tech just to go back to CDMA based tech.

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RE: Really?

By GeorgeOu on 7/10/2009 12:29:36 AM , Rating: 2

LTE is the latest iteration of GSM technology. UMB *WAS* the latest iteration of CDMA technology until the CDMA camp folded shop when the entire industry decided to go with LTE.

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RE: Really?

By MatthiasF on 7/10/2009 8:05:28 PM , Rating: 1

LTE is GSM technology.

Verizon plans on all new phones to have LTE so all long distance can run over the LTE while local calls are routed over the CDMA. This cuts their costs on two fronts.

It's a tactic Vodafone invented.

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RE: Really?

By omnicronx on 7/20/2009 11:37:30 AM , Rating: 1

They are still a CDMA network, as any phone that does not support LTE will fall back to CDMA. With WiMax and LTE, the CDMA vs GSM network is going to disappear as LTE can complement both GSM and CDMA networks.

And if you really want to dig down deep, LTE is a variation of UTMS whose roots are actually Wideband CDMA(in most deployments around the world) and not a GSM based technology. AT&T's GSM network for example is based on W-CDMA. In other words LTE is supported by GSM vendors, but to say it is GSM technology is pretty much false. Thankfully it looks like we can put the two words behind us.

In other words, Verizon has not switched, they will remain a CDMA network until the words of the GSM and CDMA no longer have a meaning.

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RE: Really?

By TMV192 on 7/9/2009 5:49:07 PM , Rating: 2

Your examples make no sense to me. First of all I have no problem with the early termination, because it does give cheaper phones, I wish they went back to offering 1-year contract though. My real problem is locked-phones. The contract is so you can get the otherwise expensive phone on the cheap, but after the contract is up, it is assumed that the phone is now purchased by me, so why am I still locked to one carrier.

A better example is a Cable company giving you a discount HDTV if you use there service for 2 years. But after its over, you can hook it up to FiOS; to use the TV you gotta keep your service with Cable forever.

I wouldn't mind it being locked if it was like a rent phone where they take it back, but that should also make the free and the plan cheaper.

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RE: Really?

By toyotabedzrock on 7/10/2009 1:07:38 AM , Rating: 2

Ur argument is correct except for the Halo 3 part. It can't run on PS3 because of differing technology. And since MS owns the studios that make Halo they are not obligated to reprogram there game. If it was a 3rd party studio with just an exclusivity contract then your argument would be valid.

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RE: Really?

By rdeegvainl on 7/10/2009 8:57:33 AM , Rating: 2

How about blue dragon on ps3?

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In related news....

By slashbinslashbash on 7/9/2009 8:00:46 AM , Rating: 1

Time Warner Cable is running radio ads calling AT&T a "bully" and saying that AT&T is "scared" of Time Warner's Price Lock Guarantee. There's even a website:

http://www.timewarnercable.com/texas/plgenvy/

These are some of the lamest radio ads I have ever heard, and it is amazing to me that one megacorp would resort to calling another a "bully" over business tactics. Maybe if Time Warner Cable were some upstart, but seriously? It's almost as hypocritical as the "save local radio" ads that Clear Channel stations constantly play.

RE: In related news....

By brshoemak on 7/9/2009 8:18:12 AM , Rating: 3

Sorry, but this quote from that link cracks me up.

quote:
AT&T’s DSL only running on 6 Mbps, compared to our blazing fast Turbo Speed of up to 10 Mbps or faster! With us, you can download music, movies and games at incredible speeds. Period. And here’s a FREE extra: our new PowerBoost feature allows Road Runner Turbo customers to experience a burst of speed while downloading from the Internet when network capacity is available. And AT&T? They’re left in the dust.

TURBO SPEED! Well if TWC decides to roll out bandwidth caps in their TOS it doesn't matter how "turbo" your speed is. It's like having a Viper vs. a Civic - sure you'll have fun flying down the highway like a bat out of hell; but when the Viper runs out of gas and the Civic comes puttering by and keeps on going you might think differently about which is better. btw, TWC and AT&T are both terrible and I'd still take the Viper (in real life). :)

Also, the major issue here isn't the iPhone specifically, it's more so about the phone exclusivity and carrier lock in that we hate but seem to accept in exchange for subsidized hardware costs. Some people are trying to change this, the iPhone is merely the catalyst and focal point of this movement due to its popularity.

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RE: In related news....

By Boze on 7/9/2009 11:53:33 AM , Rating: 2

That's not really the best analogy, since if you can afford a Viper you can afford the gas for it as well.

What's really ridiculous about that are the speeds. 10 megabits a second? Four years ago when I was living in Honolulu I was getting 15 mbps down / 6 up for $50 from... Time-Warner Cable! How is it that in four years speeds have gone down?? Progress means moving forward, not backwards!

If these companies were actually performing their stated mission: delivering access to customers, then we'd be seeing 100 mbps networks like Japan and Korea has. Instead, they're so focused on profits that they're letting their network slide.

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RE: In related news....

By MatthiasF on 7/9/2009 3:00:13 PM , Rating: 2

While I'm not surprised a small, relatively young town like Honolulu has high speed DSL like that, I'm not sure how much help it is since all the traffic to most websites would be traveling over Pacific cable lines.

Korea and Japan both have much higher population densities than the US and Europe.

http://en.wikipedia.org/wiki/List_of_countries_by_...

You'll find South Korea at number 21, Japan at 34 and the USA at 177.

Probably the fastest broadband network on the planet is in Hong Kong, which is number 4 on the list.

I'm sure if we forced the entire US population into California, we'd have some wicked broadband speeds (and the suntan lotion industry would take off too).

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AT&T Rise of the Empire

By Misty Dingos on 7/9/2009 7:57:34 AM , Rating: 5

I just got a battery sucking, app running, over heating bit of tech called the iPhone 3gS. I love it.

Yes I still hate Apple.
I will never buy a Mac.
I don’t like how they limit apps on the iPhone.
I am not a fan of iTunes. Some of this is likely more a learning curve on my part but it can’t figure out album art from Windows Media Player? You have got to be kidding me.
I feel bad that Steve Jobs had to get a new liver. No one likes to be sick. Sucks to be him. But he has a new nick-name. Two Liver Jobs! Which is funny.
And I like I said I love my iPhone.

But onto the subject at hand, service monopolies.

Is it right for cell phone providers to have exclusive rights to cell phone models? I don't think it is. Is it anti-competitive? Well that depends on how you want to define competition. The iPhone has spurred innovation and innovation is not competition (except between cell phone manufacturers). Innovation is good.

I think that if we did not allow manufacturers of cell phones to enter into chummy relationships with service providers we would indeed have greater competition. That competition would be good for the consumer.

Is the current market ideal? No. Is it defacto monopolies? No. Is it anti-competitive? No.

Is it bad for the consumer? Yes.

RE: AT&T Rise of the Empire

By rcc on 7/9/2009 2:31:12 PM , Rating: 2

I don't even know that it's really bad for the consumer. Agreed, in a perfect world, you could get any phone from any carrier. However, at the rate phones are evolving, changing, etc. there is a high cost for the manufacturers to "keep up with the Joneses". By contracting with a carrier, the manufacturer gets a partner to help pay for it. Without that, we might actually seen less new gadgets, features, etc.

So, overall, it may be better for the consumer as is.

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funny

By Moishe on 7/9/2009 10:28:14 AM , Rating: 5

quote:
"U.S. wireless prices are much lower than in any other major industrialized country," Cicconi also noted in his letter.

Well... damn. I thought they were kinda high. I guess I should take Cicconi's word for it... after all he has no bias or agenda.

Can a single cell phone be considered a monopoly?

By ltcommanderdata on 7/9/2009 7:40:18 AM , Rating: 2

While it is an inconvenience for some users, I have a difficult time seeing how exclusive contracts between for individual cell phones and carriers constitutes a monopoly and anti-trust violation. After-all, in the case of the iPhone it's not like it's the only smartphone available much less the only cell phone available, and it neither has majority market share/user base in either the smartphone or overall cell phone markets. The same for other phones that have exclusive arrangements like the Palm Pre. There are plenty of other cell phones to choose from. If exclusive cell phone arrangements are illegal, then things like exclusive clothing lines to one chain should also be illegal.

about prices

By sprockkets on 7/9/2009 3:36:47 PM , Rating: 2

Back when I had an ancient TDMA phone for Att, I could have paid their $20 plan, but instead went with Cingular. Then with Cingular, when I got my GSM phone, I had to move to the $30 plan.

Then, in 2006, I needed more minutes so I went to the $40 plan. But, now that I use my phone less, they no longer offer the $30 plan. How convenient. And now they no longer offer the unlimited data plan for $15.

I don't care if a phone is exclusive for 6 months, but this iphone 3 years and counting exclusivity is just bs.

Exclusive deals help the Hardware and Software makers

By honestIT on 7/9/2009 5:31:15 PM , Rating: 2

Create a standard package. If you compare this with haphazard Windows Mobile phones which are so varied among carriers you don't have a consistency about the phones and their services.

Apple was smart to stick with one carrier. They may want to develop exclusive variants of the iphone other carriers

envious

By Maxfli81 on 7/10/2009 9:11:57 AM , Rating: 2

I think other carriers are now envious of the lucrative contract between Apple and ATT. Verizon must be kicking themselves since they had a shot at it first but turned down Apple. Steve Jobs knows what he's doing and ATT trusted him. I'm a Verizon customer but if I wanted the iPhone so badly, I would switch. I've used both AT&T and Verizon, and I'm sorry but the services are so similar, there is no reason to hold out based on cries of service.