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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."
The question is, what is the current state of regulation in the wireless arena? Do regulations currently exist similar to the old phone regulations? If not, how do the wireless carriers enforce their hardware requirements?
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
Bravo!
This is highly needed. I am a big fan of Nokia phones, to the point where I won't use any other brand of phone. Unfortunately, I signed up for access with Sprint PCS 2 years ago, and a little over a year ago I extended my contract (it won't be over until May).
When I signed up with Sprint PCS, Nokia phones were an option. Today they aren't, and no matter how many times I've contacted them things don't seem to be changing.
My only choices are to (A) continue to use my 3 year old phone, (B) move on to a new provider, or (C) get a non-Nokia phone.
None of those options are satisfactory to me.
(A) my phone is outdated and no longer has the features I require. It is over large, gets horrible reception in my new Apartment, and the battery hardly lasts a day.
(B) I would have to change my phone number as I was told I could not switch my current phone number over to the new provider (it is owned by Sprint). Secondly, my options are AT&T and Verizon who are both far worse companies than Sprint (in my experience anyway).
(C) There are few phones I like, and after past experiences with current cell phone companies I've chosen to remain with Nokia, not just because I like their phones but because I like the way they run their business.
As you can see, I am in a no win situation. Any choice I make leads me to make some sort of a compromise. While this lawsuit will unfortunately not go through the courts quick enough to be a benefit to me, it is long overneeded and I can only hope it helps keep others from experiencing these same problems in the future.
Bryan
Pesky 'standards' getting you down? Consumers switching willy-nilly from one provider to another? Don't like the idea of this new-fangled 'interoperability'? There's an easy answer! Just make your own additional rules and refuse to allow devices that don't meet them. And the best part is, you can do this while still claiming to comply with the standard!
-- Ed Avis ed@membled.com
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.
As opposed to... what? Putting up with explaining over and over why random feature 'x' of gee-whiz gollywag phone doesn't work on their network?
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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.
It's time the governments of the world realize a free market doesn't work everywhere.
Standards need to be set by a regulatory authority. Otherwise competing businesses will not just have the opportunity to create their own standards, they'll be forced to do so. There'll always be one business that'll use dirty tricks, so to survive, all must use them.
The U.S. cell phone market is a joke. Over here in Europe where I live I can buy any phone from anywhere. It'll work with any operator (as long as I pay for their service - duh). It will operate in any country in the world (except the U.S. and some other exceptions). There are no usage restrictions.
A few years ago when I visited the U.S. the phone I rented worked in New York, but not in Iowa! And I'll be moving to Boston next year, forcing me to get a U.S. phone. I hate you people! (well your phone companies at least...)
P.S. Is it true that text messaging doesn't always work between operators in the U.S?
My Sig: SEGV
As most of us know, there are six widely used technologies, Analog, GSM, CDMA 800mHz, CDMA 1900mHz, TDMA 800mHz, and TDMA 1900mHz.
Most carriers only have their towers equipped for one, maybe two frequencies. In your case, while Sprint used to use the GSM technology, they now only use the CDMA 1900mHz for their phones.
Only phones made for that technology will work on that system.
The other issue that is run across quite a bit is knowledge. Most wireless representatives will have no idea how to program handsets they do not actually sell, even if they run on the same technology and frequency. A person who sells only Nokia and Motorola handsets will have no clue how to program an older Ericsson or Samsung, for example.
Another reason they require their own handsets deals with the fact that many companies (AT&T and Sprint for example) upgrade the software in the phones before sending them to the stores.
They do this to make sure you have the ability properly access their networks.
I agree that wireless providers should provide quite a bit more selection in stocking their handsets, but I would don't expect them to sell and support every type of handset out there.
Thats like requiring car manufacturers to make sure all their vehicles can use diesel, gasoline, petroleum, electricity, fuel cells and ethenol, and have them interchangable.
All it will do is drive the price of the service and handsets up, not just for the added technology, but for the additional training and expertise the representatives will need.
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.
...well, some level of precedent.
I'm technically not old enough to remember any of this, but from what I recall, there was some issues with the phone company not selling phone equipment to people -- only leasing.
There was some issue about the use of non-Bell phones on the system. Could someone respond with more intelligent and enlightening information regarding this?
The gist of it is that the general population won the right to use their own phones on their phone connection without being hassled by the phone company about it.
I can't see any possible way for this suit to succeed on its merits. The courts have held, again and again, that a "unilateral refusal to deal" is not a violation of the antitrust laws. As far as I can tell, there isn't any allegation the companies conspire not to use each others' phones -- and, of course, there would be no reason for them to conspire _not_ to cooperate.
But, like most class actions, this suit can succeed without the slightest hint of merit, since the real point is just to extract fees for lawyers by making it too expensive for the defendants.
I Can't Believe It's A Law Firm, LLP does not necessarily endorse the contents of this message.
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!
i'm amazed, usually here in Europe we have to sneer and hide our jealously behind sarcastic comments in all things communication related, eg you have always on DSL, we're still waiting (well, DSL is /starting/ to become more a bit widespread in some EU countries), you have 155Mbit/s OC-3c's while for the same price we get E2's (4Mbit/s), you have free local calls - we're still getting screwed by former state monopolies who still control the local loop and do their damnedest to make it difficult for the competition to get access... etc..
But at last we europeans (and those asians even more so) have a chance to cast a gloating data communications eye across the water: the USA is still in the mobile phone dark ages!
Over here, you can buy any phone and have it work anywhere in europe with any carrier. It's all GSM here. (well, actually there are pre-paid phones, and bill phones) and I can go on holiday to a little greek island and my phone could roam on either of the 2 greek carriers that covered the island. I go to london, get off the airplane and my phone has a choice of a whole bunch of networks!
My dad travels a lot, so to save on roaming costs he bought a pre-paid GSM SIM card in each country that he regularly spends time in. So when he gets off the plane, he just puts whichever SIM card into his phone according to which carrier has the best rates. the only disadvantage is that to reach him i might have to dial 4 numbers (Dad, Dad-FR, Dad-NL, Dad-ES). But hey..
Also, do people in the states have to pay full price on the handsets? At least here in EU, most of the cost of handsets is subsidised by the carriers (low-end nokia's are about EUR30 to EUR70 depending on the carrier's deal - used to be they gave them out free, but not anymore)
anyway.. GSM - we pee in your general direction! hu hu..
I use Friend/Foe + mod-point modifiers as a karma/reputation system.
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*?