The iPhone (s aapl) has sure brought a lot of whiners out of the woodwork. Today Sen. John Kerry joined them by publishing a blog post on the Save The Internet blog arguing against exclusivity of certain phones on some wireless networks. Yesterday, Kerry sent a letter to the FCC in preparation for hearings scheduled tomorrow that called for investigation into exclusivity arrangements such as AT&T’s (s t) lock on the iPhone or Sprint’s (s s) six-month exclusive on the Pre, asking if those arrangements hurt consumers.
As an example, the letter asks if such deals result in a consumer not being able to use the full features on a device (for example, if a carrier prohibits tethering). Other concerns are whether these deals are becoming more common, and whether it stifles innovation in the handset market.
In March, I wrote about exclusivity arrangements, and questioned whether the government should get involved. I think that most consumers still have access to a variety of competitive devices on other networks. Plus, in most areas they can choose whatever cell phone provider they want and still have an array of devices to choose from. If you want an iPhone, you can get one in most places in the U.S. by signing up for AT&T’s network and forking over a few hundred dollars. These crusaders are confusing a lot of issues with complaints about exclusivity, associating it with higher prices for devices and net neutrality on wireless networks. From a Free Press release:
“Consumers are outraged by both the high prices of new smartphones and the blocking of access to innovative features,” said Timothy Karr, campaign director of Free Press. “Senator Kerry is leading the fight on Capitol Hill to make walled wireless gardens a thing of the past. It’s time we opened up networks so we can access the wireless revolution at prices all Americans can afford.”
Say what? So far, there’s no guarantee that net neutrality will ever happen on wireless networks — mostly because wireless networks use spectrum that carriers purchased from the federal government, which in most cases (part of the 700 MHz block is an exception) has no open access regulations tied to it. To change the rules now alters the contract with carriers, and that’s a nasty precedent to set. If we want neutral wireless networks, building out white spaces or allocating more spectrum for other types of wireless broadband is the way to do it.
As for the high prices for these devices, I’m not sure what the beef is here. The iPhone is expensive because it’s a mini-computer, and because it’s a desirable object, Apple can charge a premium for it. My MacBook costs more than a Dell Inspiron, and both cost more than a cell phone. Thanks in part to its exclusivity, or at least the ability to lock the iPhone to its network, AT&T actually makes the iPhone cheaper for consumers by subsidizing it. So I think iPhone envy is causing a lot of people to lose their ability to think clearly about wireless broadband. That’s unfortunate, because it could be the method of access for rural Americans in the years to come.