Video Killed the Radio Star: 2010 Telephony Edition
One hundred and twenty-six years after Alexander Graham Bell patented the telephone, AT&T, America’s largest provider of fixed telephony (and third largest non-oil company in the U.S., behind Wal-Mart and Bank of America) may finally lose its iPhone stranglehold.
Rumors abound that Apple is about to open the iPhone to the Verizon network. “Verizon-friendly iPhone” rumors surface every six months or so. But this time, both the New York Times and the Wall Street Journal are reporting that the handset is coming. They’re getting this information from people who are “in direct contact with Apple” and who “don’t want to be identified” because they could “alienate” their contacts.
The Verizon buzz comes on the heels of two lawsuits in California addressing Apple’s hush-hush five-year contract with AT&T. A federal judge has allowed a class action suit to proceed, consolidating many iPhone buyers’ allegations of monopoly abuse against Apple and AT&T.
Apple and AT&T have a relationship as tight as it is tumultuous. Plaintiffs claim that Apple engaged in illegal monopolistic behavior in 2007 when it did not disclose its exclusivity contract to users. Apple customers had no notice that they might remain wedded to AT&T until 2012.
iPhone purchasers may have known that their iPhone then required them to contract with AT&T, but complain that Apple crossed the line when it failed to disclose its secret deal that would prevent purchasers from changing carriers after their initial two-year contract expired. Apple also incited the red flags of anti-competition by blocking third-party apps like Flash.
Check out these quotes from Apple’s defense:
The duration of the exclusive Apple-[AT&T] agreement was not ‘secret’ either. The [plaintiff] quotes a May 21, 2007 USA Today article – published over a month before the iPhone’s release – stating, “AT&T has exclusive U.S. distribution rights for five years-an eternity in the go-go cellphone world.
[T]here was widespread disclosure of [AT&T’s] five-year exclusivity and no suggestion by Apple or anyone else that iPhones would become unlocked after two years… Moreover, it is sheer speculation – and illogical – that failing to disclose the five-year exclusivity term would produce monopoly power…
Competition suits merely scratch the surface of Apple’s battle with Google over intellectual property in smartphone technology. Not to mention suits over the notorious “no no spot” that disables iPhone’s antenna with one touch.
It’s been a long year for Apple. Droid’s debut on the Verizon network captured many would-be iPhone customers who waited for an alternative to AT&T’s infamous record of dropped calls and missed connections.
Sure, we can get a blackmarket T-Mobile iPhone hack. But who wants to live like a refugee?
In technology markets, late movers tend to prove the most loyal customers. Apple will not hold its breath to woo Droid users away from Google. Yet now that Droid and Apple apps emerge almost in tandem, the most distinguishing feature between these two products is the network.
Once the most important part of phone choice, network dependability fell second to gadgetry during the rush to innovate in the past ten years. Yet with ubiquity comes responsibility; “I’m on a mobile” no longer excuses dropped calls. In this post-landline era, where even emergency operators at 911 receive 30 percent of their calls from cell phones, network dependability is once again paramount.
Mac has long couched confidence in its superior product in keeping switching costs to Apple products high, while costs to switch from Mac stay low. Apple computers can run Windows programs as well as any PC can, but only Mac users can run Mac operating systems. Even new iPhones come with a 30-day money-back guarantee. That’s a guarantee on both the phone and the contract.
Just try wiggling out of a Verizon contract after 30 days! Mac’s message comes loud and clear: Why would anyone switch back?
Evidently Mac users have begun switching back because they’re tired of clandestine contracts and anti-competitive measures from on-high. Long the “boy who cried wolf” of tech rumors, this time Mac would be wise to open the network to Verizon in real life, ending at long last the monopolistic Apple-AT&T “marriage made in hell.”