Tuesday, July 7, 2009

Oh, Good, Here Comes the Justice Department

They did such a bang-up job with the Microsoft situation, I'm so glad to see that the Department of Justice is on the case! Now, if you read any of yesterday's grumpy rants, you know I'm not exactly a big fan of AT&T or of the ability of Federal agencies to improve, well, anything. Truth be told, I would LOVE to see the iPhone freed from AT&T.

But… this is just stupid. Check this quote out:

Among the areas the Justice Department could explore is whether wireless carriers are hurting smaller competitors by locking up popular phones through exclusive agreements with handset makers, according to the people.

They specifically call out the iPhone. Wow.

Yes, the iPhone is awesome. Yes, it's a competitive advantage. I mean, duh! Of course it makes it harder for smaller competitors to compete. That's the whole damn point! Have we forgotten what a monopoly even is? It's hard to imagine how it could be illegal to enter into a two- or five- year exclusive agreement with the manufacturer of a phone that accounts for 1.1% of the mobile phone market.


Playing Monopoly by the Department of Justices rules would be no fun, because you'd only need one property before you have monopoly. To heck with requiring players to have 100% of the properties with the same color. If you've got more than 0% of one color, you're good to go. Monopoly, baby. Start building houses! One house is at least 33.33% of a color, so you obviously have a monopoly there!

God, this would be such a waste of taxpayer money. It's is a sad attempt by the Executive branch to appear responsive to negative public sentiment about wireless carriers without any real legal basis and without any intent to actually fix or even really change anything (how'd that split-up of Microsoft work out?). This is using a duct-tape as a band-aid and sticking it nowhere near an actual wound.


Mostly Torn said...

Isn't it the wireless carriers that the government is implying might be abusing their powers, not the handset manufacturers?

The whole thing with tying a handset (which is purchased outright) to a specific carrier even after the contract expires - that's one of the potential issues.

Jeff LaMarche said...

Yes, it is the carriers they are investigating. And if there were only one manufacturer of cell phones, or one truly dominant one, I could see how locking up that manufacturer with an exclusive contract would be unjust. But I'm having trouble seeing how entering into an exclusive contract with one of many viable manufacturers is abusive.

The situation may not be the best thing for consumers, but that's a far cry from abusive or anti-competitive behavior to the extent that the law has been broken.

The situation may seem "unfair", or not in the public interest, in which case new laws or regulations could be considered to deal with it, but is the behavior anti-competitive and in violation of the Sherman Act or other laws designed to prevent abusive behavior? I think that's a stretch, and I don't think they'll actually fix anything.

Jonathan Nobels said...

I could go on for hours recanting personal tales of meetings with every one of the North American carriers that would make anti-competition lawyers drool. Their "requirements for Handsets" documents usually read like the Old Testament.

What shocks me is not that AT&T is the only iPhone carrier - but that they agreed to sell it at all given that it completely decentralizes the carrier from the user experience. This is usually a complete show-stopper in the mobile world - where products are designed to stroke carriers egos and flaunt their failed data service offerings and weak brands just to get them to put your handset on their shelves.

It's high time that sales of phones and service are decoupled otherwise, we'll never see any real competition in the US when it comes to service pricing. Carriers will spout their usual complaints about foriegn devices wreaking uncontrollable havoc on their network but this is just a smokescreen. Networks everywhere else in the world seem to be holding up just fine.

bcc said...

in France there was a ruling that a similar situation (with Orange as sole provider) was anticompetitive, the problem was not the monopoly but the bundling. Apple an orange were forcing a contract with orange with the iphone. The result for the whole of last year the 8GB 3g iphone on the 2 smaller carriers where Euro 99 instead of the Euro 199 it started out when selling only on Orange.
I think this was clearly to the users advantages.
I am not even starting on the saving on the available plans.