Irrational Thinking: Exclusive Handset Deals Are Good for Consumers, Good for Competition, Says AT&T

Sometimes you wonder about drug testing people who come up with amazing lapses of logic like this:

Paul Roth from AT&T said in sworn congressional testimony that removing exclusive deals “would serve only to harm consumers.”  He also claimed “devices would devolve into the lowest common technical denominator.”

The issue?  Exclusive deals for cell phones.  AT&T exclusively provides the iPhone in the United States.  Other carriers, usually AT&T or Verizon, have exclusive deals to sell the latest and greatest equipment on their networks only, limiting consumers who want those phones to the carrier that sells it.

Unfortunately, since not every carrier has the best signal coverage in every part of the country, a consumer that wants an iPhone, for example, would be throwing money away buying one only to learn AT&T has lousy or non-existent service in his neighborhood.  If Verizon offered rock solid service, you’d be stuck because the iPhone will not work on Verizon’s network.

Roth’s claim is ridiculous on its face, because most consumers will not buy a phone that will not work where they want to use it.  Many others on another carrier will not switch providers just to obtain a phone, even if it is an iPhone.  AT&T may not do as well in a completely open marketplace where any phone is available from any carrier, because they extract top dollar pricing from iPhone users, who are stuck with a monthly cell phone bill running $70 plus.

Free My Phone! Pro-Consumer Organization Launches Effort to End Mobile Phone Exclusivity, Enhance Customer Choice

Free Press, a national consumer advocacy group, has launched Free My Phone!, an effort to impress regulators with fed-up consumers tired of limited mobile phone freedom, exclusivity deals which lock customers into contracts with providers they’d rather not do business with, and allows the industry to cripple/limit phone features to maximize potential profits.

Just a year or so ago, wireless carriers promised Washington they would ease up on their closed network business practices, which keep customer-owned phones from moving from one mobile phone company to another, turned off phone features built-in to the phone, and stopped disabling certain other features to limit usage or extract higher revenues from “add on” services.

Cell phone companies know their business, because in the end it was a whole lot of talk, and not much action.

Now Free Press is working to organize consumers to tell the FCC and Congress that enough is enough.

Tell Washington: Free My Phone!

New “smart” phones have set the stage for the future of a mobile Internet. But companies like AT&T and Verizon are getting in the way by shackling open and innovative devices to closed networks. The FCC and Congress must step in to protect consumers and foster innovation. We demand:

1. The freedom to choose any phone on any network.
2. The freedom to choose among many carriers in a competitive, low-cost marketplace.
3. The freedom to access any Web content, applications or services we want through our phones.

Free Press calls out the industry:

New mobile phones have been called “the Internet in your pocket,” but they’re not. Through exclusive deals for phones like the iPhone and BlackBerry Storm, wireless companies have curtailed innovation, crippled applications, and stuck users with the bill. We demand the freedom to use our phones as we choose — on wireless networks that offer true high-speed Internet and real consumer choice.

In addition to signing an online petition, feel free to contact your representatives in Congress directly and let them know that practices like AT&T’s iPhone agreement guarantees high prices and bad service for consumers.

Apple’s Embarrassing Uncle Bell AT&T – Here’s $30 in iTunes Credit to Help You Forget

Stop the Cap! has peripherally followed the misadventures of Apple’s iPhone 3GS release by AT&T, which has managed to alienate customers and overcharge them for service at the same time.  Perhaps a few AT&T customers enjoy the sadomasochism inflicted on them by AT&T Wireless, but most wish they could feel good about two year contracts with the carrier they love to hate.

Once again, the early adopter who waited in line all night or who put themselves on a waiting list months before the latest iPhone release, were stuck cooling their heels for up to 48 hours after bringing their new phone home.  New AT&T customers found the inconvenient truth when they ran iTunes, displaying a warning that they would have to wait up to 48 hours before activation would be complete.  Perhaps AT&T was thinking, ‘you waited this long, what’s another two days for us to get our act together!’

Apple paid the public relations price with $30 in iTunes Store credit being e-mailed to affected customers:

Dear Apple Customer,

Thank you for your recent Apple Store order. We appreciate your patience and apologize for the inconvenience caused by the delay in your iPhone activation.

We are still resolving the issue that was encountered while activating your iPhone with AT&T. Unfortunately, due to system issues and continued high activation volumes, this could take us up to an additional 48 hours to complete.

On Monday, you’ll receive an email from Apple with an iTunes Store credit in the amount of $30. We hope you will enjoy this gift and accept our sincere apologies for the inconvenience this delay has caused.

Thank you for choosing Apple.

Sincerely,
Apple Online Store Team