iPhone To Be Offered From Multiple Carriers, eh
from the in-God-Phone-We-Anti-Trust dept
Given all the talk in DC lately about anti-competitive exclusive cellphone distribution arrangements, it's very interesting to see a rumor broken by the Globe and Mail about the iPhone in Canada. According to The Globe, Rogers will soon lose its iPhone exclusive as both TELUS and Bell Mobility add the iconic device to their Christmas line-up. Bell and TELUS are migrating away from the CDMA technology they have used up to 3G, towards the more globally compatible GSM evolutions. To minimize costs, the two carriers are building a single shared-infrastructure network, on which they will both sell services. While Rogers, the long-time GSM user, will have the wider network footprint and offer iPhones fall-back to their 2G data networks when out of 3G coverage, that advantage is countered by TELUS and Bell offering 3.5G HSPA+ speeds to Rogers' 3G. Under current coverage conditions, iPhone urbanites might prefer the new entrants, while sub-urbanites may prefer Rogers.What is most interesting here is the break from Apple's conventional one-country-one-carrier strategy, which has attracted the attention of more than a few countries' regulators. The Canadian case will be the first market where competing carriers offer the iPhone, without a regulator forcing Apple's hand. Perhaps Germany will follow Canada: there are rumors that T-Mobile will lose their exclusive deal with Apple by year's end, and British/Spanish carrier O2 will enter the market with preferable iPhone plans. In the USA, most of the hot water Apple is swimming in is because the FTC isn't happy with the iPhone app approval process, which nixed the Google voice app. But while the FTC branch is focused on the App Store, some Congressional Reps are voicing their displeasure at the exclusive iPhone deal with AT&T. Governments around the world aren't sure what to make of exclusive phone distribution deals - which, strangely, never seemed to raise an eyebrow until the iPhone. In France, the Orange-Apple 5-yr exclusive was smacked down by the feds who argued that an exclusive arrangement would add "a new element of rigidity in the sector which is already suffering from a lack of competition." But here's where I'm not so clear.
I agree that exclusives, when examined in isolation, are anti-competitive. But overall, I'm not clear on how a 2007 new entrant (Apple), with a disruptive device that lit a fire under the incumbent vendors, could be perceived as "anti-competitive" in terms of net results. In fact, the exclusivity has undeniably forced the competing carriers to work their butts off to come up with a comparable device, seeking it from the likes of Nokia, Samsung (which are scrambling to respond, though they'd never admit it), or newer players like HTC or INQ. The exclusive deals seem to be spurring competition. In contrast, in a world where every telco carries the iPhone, the telcos actually can worry less about offering something else that's equal or better. I suppose someday it could make sense to go after Apple exclusives, but why not wait until the net effect on society is actually negative in some measurable way? A good rule for government should be, "When in doubt, leave it alone."
Meanwhile, the Canadian case will certainly offer Canadians more choice among iPhone providers, and most notably iPhone plans. Canadians tasted the bitter flavor of inadequate competition when iPhone data plans were first announced there in mid 2008. Three-year contracts, no unlimited data plan, high per-MB pricing, and a triple lock-in. Yes, Canada may soon see more service competition around the iPhone -- but will Canada see more or less device competition?
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Filed Under: canada, competition, exclusivity, iphone
Companies: apple
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Whatever
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iWho?
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Mike's got it
Everywhere you went this last year, in whatever forum Canadians would gather, you heard nothing but complaints about the horrible vice Rogers has their customers in regarding prices. Many of them were most decidedly NOT complimentary towards Apple for partnering with such a vilified company.
My guess is that Apple decided that, now the two other competitors are playing in the same technological sandbox, it is time to goose Rogers in the butt and get them a little bit more amenable to lower prices, the better to boost iPhone sales.
Sure, Apple likes control, but they aren't stupid, and they've got economists on the payroll that can read sales charts. Management, needless to say, seems to have been listening.
As for the US, the only other cell network provider that plays in that sandbox, T-Mobile (as Mike noted), is pretty small, is struggling to make ends meet, and probably wouldn't add much to Apple's bottom line.
Since Verizon, as of today, seems to be counting on Android for the future, and won't have a compatible network until at least the end of 2011, can be counted out now, that doesn't leave many candidates, does it?
Internationally, I'd bet that we will see additional carriers come on board as local market conditions warrant the move. As Mike noted, sometimes exclusivity is not conducive to competition, sometimes it is. But Apple is focusing on the bottom line, and how it will affect sales.
Sometimes the two will coincide, sometimes they won't.
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Sole phone/carrier deals
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Only TMN, the biggest carrier with something like 60% market share, doesn't have the iPhone. And like Derek said, they have been very keen in launching touch phones from Samsung, Nokia and HTC. They where the first to launch an Android phone here, the HTC Magic, and they offered a 50% discount for it during the iPhone 3GS launch day. It sold out from the online store in less than 1 hour. I was one of the luck few that got one. 224€ without any "plan" or "contract" attached, I think it was a good deal.
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Not expecting much of a change
When the analogue bandwidth spectrum auction occurred, the government blocked off 40% for new entrants into the market. That is still in the setup process, but many, including me, are eagerly awaiting something new in the hopes of shaking up a very very static market. So even if the iphone comes to multiple carries, i don't think the incumbents will rock the gravy boat.
I myself, would love an iphone but I refuse to pay $80/month plus a 3 year contract low data rates etc etc, so I sit here with my WinMo P.O.S. waiting for the day real competition comes to the great white north.
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All australian carriers offer the iPhone
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Great quote
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Well no
that changed things. a lot.
FYI, the competing carriers are not what should be forcing HW makers. Customer demand is. The fact that other carriers couldn't get an iphone meant that they forced the HW to come up with something, because they were losing customers to ATT. However, those companies would still have been losing business to *all* carriers, regardless.
Some have argued that it has put *less* pressure, since there are many people who can't or won't switch carriers. So there is less affect from the customer since they aren't able to switch.
Essentially. The HW competition would have been better, since most everyone agrees that with iphone available through *all* carriers, Apple would have a larger market than they do. => more pressure on competing HW vendors. ATT had to *buy* that from Apple. Apple didn't grant them that exclusive without some payback. ATT paid for it because it did drive customers to them from other vendors.
The whole thing stinks to high heaven and always did. It's just that before the iphone, most cell phones were pretty lame so everyone let it pass. Why fight for equity in shit piles?
Even if iphone was available through all carriers
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Re: Australia
Competitive pressures did not seem to work for the consumer in Australia.
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Re: Re: Australia
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I really don't know why anyone thinks this will substantially lower prices on either the iPhone or the service fees it carries. If people want a different carrier, they will change based on that, irrespective of price. It was the same when the RAZR (the last big "it" phone) came out on multiple carriers. Everyone offered the same plans with the same rates.
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australia
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If you're only thinking of handset manufacturers, sure, but the problem with exclusive deals is that they also distort competition between carriers. How much harder would ATT need to work without the iPhone exclusive? How much better could overall industry service have been if competition had been more open?
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Re: Sole phone/carrier deals
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There's also the fact that even without exclusive deals, there is still plenty of competitive motivation to keep developing. You merely have to look at the Blackberry Storm to see that, which would have come out regardless of which carriers had the iPhone. Sure, it might not be as high as it would be with exclusive handsets, but the on the contract side, the difference is huge. The example in the post of Rogers charging large data rates shows just that. A little competition to gain iPhone customers would have forced them to offer unlimited (or at least a very high cap) data plan at a reasonable price. That sounds a whole lot better to me than a slightly less competitive handset market.
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Re: Great quote
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The Telcos actually offer nothing
They are my service provider and nothing more. Why is this situation allowed to continue? Imagine if traditional telcos could still dictate what phones you had in your house. No going to radio shack to get a replacement, or getting a trendy football phone. What do you think prices would be like now? What kind of selection?
Or imagine if we were talking now about choosing what computer to get from Comcast or Time Warner. Gee the one from Time Warner has a good hard drive but the Comcast one has that HUGE 9 inch screen we have ben waiting for. They are a barrier to innovation. Talk all you want about the carrier subsidies but that money is coming from somewhere. If the handset makers were connecting directly with us, the consumer, they would have to price accordingly. If anything that FAT carrier subsidy is keping prices artificially high.
The market has to push back and get these wireless guys OUT of the hadset business and back into the traffic carrier business.
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Competition of
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Whatever - TELUS and Bell are still on the old CDMA Network
If TELUS or BELL ever do get their shit together, it will much longer than before this Christmas that they will be offering the iPhone. And I still can't see that because ROGERS made an agreement with TELUS about having the iPhone specifically, and BELL/TELUS have other types of touch phones, but nothing near as good as the iPhone. Apple will always be #1, I knew that back in the late 80's, when people used to cuss out Apple. Well guess what, Apple is kicking Microsofts ass now, and EVERY SINGLE COMPANY OUT THERE tries to copy Apple. They try and copy the iPhone. Microsoft tries to copy the iPod by putting the Microsoft "Zen" out.. lol how lame.
Anyhow, no. I doubt you will be seeing this before Christmas as Bell/TELUS are way behind when it comes to cellular, they don't even have a satellite network out yet. Their still using the old CDMA technology. So these rumours put out by them - they are full of shit.
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Re: Whatever - TELUS and Bell are still on the old CDMA Network
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Wrong type of competition
But you are confusing the types of competition, while the iphone has forced device makers to up the ante and try to offer more competative products, the exclusivity has actually harmed competition between providers, as AT&T does admittedly have a inferior 3G network compared to Verizon, but the exclusive deal has netted them higher revenue and growth, despite their failures, exclusive phone models, especially ones with as much hype as the iphone hurt provider competition on equal playing grounds which both AT&T and Verizon had the iphone, I think you'd see AT&T in a much worse position than it currently is.
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huh? FTC?
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It's a good thing it's going to other networks, but only because O2 might bring their prices down! They give the best network coverage so I'm going no-where, but £35 a month for 600 mins and 500 txts is plain awful!
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Canada has the HIGHEST PRICED CELLULAR PLANS in the World!
Apple 0wns, and Microsoft sucks shit. I always knew Apple was #1 since I first had my Apple Classic II back in the 1990. A lot of you users posting now, I bet you used to cuss out Apple, and Macintosh Computers. Well guess what, they have the Stablest operating system out now - Mac OS X Snow Leopard. Windows 7 tries to copy Apply, Microsoft tries to copy everything apple does, but they do a horrible job of it and their OS's always have exploits and wholes in them, and Windows will never be Virus/Spyware free.
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Re:
I agree with the commenter two above, Scarr, who pointed out the contrary. When all the carriers had the Razr, they just offered it at similar prices. Competition pretty much stopped among the carriers, usually because so few carriers serve any given region (which is just an economic norm, given the concept of natural monopolies.)
1)
So, actually, when a single carrier like AT&T carries the iPhone, all the other carriers must scramble to match (even as they talk down the iPhone, and say it's nothing special). It's bloody obvious with Verizon right now - do you think VZW would have made yesterday's Google deal to offer Android phones if they weren't scrambling to compete with ATT/iPhone? They HATE Google! But competition makes strange bedfellows, and the consumer wins that round.
1b)
When a single carrier offers the iPhone, the other handset vendors also scramble to produce an equal or better phone, which they can sell to the ready market of the other carriers.
2)
But when all carriers can offer the iPhone, there is no longer a need for the carriers to compete aggressively. They are back in their happy state of oligopoly, product parity, and lower competition.
2b)
If all carries offer iPhone, other handset vendors must still compete aggressively to offer something equal or better, but they will find their customer (carriers) less interested in revolutionary products. I'm not saying "disinterested", just "less interested". The net effect is reduced innovation hitting the streets.
And the total effect of iPhone's exclusive deal with AT&T is this, MORE competition. It's counter-intuitive, but my argument above is fairly straightforward. The real world results speak for themselves.
Think about it: you're arguing that if Sprint, T-Mo, and VZW could only offer the same phone as AT&T, there would be more competition. Does ever provider offering the same thing sound like competition?
You'll note that I refer to the carriers as the market for handsets. That's because they are the ones who actually buy the phones from the vendors -- NOT the end consumer (certainly so in a North American context.) Vendors sell a small portion of units direct to consumer. In this industry, there are, thus, two ways of looking at the "customer" of handsets.
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Canada has the HIGHEST PRICED CELLULAR PLANS in the World!
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Re: iWho?
They are only "abusing" their customers from the perspective of an uber-geek or a business analyst who understands the nature of their exclusive deal, and doesn't see the forest for the trees.
Customers are being abused in the same way their masseuse abuses them as he mercilessly beats their back with shiatsu. From your perspective, it's abuse, but the customer's perception is what really matters.
If you are a layman with an iPhone, you are too busy being delighted by the best phone you ever had. You are too happy about being exposed for the first time to a usable mobile Internet. You are too excited by the power to customize your device with downloadable apps presented in a very easy-to-install fashion.
Side story: I remember when the Palm Pilot became wildly popular, and all my friends in finance got one allocated to them by the IT dept. The IT guys would configure the calendar and contacts functions into the PDAs. All these guys would walk around with one, but not really know how to take advantage of the power in their pocket. Palm offered 30,000 apps at the time, yet EVERY one of the people I spoke with who had the Palm issued to them by IT had NOT installed one single app. And it was fairly easy to do. It took, maybe, ten simple steps: find an app you want, pay or get free access to the download, download the small .prc file to your pc, double click to put it in the hotsync queue, connect, hotsync, then launch on the device. Seems simple enough. You know what...too hard for the mass market! So calendar and contacts it was.
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Derek Kerton Shut Up Already you are lame and boring
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Re:
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Re: Derek Kerton Shut Up Already you are lame and boring
BTW, what does "the top page" say?
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Re:
You are looking at just the specific case of a person who says "I must have an iPhone, and I want competition among the iPhone service options" and in that case, the exclusive is a negative for sure. But if you widened that to "I want competition among devices, and also among service plans." I think you would find the Apple/AT&T deal is a catalyst for increased competition.
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Re: The Telcos actually offer nothing
People just weren't willing to buy phones for $500, EVER. The carriers, starting back in the 90s, could not get a market for their "traffic carrier business" because the customers could not see past the hurdle of the upfront expense. There is a standard business solution when a service provider's potential market doesn't want to fork out the up-front capital, but would otherwise subscribe. The answer is the subsidy you so dislike.
While carriers often complain about the high cost of subsidies, they also realize that it is an incredible leash on control. With subsidies, the customer pays for the phone long-run anyway, but the carrier gets to decide on what models to sell, install software, test, and control app sales. And because the costs of the phone are hidden, customers tend to buy more phones than they otherwise would - upgrading more frequently, getting new 24mo contracts, and getting devices that access the latest carrier services.
Yet despite that carrier stranglehold, still today the majority of customers would not want to fork out $500 for most devices, and customers repeatedly choose the contract+subsidy. But this reliance on the subsidy model has prevented our market from offering other options.
I'm with you. I actually already buy my phones full retail price, and often straight from the OEM. I get a fair number of freebies, too, as in industry insider. This lets me try out more handsets. I don't have to wait for AT&T to re-brand, test, design bloatware, etc.
What I would like to see is an option for customers to NOT participate in the subsidy, and to get lower subscriber rates as a result. "SIM card only" plans have popped up in many global regions over the past decade, but notably not North America. How great would that be? Choice. Bring your own phone and let carriers compete for your subscription, or if you're cash-strapped you could choose the subsidy model with a 24mo contract. Choice is good.
So, I agree with you. But this has taken us off-topic of my original post about whether iPhone-ATT stimulates or hinders competition. My post is written in the context of a subsidy-dominated market, which for now, is the reality for North Americans.
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Re: Competition of
It's a fact that this device actually churns Verizon customers to AT&T, and that quickly results in device AND plan competition from the non-ATT players. Without the exclusive, no churn. No churn, no competitive response needed. Prices stay high. (see the Scarr comment near the top RE Razr)
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Re: Wrong type of competition
But competition isn't done in lock step, with all carriers at once. Oh, yes, they often work in lock-step, but that is oligopoly, and the resulting steps aren't very fast.
Competition works best in a ratcheting mode. One provider jumps ahead, in this case ATT. And while ATT could choose to rest, the others MUST scramble. Eventually, they excel and surpass. Then, ATT will need to respond. It is these ratcheting inequities that bring the market the benefits of competition.
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Re: Canada has the HIGHEST PRICED CELLULAR PLANS in the World!
Those "morons" are actually on topic, and you just don't understand them.
I suppose I should have some right to ascertain what the topic is, having been the author.
Further, your post directly above..you know, the well-rounded, dispassionate analysis on whether Apple Owns and MSFT sucks shit, well, that was pretty much the first off-topic comment in the thread.
Please don't just troll the interwebs with the search term "iPhone" and feel the need to "add value" to whatever discussion pops up. If you don't understand economics, you'll have a hard time keeping up on this blog. This is neither the "iPhone lovers" nor "iPhone haters" blog.
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Re: Re: Derek Kerton Shut Up Already you are lame and boring
Hey, did you notice who wrote the "top page"? Just a thought.
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Huh?
Just who are these these carriers that are working so hard "to come up with a comparable device"? I'm unaware of any carriers that design and manufacture their own cell phones.
...seeking it from the likes of Nokia, Samsung (which are scrambling to respond, though they'd never admit it), or newer players like HTC or INQ.
You know, I once met a guy claimed that he was an automobile designer and had designed his own car. It looked like pretty much any other Camaro to me and I asked him how long he had been an engineer for General Motors. After standing there with a dumb look on his face for while and me questioning him some more questions it turned that he had simply special ordered it with the options he wanted from the manufacturer through the dealer. Yet, he thought that qualified him to claim that he had designed his own car. I am of the type who disagrees.
Likewise, ordering a phone from a manufacturer like Nokia, Samsung, HTC or INQ isn't "coming up with a new phone". The manufacturers are the ones who come up with the new phones and they would be driven to do so by market forces in order to compete with the iPhone, not exclusive contracts that actually hinder competition.
And yeah, I've heard the old claims that monopolies actually encourage innovation because they reduce the risk involved and I don't buy that one either. I think it is the risk posed by competition that actually encourages innovation.
Bottom line, I disagree with your view that these exclusive deals (monopolies) actually promote innovation in the market. Instead, I say that they only benefit those involved at the expense of society in general.
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No Measurable Harm
I am reminded of the way that the tobacco companies argued for so long that was no measurable harm from tobacco use. "When in doubt, leave it alone" seemed to be their mantra for quite a while.
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Re: Huh?
"the old claims that monopolies encourage innovation"
Agreed. But Where is the monopoly in this topic? Is it Apple/AT&T? There are other competitors for service (VZW, T-Mo...), other competitors for handsets (HTC, Motorola...). The others are not blocked from entry to the market, they offer direct substitute products, and they are actively responding to AT&T and the iPhone. This monopoly. This = competition.
If you are saying that there is a monopoly on the specific device called the iPhone, that would be like saying Safeway has a monopoly on Safeway Select brand Oatey 'O's. Yes, they do, but there are other cereals out there, no?
The other point you argue is also in violent agreement with me. You talk about some guy who claimed he was a car "designer and had designed his own car." I never claimed carriers were handset designers at all. I said carriers needed to "come up" with a comparable device. Obviously, they are not the handset makers. Their job is just to find it and bring it to market, which is why the sentence carries on, "seeking it from the likes of Nokia, Samsung...HTC or INQ."
YOUR problem is just confusing the term "designing" with the more flexible expression "coming up with". If I asked you what the name of that movie was with Tim Robbins and Morgan Freeman in prison, where Robbins' character crawled through the sewer pipe to freedom. Could you "come up with" the name of the film? Does that imply that you wrote the screenplay, or just delivered the answer?
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Re: No Measurable Harm
There is a big gap between suppressing evidence and lacking evidence.
In this case, I would say the evidence (in the US market) is that the competitors are actually being spurred onward, out of their comfort zone, by the competition presented by iPhone/AT&T.
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Re: Re: No Measurable Harm
No, that was their claim. I didn't know you were an apologist for them too.
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Re: Re: Huh?
It seems that whenever anyone mentions "monopoly" there is always disagreement on what constitutes a "monopoly", usually by varying the definition of "the market".
Define "the market" widely enough and there is no such thing as a monopoly anywhere because we are all competing for the same dollar. So as long as someone with money to spend has a choice of at least two sellers to trade with, no monopoly exists.
I, on the other hand, define monopoly with a narrow market. Down to, in fact, a specific type of goods. For example, just because there are other types of communication available does not mean, to me at least, that the telcos do not have local monopolies. Just because there are other widgets available does not mean that the holder of a patent on a particular type of widget does not have a govt granted monopoly on that type either.
I do not, however, apply it to the "name" of a product as in your Safeway example. If other cereals the same as "Safeway Select brand Oatey 'O's" are available under a different name, then there is no monopoly. If someone else were to try selling another cereal with the same name then that would be fraud and a trademark violation and really nothing to do with monopolistic market practices.
If, however, Safeway and all the oat suppliers were to get together and decide to refuse to sell oats to any other cereal maker then I would indeed call that a monopolistic practice even if the other cereal makers could still buy wheat to make wheat cereal. Wheat cereal isn't the same as oat cereal even if they are both competing for a slice of the same family grocery budget or "market".
In the US cell phone market, AT&T got together with Apple who then refused to sell iPhones to anyone else, even if they are willing to pay the same as (or more than) AT&T. That's monopolistic.
YOUR problem is just confusing the term "designing" with the more flexible expression "coming up with".
I think that to most people "coming up with" something implies creating or finding something previously unknown.
If I asked you what the name of that movie was with Tim Robbins and Morgan Freeman in prison, where Robbins' character crawled through the sewer pipe to freedom. Could you "come up with" the name of the film? Does that imply that you wrote the screenplay, or just delivered the answer?
I think that it would be misleading if every time someone mentioned that movie I jumped up and blurted out "HEY, did you guys all know that I came up with the name for that movie?" when in fact all I had really done was "remember" it just then.
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Re: Re: Re: Huh?
Especially when it was described as "working their butts off" to do so. Yeah, I think the meaning was both pretty clear and misleading.
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Re: Re: Re: No Measurable Harm
There was evidence, they were suppressing it, and they were lying.
Therefore, you conclude, any completely different entity that argues "There is no evidence of harm" must also be lying.
Good logic. As I said, you are triggering false memories.
I have presented the case that the exclusive has actually been a catalyst for additional competition in the US, yet you think it "sounds like" the tobacco companies, so it must be bad. You, sir, are a formidable opponent.
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Re: Re: Re: Re: Huh?
"seeking it from the likes of Nokia, Samsung ... or newer players like HTC or INQ."
Doesn't that imply -- no not imply, clearly state -- that the devices are actually coming from the device vendors?
Isn't it clear with the including of the above IN THE SAME FREAKIN SENTENCE that AT&T doesn't invent phones? I mean, the first Anon Coward quoted half my sentence, conveniently ignoring the second half..which was rather pertinent to his beef.
My original point is that the other carriers are scrambling to get competitive phones. He says I implied that carriers invent/design phones themselves. OK, if you only read the first half of the sentence, I can see where that would be a small nit one could pick with my writing. But it is not a consistent interpretation within the context of entire article...and it is not even correct in the context of that complete sentence.
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Remember 2007?
http://www.wired.com/epicenter/2007/10/mossberg-likens/
Wired (in 2007) talks about how the iPhone is the catalyst that is breaking up the stranglehold the telco oligopoly has on the US device market.
You see, the iPhone entry is disruptive step 1. This was the dam-breaker. The price of it being so very disruptive was the exclusive deal, but the net effect was a HUGE benefit for US customers. Step 2 is the other carriers and handset vendors scrambling to match or beat the iphone. Another big benefit. Is this really the kind of "monopoly" that we want to discourage???
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Hmm, Interesting Info from BusinessWeek
The subtitle of the article is:
"An Android mobile alliance between the two giants could soon result in formidable smartphone competition for the dominant iPhone and BlackBerry."
First two paragraphs:
"Move over Apple and Research In Motion. Rivalry in the smartphone market has just heated up.
For a while it seemed the bloodiest battle in smartphones would be fought between Apple (AAPL), maker of the iPhone, and BlackBerry maker Research In Motion (RIMM). But an emerging alliance between Google (GOOG) and Verizon Wireless has the potential to create a potent alternative to the BlackBerry and iPhone in the U.S. smartphone market."
It s very difficult to cotton to the hypothesis that iPhone/ATT is a monopoly that is "harming competition" in the US market.
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