The Irksome Cellphone Industry [Telecom]

State of the Art The Irksome Cellphone Industry

By DAVID POGUE The New York Times July 23, 2009

Never let it be said that Congress never did anything for you.

In recent weeks, the Senate Commerce Committee has been holding hearings about handset exclusivity. That's when a phone maker (like Apple) offers a particular model (like the iPhone) to a carrier (like AT&T) exclusively for a period of time (like five years).

Come to think about it, that example - the iPhone - is pretty much the only one anybody cares about. These aren't handset-exclusivity hearings; they're "Why can't we have the iPhone on Verizon?" hearings.

Look, it's great that our elected officials are looking out for us. The last time Congress got involved, we wound up with phone-number portability, meaning that you can keep your number when you switch phone companies. That's unequivocally a good thing.

But the exclusivity point is not such a slam-dunk. Sure, everybody would love a Verizon iPhone. But there are some valid arguments against banning exclusivity deals altogether.

First of all, there are two different cell network types in this country: the AT&T/T-Mobile type (called GSM) and the Sprint/Verizon type (called CDMA). Creating a Verizon iPhone isn't just a matter of signing a few papers. It requires new engineering. It takes time and resources.

Second, you could argue (as some of the carriers at the hearings have) that exclusivity arrangements are actually good for innovation. Look at Visual Voicemail, which displays your voicemail list so you can get to them in any order, without being held hostage to your carrier's prompts. That's a very cool iPhone breakthrough that required Cingular (the iPhone's original carrier) to make special changes to its network - collaboration that probably wouldn't have happened if Cingular hadn't had the incentive of exclusivity.

Above all, though, you've got to wonder why, if Congress has time for things like cellphone gripes, it's barking up this particular tree. Frankly, there are many other, much more whopping things that are broken, unfair and anticompetitive in the American cellphone industry.

If I were on the Senate Commerce Committee, I think I'd start with things like these:

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Reply to
Monty Solomon
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Nit: *NOT* entirely true. Various models of the RIM "BlackBerry" are exclusive to various carriers. If you want features specific to a particular model, you're stuck with the carrier that 'bought' rights to that model.

Reply to
Robert Bonomi

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