Verizon Offers Compromise In Exclusivity Debate 106
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.
Ah yes, the old chicken scratch compromise (Score:2, Insightful)
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?
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What was the last Verizon exclusive phone?
As far as Palm goes, I've had to wait for Sprint exclusivity deals to end in order to get the Centro. Now I'm waiting for the Pre exclusivity on Sprint to end in order to get one from Verizon.
Hmm (Score:4, Insightful)
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.
Re:Hmm (Score:5, Insightful)
None that own their own networks, which I suspect is the the other half of the point. Letting their vassals have their "exclusive" phones doesn't really change anything for Verizon.
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Me personally, I don't know if I'd want to do business with a carrier with that small of a user base. They could fold suddenly, my "out of area" charges could be rather high, there's no advantage I see to small business in the cell phone industry.
Now, assuming that people start signing up with some small carrier, I'm thinking Verizon chose that number because Verizon knows they'd buy them out if things started to swing the wrong way. Suddenly you're a Verizon customer again, like it or not.
So how was this
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I was thinking "well what happens if your indep carrier gets bought my a major" but it seems I was thinking too hard.
Can regulators get the really simple idea that "if the customer is restricted in changing, it's exclusive, and bad", or do we have to write it on their dead bodies first?
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As a consumer, which do you like more:
1. AT&T pays 80% of the cost of your iPhone, so the phone only costs you $99 (but you have to use AT&T in order to get that amazing deal)
2. You pay the full $600 price for your iPhone and you can choose between the only 2 carriers (in the US) and 1 of them will be AT&T anyway.
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Actually, only 1 carrier. AT&T and TMobile have different spectrum allocations for UTMS, so you wouldn't be able to take the iPhone over to TMobile anyhow...
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I expect it wouldn't be hard to make a "carrier" that would essentially be a store for unlocked phones that would otherwise be far more expensive.
Hmm. (Score:4, Interesting)
Exclusivity arrangements promote competition and innovation in device development and design.
Citation needed.
I would argue that it is either an antitrust [wikipedia.org] 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.
Re:Hmm. (Score:4, Informative)
Consider the iPhone. Apple went to Verizon and said "Hey, we have this phone. But we need you to add support for visual voicemail. Also, you're going to act as a dumb pipe only (did we mention the reasonably priced unlimited data plan?). We'll handle the ringtones, music, wallpaper and anything else like that. One more thing: you'll give us a cut of the monthly revenue."
That was too much innovation for Verizon, so AT&T got the exclusive deal.
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Consider the iPhone. Apple went to Verizon and said "Hey, we have this phone. But we need you to add support for visual voicemail. Also, you're going to act as a dumb pipe only (did we mention the reasonably priced unlimited data plan?). We'll handle the ringtones, music, wallpaper and anything else like that. One more thing: you'll give us a cut of the monthly revenue."
That was too much innovation for Verizon, so AT&T got the exclusive deal.
Sticking with my Ford/BP analogy, was this argument meant to say it would be completely legal for Ford to pair up with BP to lock you (the consumer) out of any other gasoline choices? I ask because at the end of the day, the iPhone/Pre isn't some new magic device that requires a new magic infrastructure. It's a phone, and it only works on the existing telephone infrastructure.
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This sentence really pisses me off. The only competition going on is the big carriers fighting for exclusive handset contracts, they sure as hell aren't competing with each other on price and/or service quality. Also the handset makers are the ones doing all the work, how exactly is Verizon innovating?
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Re:Hmm. (Score:5, Insightful)
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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 p
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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?
Understandable (Score:3, Interesting)
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.
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I'm not sure I see where their valid point is.
Re:Understandable (Score:5, Insightful)
"but Verizon does make a valid point."
No they don't. They along with other mobile providers in the US are among the very few carriers of any sort of consumer service in the world that enjoy this sort of exclusivity.
This shit wouldn't fly if you could only use Samsung TVs on Comcast. Nor would it fly if Earthlink required you to use a Dell computer to access their dialup service.
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These to my mind are excellent analogies. Vendor locking in certain hardware to their network. Don't get me wrong, I have no issues with AT&T other than the ridiculous texting rates but all of the carriers are guilty of that sin. That doesn't mean I don't want or need a choice of going to someone else should I get totally pissed at AT&T.
Re:Understandable WRONG (Score:2)
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.
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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
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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.
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AOL has been available to Mac users for 20 years
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This shit wouldn't fly if you could only use Samsung TVs on Comcast. Nor would it fly if Earthlink required you to use a Dell computer to access their dialup service.
Gather around, Grasshoppers. For I present to you the tale of the Magnavox Odyssey, the first home video game system to go to market.
Although there was no true exclusivity involved anywhere, there was an appearance of exclusivity, as customers were under the impression that it would only work on Magnavox television sets due to the system being sold only at Magnavox stores. This hurt the Odyssey's sales tremendously.
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Re:continued crappy service & coverage (Score:4, Interesting)
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.
DING DING DING DING... There's your problem! GSM service in North America is a complete joke in my experience. ESPECIALLY once you venture out of any major city or highway! Just look at the coverage maps for each carrier!
I've had both a CDMA and GSM work phone for many years. Traveled through much of the US. I always chuckle when I see some reviewer favorably comparing the two, ESPECIALLY on coverage.
I was actually up in Maine (Bangor and Bar Harbor) just last week. I had my personal verizon phone with me, and a GSM work phone. The GSM phone had a t-mobile sim but all of the carriers seem to mutually roam in Maine. The phone could associate with banner (company) : Cingular (AT&T), US-890 (Unicel), and T-mobile (T-mobile). It autoregistered to any one of those networks depending on the strongest signal. All THREE of those GSM networks combined were completely dwarfed by Verizon's native CDMA coverage. I mean it wasn't even remotely close! Hell, I had full EVDO revA coverage in areas that couldn't even get a regular GSM/GPRS signal.
In my experience, GSM in Canada is no different. For example, I continued up to Cape Breton after Maine. At one point, the closest GSM tower (Rogers) was a hundred miles away! Full CDMA coverage almost all the way up there, and many spots with EVDO!
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...
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well, that raises one other question: since there are two distinct and incompatible phone networks in the US (CMDA and GSM) would phone makers make versions that work on both networks? All of a sudden all of these phones would need twice the hardware component count internally so they could hook up with whichever carrier you're currently on. If not, would carriers make two separate lines on phones, one for each network? Would they want to put up with the customer service hassle of telling Aunt May that she
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Some phones already have dual radios. For example, the Blackberry storm comes in a hybrid GSM/CDMA design. When sold by verizon, it has a sim card already installed.
HOWEVER, the phone will not currently roam on domestic GSM carriers. The SIM card and GSM radio are only used for international roaming in countries without a CDMA network. However, that seems to be a contractual limitation rather than a technical one. It likely just doesn't make any business sense right now to offer GSM roaming within the
Astro lawn (Re:continued crappy ...) (Score:2, Interesting)
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 [google.com] list of Verizon's [slashdot.org] virtues [slashdot.org] seems a little suspicious.
Especially when you seem rather sympathetic [slashdot.org] or unusually [slashdot.org] knowledgable [slashdot.org].
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Chill. It's a cell phone, not a religion. Half the people on here have posted about FIOS and cell phones. I've also posted a ton of "knowledgeable" stuff about physics, computers, electronics, etc. etc. What does THAT tell you about me? I've never worked for a cell company. I don't even own stock in a cell company. I just happen to use the phone (and recently data) a lot, and have traveled pretty extensively in the US. When I see a discussion I can contribute info to, I post a comment.
besides... you
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Mount everest has people on it 1 month a year, there are over a million people in maine at any given time!
Like duh! The top of Mt. Everest is much closer to the satellites than anywhere in Maine would be. ;)
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Really? (Score:4, Insightful)
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 [consumerist.com] 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.
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And furthermore, US has some of the worst cellphones and some of the most stripped down cellphones. Here in Europe I can buy retail any Nokia phone and just insert my SIM card and it just works. The worst I've seen when buying a phone from a GSM company like Orange or Vodaphone with a plan (so the cellphone is much cheaper than retail) is having VoIP or FM radio disabled but otherwise there's no such thing as not being able to use your own ringtones or stuff like that..
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NO COMPROMISE ON THIS (Score:5, Insightful)
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.
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Seeing as each configuration would still need to undergo FCC testing, it is likely that the pluggable modules you speak of would actually introduce complexity into the situation (namely the plug). Sure, it would make it so that a technically adept user could swap the modules in order to switch carriers, but the overwhelming evidence is that most people like to switch to shiny new phones as rapidly as possible.
Really, the solution is not to ban exclusivity arrangements, it is to make it relatively straightfo
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Really, the solution is not to ban exclusivity arrangements, it is to make it relatively straightforward for third parties to be able to offer a phone that works on a network.
I don't think this is a real hurdle.
For the GSM-based carriers, you just buy phone that's not carrier-locked and insert your card.
Looking around on Google, it turns out that you can get unlocked CDMA phones too, just buy the phone and tie your account to that phone based on its ESN.
But the other problem you point out is a valid one: the subsidy the US carriers offer for buying their chosen phones with their contract makes buying an unlocked phone unpalatable. They don't even offer a way to buy a cheaper mo
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I can tell you the first phones that appeared after the ATT breakup were pieces of crap. They were cool novelties, but the quality sucked. About the only benefit to the average person was that geeks could
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Where is all this crazy coming from.
The issue with analogue services was the requirement of renting a phone. The next huge issue was removing the long distance carrier lock in and then phone number portability. The latter didn't seem much like a necessity.
In no way does any of this translate to "I want to use an iPhone on X network." Let us be rather clear in that this is precisely the issue that everyone is complaining about. It is no way the same involuntary lock in that my parents had to fight with. I ca
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Well then, how about we require Verizon and Sprint to convert to GSM. You know, like the REST OF THE WORLD. But that would be a bit unfair as well. Frankly Verizon has a better network in the US. But I do just enough traveling to the rest of the world that we AT&T at work. (And I have an iPhone).
Now 4G is pretty much supposed to be the same everywhere. So some of that will go away.
But personally I don't see what the big deal is. I know people who prefer verizon and got a blackberry storm. They s
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Well then, how about we require Verizon and Sprint to convert to GSM. You know, like the REST OF THE WORLD
That would be un-American. Seriously, that was the argument given. When the frequencies for digital mobile telephony were sold in the EU and most of the rest of the world, it was with the requirement that they were used to implement a given family of protocols (GSM, later evolutions of the GSM standard). In the USA, that was regarded as government interference in the free market; the correct, red-blooded American capitalist, solution was to let the companies compete with whatever standard they want and l
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The trouble all started when you american morons invented CDMA as a NIH syndrome response to the GSM.
That is why you have stupid contracts, tie-ins, no advanced phones (come on Nokia N97 is far better than iPhone), and stupid fees.
Someone will mod me down as flamebait, but i can afford to lose points.
Why couldn't you guys stick the GSM. It was flexible, allowed NO tie-ins, was easy to administer.
But Nooooo, you morons had to go and invent a whole new standard because you were too pissed to use the frogs' st
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UMTS is usually implemented as a GSM type service over a CDMA carrier. So apparently it wasn't that moronic.
The relative lack of difference in prices between the U.S. GSM and CDMA carriers suggests that it doesn't matter very much.
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Its the lockin that matters.
CDMA is used only in USA. (Ya, other countries have it, but not as extensive).
So makers make them only for USA markets which consume far lesser volumes.
Lesser volumes mean more price per unit.
Buyers will not pay $450/- per mobile. They would pay $50/-
So carriers subsidize these upfront with contracts.
So you end up paying $3500 over 2 years for a $450 mobile phone because you want to pay only $50 upfront.
In GSM, the sheer volume is HUGE. Worldwide, more makers, more units and less
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I don't know the specifics of it, but I suspect that the U.S. market for CDMA phones is large enough to get pretty good economies of scale, I doubt that there is a huge difference in price between producing 500,000 units and 5 million units.
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CDMA is a far superior technology than GSM and UMTS even uses W-CDMA.
CDMA specifies on-air specifications. Period.
GSM specifies the whole damn infrastructure.
CDMA allows network carriers to design their own network features, one of which is lock-in.
GSM does not do so.
Which is superior?
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Everything is supposed to be a compromise, if the government didn't help businesses at all, than we wouldn't need laws protecting consumers, similarly when the government over-protects con
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This then raises the question of what market conditions exist that make it attractive for Apple to sign such a deal for the iPhone.
Sorry, I am finally unable to resist this...
Is it possible that the folks at Apple mispronounced AT&T, and thought it was GayT&T? :)
(ducks out of the way of the flying fresh veggies...and flying canned veggies).
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Remember that the iPhone was a gamble for both Apple (who had no experience in the cellphone biz) and AT&T (who were trying to sell a cellphone from a company with no experience in the cellphone biz).
Also, AT&T had to do a lot to support the iPhone (Visual Voicemail etc) and that doesn't come cheap.
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Exclusivity agreements can be monopoly abuse if the carrier in question has a near monopoly. In this case, the handset manufacturer has little to lose (a tiny percentage of potential sales) and the carrier gets another reason for customers not to go with the smaller carriers. That doesn't appear to be the case here, however.
If a carrier has 50% of the market, then a handset manufacturer signing an exclusive deal loses 50% of their potential market before they ship a single unit, which is rarely good busi
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Of course exclusivity deals are terrible for ordinary people. That's not factually in doubt. Instead, I'd like to explore why you'd post a comment like this. As I see it, there are three explanations:
Worst idea ever ? (Score:2, Interesting)
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 !
Freedom is slavery! War is peace! (Score:2)
"exclusivity agreements promote competition"
how can anyone ANYWHERE not see the blatant intellectual dishonesty.
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In one word: Bullshit
In two words: Bull Shit.
In three words: Fucking Bull Shit.
The numbers don't add up that way. At&t spent crapola on supporting the iphone. As did Sprint to support the pre. The only painful part of the process is the carriers giving up a little bit of control. Not money, not infrastructure improvements: control.
The arugment (Score:5, Insightful)
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.
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You and and the guy who replied to you are exactly right. If you let them, they will of course compete on the "cool factor". But why should you let them. If they want to compete for cool-factor, they should become a cell-phone manufacturer.
Once they can't compete for cool-factor, they'll have to compete for price, coverage, service. Well, or getting monopolies...
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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.
I see two solutions: Either carriers are forced to sell all their phones at fair market value and unlocked so they can be taken to other networks; OR, carriers are legally barred from selling and investing in phones.
Either way, everything that the carriers are saying is complete BS when compared to how the cell phone industry in Europe works.
Like it matters... (Score:2)
....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....
Yelp! What's the number for 9-1-1? (Score:1)
what exactly is Verizon thinking? (Score:2, Interesting)
Government should stop interfering! (Score:2)
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
Why does exclusivity help? (Score:3, Insightful)
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.
More like a way to keep the small carriers small (Score:2)
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.
Congress has a (publicly funded) medical plan? (Score:1)
Apples and Oranges (Score:1)