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story category FCC To Investigate Exclusive Handset Deals
Will determine whether they stifle consumer choice...
08:46AM Friday Jun 19 2009 by Karl Bode
tags: fcc · business · wireless · hardware · alternatives · consumers
Prompted more by small carrier constituents than consumers, Congress this week started pushing the FCC to investigate the anti-competitive ramifications of exclusive handset agreements, like AT&T/iPhone and Verizon/Blackberry Storm. Speaking at the Pike and Fisher Policy Summit yesterday, interim Chairman Michael J. Copps gave a speech (transcript from the FCC website) saying the FCC would in fact open an investigation. The agency "should determine whether some of these arrangements adversely restrict consumer choice or harm the development of innovative devices," says Copps, adding that "it should take appropriate action if it finds harm."

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footballdude
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Just like ten years ago

A return to the days of 'you build it but let everyone else use it'?
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PapaMidnight

join:2009-01-13
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Re: Just like ten years ago

You mean back when I could actually use the same Nokia phone wherever I went?
iansltx

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Re: Just like ten years ago

Nokia FTW!

Seriously, Sprint was the carrier with the cool phones. Verizon has meh phones that didn't work on other carriers but their coverage was okay. Everyone else was TDMA, so you could get a Nokia 5165 or a 3560 anywhere

nklb
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In some ways this PROMOTES competition

Seems to me if one carrier has what is recognized to be an awesome phone, the other carriers are going to be spending more R&D money to get the next best thing.

This sort of thing can promote competition, which is a GOOD thing.
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cdru
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Re: In some ways this PROMOTES competition

said by nklb See Profile :

Seems to me if one carrier has what is recognized to be an awesome phone, the other carriers are going to be spending more R&D money to get the next best thing.

This sort of thing can promote competition, which is a GOOD thing.
Which carrier manufacturers their own phone? What R&D are they spending to develop a phone again? The only money carriers spend on phones aside from purchasing them from the manufacturer would be in the marketing of them. They pay nothing directly for R&D of the phones.

Apple knows that they can package up whatever they want, slap iPhone on a label and sell millions of units. They can also in essence charge whatever they want for the phone. AT&T happily (well, maybe not happily) pays whatever Apple wants because they just pass the cost on to consumers. And consumers just eat it all up.

Yes the consumers have a choice in if they pay the premiums for the handsets. But how exactly is the iPhone being tied to AT&T a good thing for consumers?

swintec
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Re: In some ways this PROMOTES competition

said by cdru See Profile :

Which carrier manufacturers their own phone? What R&D are they spending to develop a phone again?
Sprint is the only operator that Sanyo offers there phones too...because of this, Sprint works with them closely to develop handsets that work to there own specs and what not. Most Sanyo owners (past and present) will agree, that Sanyo phones work great in regards to call quality and reliability, at least when it comes to Sprint.. I can vouch for this with my old Katana DLX.
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hottboiinnc
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Re: In some ways this PROMOTES competition

I agree with the Sanyo phones. They are awesome!

en102
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Re: In some ways this PROMOTES competition

Sanyo/Sprint is exclusive Almost like AT&T/Apple

swintec
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Re: In some ways this PROMOTES competition

said by en102 See Profile :

Sanyo/Sprint is exclusive Almost like AT&T/Apple
Correct...but the Sanyo/Sprint point was only brought up to show that the cell companies do spend time and money in R&D to develop phones the way THEY want, for there network.

Apple and AT&T didnt design the phoen together did they? I thought Apple made it and then shopped around?
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hottboiinnc
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Re: In some ways this PROMOTES competition

that is what i understood about the iPhone.

pnh102
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Wonderful

Now instead of being able to get a deal on a phone, we'll all have to pay full price for any phone and still not get a break on subscription fees.

And how on earth does the FCC intend to address the fact that some phones work with CDMA but not GSM and vice versa? Is it going to mandate that all phones support both systems?
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rcabor

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Re: Wonderful

said by pnh102 See Profile :

Now instead of being able to get a deal on a phone, we'll all have to pay full price for any phone and still not get a break on subscription fees.

And how on earth does the FCC intend to address the fact that some phones work with CDMA but not GSM and vice versa? Is it going to mandate that all phones support both systems?
Although I am not sure I agree with the government review of handset exclusivity, I dont see why carriers would not give deals on phones to get customers to sign up for their services.

Sr Tech
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I am not sticking up for ATT but I do not think the FCC understands that many carriers usually invest into the manufactures to help them bring out new phones but have stipulations written where only that carrier can sell the phone for a period of time before other carriers are allowed to sell the phone. If the manufactures were have to up the money themselves the turn around for releasing new handsets might take longer and possibly more expensive to the consumer as there is only so much a carrier will subsidize due to getting that money back over a period through the contract.

GOLFnSUN
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said by pnh102 See Profile :

Now instead of being able to get a deal on a phone, we'll all have to pay full price for any phone and still not get a break on subscription fees.

That is a very possible outcome if exclusive contracts are eliminated. If new phones are available to any mobile provider, why should the cell companies subsidize those phones and also spend millions on advertising them. After all, a new phone won't help a mobile provider get any new customers if every mobile provider can get the same phone.

So, that may be a good thing, right? No phone subsidies. But it will keep quite a few people from buying new phones. So the ones hurt by a policy of no exclusivity contracts may be the cell phone makers and the customers - not the mobile providers like AT&T, Verizon, Sprint, etc.
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rcabor

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Re: Wonderful

said by GOLFnSUN See Profile :

said by pnh102 See Profile :

Now instead of being able to get a deal on a phone, we'll all have to pay full price for any phone and still not get a break on subscription fees.

That is a very possible outcome if exclusive contracts are eliminated. If new phones are available to any mobile provider, why should the cell companies subsidize those phones and also spend millions on advertising them. After all, a new phone won't help a mobile provider get any new customers if every mobile provider can get the same phone.

So, that may be a good thing, right? No phone subsidies. But it will keep quite a few people from buying new phones. So the ones hurt by a policy of no exclusivity contracts may be the cell phone makers and the customers - not the mobile providers like AT&T, Verizon, Sprint, etc.
The phones could still be sold at different amounts for each carrier to get someone to signup for their service. Competition ensures that this will happen, even possibly lowering costs because you wont have for instance, the Apple/ATT markup partnership.

funchords
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This is good for consumers! One major reason I don't have an iPhone is that I think that AT&T's network and its policies stink.

said by pnh102 See Profile :

Now instead of being able to get a deal on a phone, we'll all have to pay full price for any phone and still not get a break on subscription fees.
Every dollar earned by the network provider and the handset provider comes from you, anyway. Think about that: There is no such thing as a subsidy. It's a fake.

said by pnh102 See Profile :

And how on earth does the FCC intend to address the fact that some phones work with CDMA but not GSM and vice versa? Is it going to mandate that all phones support both systems?
No, but the handset makers will be incentivised to support both networks within the model or family.
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pnh102
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Re: Wonderful

said by funchords See Profile :

Think about that: There is no such thing as a subsidy. It's a fake.
Except that it isn't. People abroad where cell phone contracts are not standard practice pay full retail price for the phone. You can already do the same here if you like. Some of us though would like the choice of a discount in exchange for a contract.
said by funchords See Profile :

No, but the handset makers will be incentivised to support both networks within the model or family.
Which will raise the price of phones.

We frequently have arguments over whether or not cell phones are luxuries, but regardless of our opinions on the issue, one fact that cannot be dismissed is that contract-reduced prices of a phones do put these more in reach of low income people who might not otherwise be able to afford a phone at all. Requiring people to pay full price for a phone each time will screw over people who would not be able to get what would have otherwise been a zero-cost phone.
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funchords
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Re: Wonderful

These companies do not print money, so all the money they have comes from us. There is no subsidy, just hocus pocus. They raise the price $200 so they can cut the price by $200 and make you feel like you've saved something.
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rcabor

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Re: Wonderful

said by funchords See Profile :

These companies do not print money, so all the money they have comes from us. There is no subsidy, just hocus pocus. They raise the price $200 so they can cut the price by $200 and make you feel like you've saved something.
Also they make alot money by locking you into a contract, and overcharging.(ie text message fees).Its more of a make you think your saving money. It does not cost apple $400 to make the iphone »news.top100.biz/shopping/Manufac···-at-173/ (granted thats a year old so cost have likely come down) therfore you can see your not saving as much as you think with a subsidized phone.

sivran
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said by pnh102 See Profile :

said by funchords See Profile :

Think about that: There is no such thing as a subsidy. It's a fake.
Except that it isn't. People abroad where cell phone contracts are not standard practice pay full retail price for the phone. You can already do the same here if you like. Some of us though would like the choice of a discount in exchange for a contract.
And you could still get that. Handset freedom does not mean carriers cannot offer free/cheap handsets in return for a contract, not in the least.
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the biggest issue is that cell phones never gained a standard in the US like say DOCSIS with cable modems. i can take my customer owned modem from Comcast to TWC or Cablevision and get it provisioned on an account thanks to there being standards.
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Maggs
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Re: Wonderful

You mean like a GSM phone where I can make calls almost anywhere in the world. I think the call it Global Standard for Mobile if I'm not mistaken. I wonder what standard means
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Elf Wizard
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Re: Wonderful

so there is one and a few of our carriers just decided to ignore it. did CDMA have benefits over GSM or was it that CDMA makers had the lower bid when those carriers went out for hardware.
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ITALIAN926

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This is..

Just ridiculous.

Flibbetigibbet

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GOLFnSUN See Profile

M'kay

You know, I hate AT&T as much as anybody, but this is not the government's job, and not within its constitutional powers. If two companies in different businesses want to make exclusive arrangements with each other, that's their business. If AT&T and Verizon were colluding on wireless services, that would be one thing, but this is not that. Apple isn't an ISP or a telco. If they choose to be tied to a crappy partner, that's their decision. People have the choice to buy the product or not, and that's really the end of it.

Just because you want something (and I'd love to have a T-Mobile iPhone) doesn't mean the government ought to give it to you.

TamaraB
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Re: M'kay

said by Flibbetigibbet :

... this is not the government's job, and not within its constitutional powers. ....
Correct! The power to regulate this sort of thing rests with the states, where the will of the people wields much more power than at the federal level.

The communications industry LOVES the FCC, because they can lobby and buy deregulation from one source, and control policy for the entire country. As you say, this is not in the Constitution, and therefor falls to the States.

Why shouldn't the people of NY or California be able to pass state laws forbidding tying hardware to network access, or bandwidth caps, or any "Non-Competitive" activity on the part of service providers? It's the right of states to do so, not the Fed, as you correctly stated.

The very entities you appear to be defending, would scream bloody murder if this "power" were returned to the states where it belongs. Big powerful industry LOVES big government! It's an unholy marriage at odds with the best interests of the people.

Bob
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Flibbetigibbet

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Re: M'kay

I don't think it's any business of the states, either, but you make a good point about big business and big government going hand in hand. Monopolist corporations like AT&T absolutely love being able to lobby the government to regulate their small-fry competition out of business.

r81984
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Waste of Money

Why are they wasting their time and money on this?
There is nothing wrong with exclusive deals. That is how companies fund the project for their phones. You take away the deals and you will not get phones like the iphone.

Also, Verizon is stupid for bribing the gov'ment to get this passed since unless they switch to GSM this will not matter for them.
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Re: Waste of Money

said by r81984 See Profile :

Why are they wasting their time and money on this?
Let me correct that for you, "they are wasting OUR money on this! Dont forget that every single on of these "investigations" is directly funding by you and I.
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Re: Waste of Money

said by wifi4milez See Profile :

said by r81984 See Profile :

Why are they wasting their time and money on this?
Let me correct that for you, "they are wasting OUR money on this! Dont forget that every single on of these "investigations" is directly funding by you and I.
I don't think anyone is adding staff to do this, so it's not going to cost you anything.

Furthermore, it's an inquiry. Feel free to file comments in favor or opposed.
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r81984
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Re: Waste of Money

said by funchords See Profile :

said by wifi4milez See Profile :

said by r81984 See Profile :

Why are they wasting their time and money on this?
Let me correct that for you, "they are wasting OUR money on this! Dont forget that every single on of these "investigations" is directly funding by you and I.
I don't think anyone is adding staff to do this, so it's not going to cost you anything.

Furthermore, it's an inquiry. Feel free to file comments in favor or opposed.
I know where I work if I would have to look into this I could not do other more important work.
So unless we pay these people to sit around to do nothing they are wasting our money by doing this.
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Re: Waste of Money

said by r81984 See Profile :

I know where I work if I would have to look into this I could not do other more important work.
So unless we pay these people to sit around to do nothing they are wasting our money by doing this.
You also have friday off or you are sitting around wasting time.
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said by funchords See Profile :

I don't think anyone is adding staff to do this, so it's not going to cost you anything.

Furthermore, it's an inquiry. Feel free to file comments in favor or opposed.
even if they're not adding staff, they're still paying the staff they do have that will investigate this from tax dollars from everyone here.
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wifi4milez
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Re: Waste of Money

said by dmolavi See Profile :

said by funchords See Profile :

I don't think anyone is adding staff to do this, so it's not going to cost you anything.

Furthermore, it's an inquiry. Feel free to file comments in favor or opposed.
even if they're not adding staff, they're still paying the staff they do have that will investigate this from tax dollars from everyone here.
Exactly.
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wifi4milez
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said by funchords See Profile :

said by wifi4milez See Profile :

said by r81984 See Profile :

Why are they wasting their time and money on this?
Let me correct that for you, "they are wasting OUR money on this! Dont forget that every single on of these "investigations" is directly funding by you and I.
I don't think anyone is adding staff to do this, so it's not going to cost you anything.

Furthermore, it's an inquiry. Feel free to file comments in favor or opposed.
It has nothing to do with adding staff, its about time wasted on this issue. So congress (who is getting itchy for August summer recess) spends some time talking about this, and how the FCC should investigate. Keep in mind that while they are talking about THIS, they cant talk about anything else. You see, the government has fairly strict policies on hours worked and vacation time. If this "investigation" ends up taking a long time, we (the tax payers) will be paying overtime. In addition, what about the meals ordered by those "working nights" to figure this whole thing out? The government already has way too many important things to do than worry about something like this. Lets not forget that IF all phones were required to be dual mode (GSM/CDMA) prices would go up dramatically. It sounds like a lose/lose to me.....
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veunad
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FreeMyPhone

Other folks are starting up on bashing exclusive deals as well.

Free Press Launches FreeMyPhone Campaign
»www.freepress.net/node/61547

Free My Phone
»www.freepress.net/FreeMyPhone

Matt
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What a crock

Man, I can't believe we're wasting money on this. Can't you see how much more expensive home phones are now that AT&T doesn't have the rights to exclusively sell you a home phone anymore? It is such a PITA to be able to buy an analog phone from ANY manufacturer and have it work with ANY US phone service provider. I really hope we don't take that same, obviously ignorant concept, and apply it to cellular phones. That would be disastrous.
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Re: What a crock

You forgot your sarcasm tag.

Hope everyone has fun paying full price for their phones -- $499 for an iPhone, $399 for a Blackberry. Be sure to send Matt a thank-you note, it will be his fault.

Matt
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Re: What a crock

said by jester121 See Profile :

You forgot your sarcasm tag.

Hope everyone has fun paying full price for their phones -- $499 for an iPhone, $399 for a Blackberry. Be sure to send Matt a thank-you note, it will be his fault.
I did forget my tag and my girlfriend tells me that everything is, in fact, my fault.
jester121

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Re: What a crock

said by Matt See Profile :

I did forget my tag and my girlfriend tells me that everything is, in fact, my fault.
WTF -- your girlfriend and my girlfriend must be the same person? You bastard!

Phylop
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said by jester121 See Profile :

You forgot your sarcasm tag.

Hope everyone has fun paying full price for their phones -- $499 for an iPhone, $399 for a Blackberry. Be sure to send Matt a thank-you note, it will be his fault.
Honestly, I think the "Full Price" of phones would go way down if they weren't priced with the intention of being subsidized.

These phones are expensive to make, but that cost is still a fraction of the "Full Price."

firephoto
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said by jester121 See Profile :

Hope everyone has fun paying full price for their phones -- $499 for an iPhone, $399 for a Blackberry. Be sure to send Matt a thank-you note, it will be his fault.
So you're going to pay full price and get locked into a contract for 2yrs. because the contract doen't affect the price of the phone...

Here's how it works. You pay full price on the phone and come and go as you want moving around to different carriers or you agree to be a customer for 2 years and get the phone for free or cheap. Now here's what happened next, we deregulated some more and verizon and att bought up all the small cariers they had sold of when things were regulated in the late 90's so in general we're left with 2 big players that cover the country and some smaller carriers still left. AT&T took over my area, they had to because verizon couldn't be the only provider and the deals from years ago when cellular one existed and was dismantled basically left them in control which left att in control with a small 'local' carrier wearing the costume. My phones have been identical to AT&T phones since they existed doing wireless except maybe I got a different color by default but all I needed was an unlocked GSM phone.

Now lets get to the iPhone, it comes out, GSM phone, sim card, data capable and purposely made to not work on other GSM carriers without modification. This is the problem unless you live outside the US then pretty much every GSM provider that wants the iPhone gets it.
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slckusr
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Finally

We need more interoperability between the wireless networks. Im wondering how moves like this would affect Open Network initiatives.
Also what effect would this have on contracts. currently i can bring my own handset and not generate a contract. ( carriers worried they might lose some subs if something like this passes?)

As it currently stands Some carriers will produce the same phones but release them with different specifications. in the future the ability to buy the non crippled version of a phone, and use it on the superior network pleases me.

+ for the consumer,
+1 for the manufacturer ( or are they afraid of this because some might actually have to put some quality behind their equipment).
+1 for the carrier ( i would be using a different provider if they hadnt crippled the phone i have.)

AlexNYC

join:2001-06-02
Edwards, CO


2 edits

Good!

I seem to be the minority when I say that I like this idea.

I have been buying my own cell phones for years and have been able to just swap the SIM card whenever I travel and use a local carrier with a local number to save $$$.
The amount of money I have saved that way has paid for the phone's price tag many times over. For example, you know about the big deal over the iPhone tethering, well I have been using tethering on occasions when I travel and there isn't Wi-Fi available for years ON A $15 phone data plan and have yet to hear any complaints from my carrier. Granted I try to keep the usage to a minimum, just check emails and a few sites so no torrents or streaming media.
I buy my own phone so I'm not stuck with a device with crippled software and can use all features to save even more money. For example I use VOIP for international calls (even over Wi-Fi), Garmin XT GPS app. that does not require any cell or data service or subscription fee, etc.
My handset is also superior to ANYTHING my carrier has to offer. 5mp Camera that does video, Wi-Fi, real GPS, MMS and millions of free apps available for the Symbian platform.
I think most people don't know what they are missing, and that's why they don't mind what their carriers are giving them.
Long Live Free Choice!
Skippy25

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Hazelwood, MO

Re: Good!

Stop it!! You are speaking too much logic and making way to much sense based on real life experience.

That will not be tolerated here by the stock jockeys, their interns, and the cookie cutter script kiddies.

In addition, what many of you people miss is that exclusive agreements, ETF's, and contracts are a way to restrict competition in a market that actually has the ability to have multiple carriers compete. These actions raise prices to everyone involved. But ultimately this only affects consumers because no matter who charges what, it is the consumer that subsidizes all the markup in the end.

If carriers HAD to truly compete, then prices across the board would be less and/or services would be better and more abundant.

I personally do not believe exclusive deals should be allowed in any industry period. All products / services should be available to all those that have the ability and desire to pay the asking price. Anything else is someone trying to prevent competition and "fix" the price.
sonicmerlin

join:2009-05-24
Cleveland, OH


2 edits

Ugh

The stupidity on this forum is mind-boggling. People don't seem to understand the economics and basic government rules involved in exclusive contracts and "subsidies".

Look, you pay for the entire price of the phone *over the length of your contract*. The "subsidy" you think you're getting is simply distributed over each monthly bill. AT&T and Apple don't "bite the bullet" and offer to take a loss so you can get your pretty little iPhone.

The reality of the situation is that you end paying far more for your phone than you would if exclusive contracts were banned. Without these exclusivity agreements phone manufacturers would be forced to engage in price wars with their competition to sell their products to as many consumers as possible. Right now they sell their products to one carrier, and as a result there is no downward pressure whatsoever on the "unsubsidized" price of the phone.

Also think about those basic data and voice plans. You pay the full price of the plan whether you purchase a "subsidized" iPhone or not. That means you're paying for the supposed subsidization of these smartphones *even if you bring your own phone*!!! Without exclusivity agreements voice and data plans would experience downward trends (unless the wireless carriers collude to keep prices up, which is entirely possible).

Now as for government's role, you don't understand the Constitution grants the government the *duty* to protect the consumer's right to *choice*. In other words, the choice to buy a phone and use it on any network that's available. With exclusivity arrangements in place, the phone is not really *yours* since you don't even have the right to use it on the network of your choice. It's highly analogous to the evils of DRM.

Additionally, the Constitution *does not grant corporations rights*. A corporation is a made-up identity. They're not treated like individuals. That's why a group of executives can drive a giant company worth hundreds of billions into the ground, jeopardizing the state of an entire nation's economy, and walk away with their multi-million dollar salaries and bonuses guilt and liability free.

Corporations' "rights" are simply derived through laws enacted by Congress. Essentially any legislation that is anti-consumer is technically unconstitutional, but let's not get into that.

Flibbetigibbet

@bellsouth.net

Re: Ugh

"Now as for government's role, you don't understand the Constitution grants the government the *duty* to protect the consumer's right to *choice*. In other words, the choice to buy a phone and use it on any network that's available. With exclusivity arrangements in place, the phone is not really *yours* since you don't even have the right to use it on the network of your choice. It's highly analogous to the evils of DRM."

Please point out, oh brilliant constitutional scholar, just which article and/or clause "grants" this mythical power to the government.

This ought to be interesting.

mikes60
Stop Socialism Now
Premium
join:2001-07-31
Boynton Beach, FL

My Avatar says It All

Just wait. It has just begun.
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No good deed goes unpunished.
WhatNow
Premium
join:2009-05-06
Charlotte, NC

Let the Government do it

This crowd wants the government to stay out of everything until they want something then they want the government to fix it the way they want it.
If it has value for you pay for it if not then go elsewhere. If the iPhone had been a failure no one would care if AT&T was the only carrier. Verizon told them to get lost. Why should customers on the Verizon network get the iPhone. AT&T gambled and won now everybody wants to punish them for not saying no. Why should anybody take chance if the profits are going to be divided equally.
Forums » FCC To Investigate Exclusive Handset Deals


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