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Verizon Offers Compromise In Exclusivity Debate
For about a month now, Congress and the FCC have been investigating the exclusivity deals between mobile carriers and phone makers which require that certain handsets only operate on certain networks (for example, the iPhone on AT&T). Now, Verizon has volunteered a compromise to Rep. Rick Boucher (D-VA), chairman of the House Energy Subcommittee on Communications, Technology and the Internet, which would allow smaller carriers access to the restricted phones after a six-month delay, while continuing to block the major carriers. "From now on, when Verizon strikes a deal with a manufacturer for exclusive access to a handset, it will allow the phone be sold after six months to any carrier with fewer than 500,000 customers." In a letter to Boucher, Verizon said, "Exclusivity arrangements promote competition and innovation in device development and design. We work closely with our vendors to develop new and exciting devices that will attract customers. When we procure exclusive handsets from our vendors we typically buy hundreds of thousands or even millions of each device. Otherwise manufacturers may be reluctant to make the investments of time, money and production capacity to support a particular device." Many remain unimpressed by Verizon's generosity.
Because obviously this is going to be tons better for consumers. Think they'll keep to this if they get the next iPhone contract deal as has been rumored?
How many carriers are under 500,000 in the states?
I'm thinking they thought long and hard on that number, and made sure they came up with a promise that will not affect their overal sales.
Exclusivity arrangements promote competition and innovation in device development and design.
Citation needed.
I would argue that it is either an antitrust issue, or dances on the fine line. To make a car analogy, wouldn't it be illegal if Ford and BP paired up to make Ford's only run on BP gasoline/diesel? Of course IANAL.
"Be prepared, son. That's my motto. Be prepared." --Joe Hallenbeck
I would love to see the major carriers have to compete with their services alone, but Verizon does make a valid point.
However, they also talk out of their asses. "Exclusivity arrangements promote competition and innovation in device development and design" but they fail to realize that we want a choice for where to go with whatever phone we want. Handset manufacturers would make new handsets regardless; I don't think the major carriers have as much influence as they think they do. Unfortunately, its tough to force them to do anything because people are tethered to their cell phones; a boycott would be impossible since nobody cares enough to do so. They care enough to complain but when push comes to shove, nothing.
-SaNo
All this does is allow infighting for handsets but doesn't solve the problem of crappy service over the US. If the war torn middle east and mount everest can get cell coverage why can't we get decent coverage in maine. Mount everest has people on it 1 month a year, there are over a million people in maine at any given time! I can't use my phone is 1/2 the counties here and that's with the AT&T.
Exclusivity arrangements promote competition and innovation in device development and design. We work closely with our vendors to develop new and exciting devices that will attract customers. When we procure exclusive handsets from our vendors we typically buy hundreds of thousands or even millions of each device. Otherwise manufacturers may be reluctant to make the investments of time, money and production capacity to support a particular device
Really? Because T-Mobile, even though they don't have an iPhone offered still supports it. (see http://consumerist.com/5243325/t+mobile-provides-iphone-support-despite-not-offering-iphone for a reference).
Exclusivity arrangements do not provide competition, competition should be done with -gasp- the networks. Lets see, AT&T is pretty expensive, but they have a decent 3G network, T-Mobile is a bit cheaper, but their 3G is lacking outside of major cities. Verizon is CDMA and so is Sprint and I'm not a fan of CDMA phones so I doubt I will ever use them. That is how competition is supposed to work. Not -insert major phone maker here- just announced a new phone exclusive to -insert network here- so you buy the plan to get the phone. Thats not how its supposed to work at all.
Taxation is legalized theft, no more, no less.
It simply can't be allowed. What we need is the exact same deal that exists for POTS. The phone company pulled nearly the same crap with phones years ago until the government stepped in and said "no more!" In this day where people are increasingly dumping POTS for mobile phone services, it won't be long before we're trapped in the same situation. The time for action is now rather than later... truly, the time for action was at least 10 years ago.
As it stands, phone makers have a technological means of restriction in that AT&T and T-Mobile operate on GPRS while Sprint and Verizon operate on CDMA. But really, those could be pluggable modules installable at manufacture time. Not sure that would be terribly hard to overcome.
But when handsets are "free" (as in freedom) I think we will see not only a drop in prices of the phones but also of services. The control of phone prices and availability by the carriers has raised prices, nearly eliminated the used handset market, has essentially prevented a 3rd party phone market and created a disincentive for people to change carriers because they know it means buying another new expensive phone. This is a rather perfect example of anticompetitive behavior that should make Bill Gates envious.
These exclusivity deals are not unheard of in businesses. These excluse phones part of what differentiates them their competitors, and hopefully draws customers.
It's not as if you couldn't get mobile phones on another carrier if you don't like this arrangement. Consumers are not being deprived here. The FCC is barking up the wrong tree, and Verizon shouldn't even have to offer this up. Its yet more government meddling in business affairs.
> "Exclusivity arrangements promote competition"
War is peace. Freedom is slavery. Ignorance is strength.
"Exclusivity arrangements promote competition and innovation in device development and design."
I don't believe this. Do you believe this?
Today's magic word is despots
So what happens if that small carrier gets 500.001 customers ? You can't use your iPhone on their network anymore ?
So small carriers will need to stay small... ofcourse Verizon loves that idea, because then they can keep the status quo in the market !
"exclusivity agreements promote competition"
how can anyone ANYWHERE not see the blatant intellectual dishonesty.
VLC FOR MAC IS DYING! IF YOU DEVELOP, PLEASE SAVE IT!!
Hehe, well Sprint is at least certainly on their way! At the rate people are jumping ship there, (myself included) pretty soon you will be able to pay your bill at Sprint with a slice of cold pizza, and I guess, get an iPhone?
=)
Do you think your handset does all these neat things by itself? The "Next Big Thing" will almost certainly require major investment in network and back office system. There are economies of scale to consider, Verizon isn't going to install systems that support hundreds of thousands of users, they need millions of users to make those features cost effective.
The iPhone exclusivity arrangement probably hit Verizon hardest of all. But they had their chance and past on the deal. (Didn't want give up the control Apple insisted on.) But they seem to be accepting that and moving on.
ps. Can there ever be a Slashdot article about AT&T / Verizon / T-Mobile this forum doesn't complain about?
All of the wireless carriers, when you boil it down, offer the same thing, dial tone over a radio.
At some point, in any competitive environment you have to be able to differentiate yourself from the other carrier, so really what are the options?
With all of those factors except the cool factor being pretty much equal this is how they differentiate themselves from the next carrier. They go to the handset manufacturers and ask, "Hey what do you have that is really cool?", the look at whats out their and evaluate it and then pick the best platform that will allow them to create the best combination of experiences that add up to the all important cool factor.
Lest anyone be confused, the carriers invest a LOT of money in brining this handset to market and its is not like they make a lot of money on the handsent. They make the money on the service they provide be it providing higher bandwidth, storage services, fancy voice mail or whatever.
It is their money they are spending to do all of this, and the notion of creating a network that lets all this cool factor happen just to have someone else duplicate it, or worse duplicate it badly and sell at a lower price point is NOT a winning business model, in fact it is a model for going out of business.
Hey KID! Yeah you, get the fuck off my lawn!
trjhtsj
You can only use your PS2 on PS Home and your XBox 360 on XBox Live. No one publicly complains there either.
And computer makers are exactly doing what you're saying. If you want a DISCOUNTED Acer Netbook, you have to use it on AT&T Data. If you want an HP DISCOUNTED Netbook, you have to use it on Verizon.
-Patrick
"They never stop thinking about new ways to harm our country and our people, and neither do we."
The problem with that analogy is that game consoles aren't interchangable. They don't have the same software or the same hardware.
Discounts are promotions. They don't lock you. Plus, you can still use that netbook with other providers after your subscription with your current ISP ends.
A compromise? A COMPROMISE? This isn't a negotiation. The lawmakers should be dictating terms to the wireless carriers. What are the carriers going to do kick and scream until they get their way?
If they invested money on the assumption that the return on investment was an exclusive phone then I think they do deserve to get that exclusive phone that their own money paid for. Contracts (for investment) can be written with any language they want. This means Verizon, as an investor, does not have to buy shares of stock or ownership in the company. They can invest in a specific product expecting that that specific product is for them. Its not like companies like samsung for example don't sell any phones to other carriers, just not the exclusive ones.
I don't know the details of the financial statements and everything to say if Verizon is paying their share of the dev costs, but regardless I think that this does promote more competition. First, it allows carries to compete with one another for better phones. All the carriers are scrambling to pay for a better phone. This creates a pull on the manufacturers to create better more advanced phones rather than just telling carriers that they have to use their shitty phone because they don't want to develop one. So the current situation creates competition to create better and more advanced phone from both the phone companies and the manufacturers.
The proposed plan will only generate competition in the manufacturing sector... probably driving them out of business as they will compete on price and the phone companies will likely start/buy their own manufacturing businesses.
If these regulations go though Verizon will stop buying phone from phone manufacturers or pouring money into the companies and will just buy one and make their own exclusive phones.
Small companies don't always help the consumer. Things like cell phones and large cell networks both have great economies of scale. Don't underestimate the power a free market can have for the consumer. When the iPhone came out massive amount of research went into new phones. None of them can really compete yet, but without the iPhone (being exclusive) we would have never had this huge jump in competition, lowering of prices etc.
....when has Verizon actually offered a phone that anybody actually wants?
So, they are shortening their exclusivity on the Samsung 4589? The what? Who cares?
Verizon may have a good network, but they have absolutely no phone selection whatsoever... No one is waiting in line to buy a phone from Verizon....
Dog-saves-owner's-family-by-chewing-apart-phone; owner then buys groceries for hungry family of 3.14. Dog found still chasing tail with owner.
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"You can only use your PS2 on PS Home and your XBox 360 on XBox Live."
You also can't play Risk on a Monopoly board. So fucking what? You're talking entertainment and the rest of us are talking telecom. Try to keep up.
So... In my opinion, the easiest way fix to your problem with coverage in the boonies is to go visit a verizon store, and just bite the bullet on the BS craptacular locked-down handset they will give you. At least you'll be able to use your phone to... you know... make phone calls...
Your impressive list of Verizon's virtues seems a little suspicious.
Especially when you seem rather sympathetic or unusually knowledgable.
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Isn't Verizon kind of shooting itself in the foot with a "compromise" like this? After all. it's been trying to get Apple to make a CDMA iPhone for ages, once it's deal with AT&T is up. Under it's own plan, it still wouldn't get to have an iPhone. I don't really have a problem with exclusivity agreements in principle. In the case of the iPhone (and really that's what it's all about--nobody was complaining about exclusivity before it came along) the deal with AT&T has just forced every other company from LG to Motorola to Samsung to HTC to try to come up with that "iPhone killer". They haven't done it yet, but the more they try the better phones in general get. Also, these deals tend to have expiration dates. Apple's agreement with AT&T is up next year, I believe. At that point, it will have to be renegotiated. Apple will have to decide if whatever AT&T is paying them is more than what it would be making by selling the iPhone to other carriers as well--and if it's possible to keep up with the demand doing so would generate. Unfortunately, if AT&T shells out enough to make Apple stick around, it will probably have to jack up the price AT&T customers pay per month for all the neat things the iPhone will do. That rate already seems pretty high.
They help develop phones. They work very close with manufacturers to remove any features they deem useful or that may use more then 8 bits per second of bandwidth. It's a very labor intensive process and I think it earns them the right to keep their crappy, er, customized phones exclusive to their network.
You can only use your PS2 on PS Home and your XBox 360 on XBox Live. No one publicly complains there either.
Of course the PS2 and PS Home are locked together: Sony spent its time and money developing both. Ditto for XBox 360 and XBox Live (except with MS).
Yep, they work very closely to ensure that all phones they vend have any cool features stripped out in order to promote even tangentially related paid services through Verizon. The phone can print via Bluetooth? Remove that so we can better sell data plans for upload to your home PC via the internet. The phone has a user facing camera to allow for videoconferencing? Yeah, that might hurt our services, so you'd better nix that too. Built in WiFi? We can't charge $1.99/mB for WiFi, are you crazy?
Try not to take me more seriously than I take myself.
At some point government has to stop interfering in the markets. You can buy a very cheap phone that does what you want on just about any network. Without iPhone exclusivity, perhaps Sprint may not have invested in the Palm pre, and perhaps AT&T would not have invested in the iPhone either. The promise of exclusivity probably allowed Apple to demand pretty favourable terms which benefit consumers (such as unlimited data) as standard. That, for me, was one of the attractions of the iPhone. In situations were there is no monopoly, or even a quasi monopoly, I would much rather government kept out.
The most important thing, in my opinion, is perhaps to enable consumers to switch carriers easily. Consumers are responsible for their buying behaviours. We can, and do weigh up the total package, the hardware + the services. We don't need government to protect "us poor consumers" from everything. Right now the system is working fine. Not perfectly, but well enough.
When the carriers trot out arguments in favor of exclusivity, or ideas like this, I have just one question for them: if exclusivity is such a great incentive for innovation, when are we going to see all the neat phones with the great features that're already on the market in Asia? There and in Europe they not only don't usually have exclusivity, they don't even have the SIM-locking that US carriers make standard. Yet, in both Europe and Asia you can buy better phones with more features enabled than is typical in the US.
Nice arrangement for the large carriers. Basically they get to tell the small carriers, "sure you can offer this phone after 6 months, but don't you dare get more than 500,000 customers, or we'll jump in and stop the practice." This will force small carriers to not grow large enough to give Verizon or AT&T any real competition.
This sounds like a nice compromise on the face of it, but it stinks.
Windows is a bonfire, Linux is the sun. Linux only looks smaller if you lack perspective.
Does that mean if we chip in to buy them some PS3s or some 360s we might get rid of these ridiculous console-exclusivity deals?
Just open talk to cell phone discussion
Discounted?
You mean the deals where you pay little to nothing up front, but get tied to a long contract with the carrier making up far more than the cost of the netbook over the course of the contract? That's not a discount, but a loan by another name.
See I sell oranges my competitor sells Apples. If I don't let him sell Oranges ever but can let some lower guys that I can control through strict agreements sell oranges then that isn't a monopoly right. right!?
open source sub sim. I might start coding again for this. http://dangerdeep.sourceforge.net/contribute/
But that is exactly what this phone debate is about.
At any time you can buy a full price phone and walk to another provider. This exclusivity debate is because we want discounted devices.
Or else you'd just pay $800 for an iPhone, go to T-mobile and shut up about it.
-Patrick
"They never stop thinking about new ways to harm our country and our people, and neither do we."