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Wireless Carriers Accused of Antitrust Violations
phoneboy writes "From Wireless Consumers Alliance: A class-action lawsuit was filed on April 5 in the U.S. District Court for the Southern District of New York on behalf of wireless consumers seeking to end the control of the handset market by wireless carriers. Read the Antitrust Complaint. While the complaint is fairly short and easy to understand, a summary is in order: The carriers basically dictate required features to handset manufacturers. Phones are tied to specific carriers and cannot be moved between carriers. Carriers refuse to allow handsets on their network they didn't approve. Handset manufacturers thus cannot sell handsets that aren't approved by carriers because carriers will not allow them to be used. All of this rises costs for the consumer, making it difficult and more expensive to switch carriers, and unfairly restrains trade for both handsets and cellular services. As someone who recently tried subscribing to AT&T's new GSM service with an unlocked GSM phone (they didn't allow me to "activate" the service unless I bought one of their phones), I'll be watching this case very closely."
Carriers set phones' SIDs and MDNs so that they work with only one provider (AT&T, for example). They add encryption on top of that so that it's hard to reprogram a phone. Carriers are currently regulated only in terms of tariffs on the service (i.e. federal tax), not on the handset-to-service binding. The latter is unregulated, hence this filing with the district court.
In Europe, with the GSM system there, you usually ahve two options.
1) An open GSM phone. You can use this anywhere, on any network. Either roaming, or with a sim card from that network.
2) A branded phone, where it is locked to a certain carrier. So you can't just take any sim card and use it, you have to use that network.
With #2, they usually sell the phone cheaper, because you are stuck with their network. Which makes sense.
But.. a carrier will not refuse service or differentiate at all as to what phone you use.
I work for a wireless billing software company. About Item (B)... the FCC is requiring cellular companies to make their numbers "portable" in the near future (more on that later). In other words, you will be able to keep your current wireless phone number, bringing it to another competing wireless provider, provided that it's in the same market.
The problem is, every time the FCC has set a deadline for this to happen, all the big wireless companies whine a lot, petition the FCC because implementing the switch/billing software/etc upgrades would be "too difficult" (i.e. costly), and the deadline gets postponed. As it stands now, it was supposed to already have happened over two years ago, and the latest deadline in late November is probably going to be pushed out another six months (if it hasn't been already). The net result is that it really sucks to be the consumer, 'cuz folks like you have to face decisions like the one you're faced with now.
The people making this lawsuit have no idea what
they are talking about.
I lived in Japan for two years, and just returned to the US. I found that the cell phones in Japan are literally years ahead of phones in the US, and data and Internet features like iMode, email, and Java apps on the handset, which simply work
in Japan, are completely hopelessly brokne in the US.
As far as I can tell this lossage is due precisely to the lack of any leverage that carriers have over handset makers in the US. In Japan, NTT DoCoMo, and the other carriers, dictate exactly what features they want, and thus
they get high quality user experience; all the phones have compatible web browsers, color displays, internet email, and other features. The features all work almost perfectly across the different handset models from different manufacturers.
Contrast this to the pathetic piece of junk called WAP in the US, where each phone has different incompatible implementations. Some phones have color WBMP support (hah!), others handle GIF, other PNG, others JPG. Some carriers gateways have byte limits of 1 kbyte, others higher, no telling which is which though. Chance of actually displaying a color picture, or a proper web page on your phone: about zero.
Email does not work consistently on US phones, and Java applets are still science fiction. People have the WAP forum to thank for this
pathetic situation. They were so greedy that they
tried to get all the carriers to standardize prematurely on technology that solved non-existent problems. NTT DoCoMo just went ahead and basically just built HTML 2.0 into thier phones (iMode) and it works an order of magnitude better than WAP.
Thanks for your answer. I took a look at some of the wireless rumor sites, and they suggest that VoiceStream's policy is to give out the SIM unlock code to customers who have been in good standing for at least three months. If you call customer service, you should ask for the "Advanced activations" department. The other way is to send e-mail to -simunlock- at -voicestream- dot -com- (I like this company enough to spam-protect their address!). It's supposed to take about a week. I just sent an e-mail request; we'll see what happens!
If phoneboy's summary is correct, this lawsuit is a joke. Let's look at each piece separately:
The carriers basically dictate required features to handset manufacturers.
I've seen these requirements, and they don't generally dictate anything other than what the GSM standards require. It's a way to ensure that all the phones on the network have the same set of features for the customer. Take Orange for example, a major operator in the U.K. They require 2-line support on all their phones, so they can offer phones with 2-lines to all their customers. This is a customer win, and is a key reason to pick Orange over someone else in the U.K.
Phones are tied to specific carriers and cannot be moved between carriers.
Absolutely! No question! And they should be! That lovely little Nokia 8290 you just got was likely subsidised to the tune of $100-$150 by your new operator. If the operator wants any chance of getting their money back for that subsidy, they have to prevent you from getting a cheap phone from them and then grabbing a SIM from another operator.
Most operators will gladly unlock your phone for you so you can use it on another network, especially in Europe. Just call them up and ask. They might charge you ~$50, but that's still less than their subsidy. Even Voicestream in the US will do this for free if you ask them, I've had it done.
Carriers refuse to allow handsets on their network they didn't approve.
This is flat out wrong. I've been using tri-band phones that I purchase in Europe over in the U.S. for years with my basic Voicestream SIM. In fact, I've never purchased a phone from Voicestream. Cingular does this as well. AT&T currently doesn't sell SIM-only packages, but they are going to. (Keep in mind they *just* started GSM service, and are still trying to get everything sorted out).
Manufacturers thus cannot sell handsets that aren't approved by carriers because carriers will not allow them to be used.
True, you cannot sell a handset *to an operator* that the operator hasn't approved for sale on their network. This is because the operator is responsible for all the support calls, replacement, and management of the phones on their network. Would you buy 1,000,000 phones from a company if it hasn't passed your quality assurance tests? Heck no!
If your phone fails these tests then it just means that you can't sell your phone to the operator directly and have to make it available through other channels. But (and again, if I've seen these tests) if you can't pass the tests then something is *seriously* wrong with your phone.
While it hasn't hit the U.S. yet, there are companies in Europe that make a killing selling phones that are not tied to a specific operator. Carphone Warehouse is a great example from the U.K., and you can bet that now that the U.S. has woken up to cellular it won't be too long before the same types of companies are available here.
All of this rises costs for the consumer, making it difficult and more expensive to switch carriers, and unfairly restrains trade for both handsets and cellular services.
This is the statement that shocked me the most. Have you *looked* at cellphone pricing and plans lately? My newspaper is constantly filled with offers that include 1, 2, or even 4 phones for *free*, with tons of minues included. For $29.99 a month I can get a really nice phone and more airtime than I can possibly use in a month.
If the operators *couldn't* lock their phones to their network to guarantee they'll make back their subsidy, do you actually think the prices will go *down*?