Farhad Manjoo suggests six ways to improve our cell phone industry in the United States. Most are hard to disagree with, but I found one:

You have the right to unlock your phone. When you get a phone as part of a new cell plan, there’s a good chance that Verizon, Sprint, or whoever else has “locked” the device. This means that the phone won’t work on another carrier. The companies do this because they want to recoup the subsidy you’re getting for buying a phone along with a cell contract. For instance, AT&T gives you a price break on the iPhone when you sign up for two years of AT&T service (the full price of a 16GB iPhone 3GS is $599, but you pay only $199 when you sign the contract). Because it’s helping you pay for your device, AT&T locks the phone so that you can’t take it to a rival like T-Mobile.

Sometimes I get the feeling that when people say things like “Oh, I wish that our cell phone system were more like the rest of the world’s with open standards,” they’re kind of thinking that they’ll get to stick it to AT&T. In reality, they’re sticking it not to AT&T, which is already close to being there, but to the much-celebrated Verizon.

If it weren’t Manjoo and if he didn’t hone in on AT&T and T-Mobile, I would suspect that he didn’t know what he was talking about. But he does and I believe he’s being disingenuous. You see, Manjoo is an iPhone user and iPhone users by default have to believe the worst of AT&T. AT&T locks their phones and that is unconscionable. Ergo, the government should force AT&T (and T-Mobile) to unlock their phones.

What he’s leaving out is that Verizon, which all right-thinking iPhone users love, and Sprint and most carriers who are not AT&T or T-Mobile don’t use SIM cards and their phones technologically cannot be unlocked. So what Manjoo would do is punish the evil AT&T and (innocent bystander) T-Mobile. Verizon, meanwhile, would get a free pass. Further, it would be punishing AT&T and T-Mobile for using a more open standard over the closed one that Verizon uses.

If we really want open cell phones like they have in Europe and the rest of the world, we sould not be punishing GSM networks like AT&T and T-Mobile, but would rather be punishing CDMA networks like more-or-less everybody else. The law would not say then that “If you use SIM cards, you must allow unlocked phones” but rather “If you make and market phones in the United States, they must be GSM-compatible and must be able to be unlocked.” That way, makers of CDMA phones would have to include GSM capability in addition to CDMA capability. This would be a logistical challenge and would make the phones more expensive. This would be unfair to Verizon and Sprint and generous to AT&T, but it would be rewarding AT&T for doing something good and right and decent (which I know is against the rules because they’re mean to iPhone users).

It would strongly incentivize switching over to GSM or some sort of open technology. Now, Verizon is moving from CDMA to LTE. LTE is a more open standard akin to GSM, but it can be made proprietary. You can absolutely bet that if carriers with open-standard networks are met with a burden that those with proprietary standards are not, not only will Verizon go as proprietary as they can but AT&T and T-Mobile (also moving to LTE) will do the same. I agree with Manjoo that a law should be passed or a regulation put in place, but I think it should be one far more aimed at Verizon, Sprint, and the other CDMA carriers. Even if that means being nice to AT&T.

However, the counterargument to such a law is very clear. Essentially, opponents will be able to say “But the phones will cost more!” because, well, they will. If you can take my AT&T phone and walk it over to T-Mobile, AT&T is either going to stop subsidizing your phones or they are going to ramp up their cancellation fees big time. And who could blame them? They helped you buy their phone. So get used to the idea of a cell phone costing $600 instead of $200. Personally, I think this is a positive development. However, a lot of non-geeks would rather have their phone paid for. At the very least, you’re going to have to let the carriers keep a phone locked for the duration of the contract.

By the way, they can’t even do that now. At least not with devices made by companies not named Apple.

When they talk about how mean AT&T locks their phones, let’s be upfront about something. They’re not talking about AT&T locking phones; nobody is talking about anything but the iPhone. You want to know how much it’s going to cost me to unlock my HTC model? $3. It’s not even a question of whether AT&T will let me do it or not and in fact sometimes they will help. I would be doing so through an intermediary with HTC, the phone’s manufacturer. If you can’t do that with the iPhone, look not to AT&T but to Apple. And before we start talking about how the meanies at AT&T won’t let them because AT&T is holding the phone hostage, remember that Apple was the one that lined their pockets with that deal. We know they didn’t have to because Apple’s competitors did and do not concede exclusivity. Sure, AT&T paid Apple a pretty penny to prevent things like that happening. But it was Apple that took the money and pocketed it. They certainly didn’t pass the savings on to you.

Meanwhile, it’s White Knight Verizon that has locked phones that cannot be unlocked under any circumstances.

Category: Market

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3 Responses to Throwing Apples at AT&T

  1. ? says:

    You’ve obviously studied the cell phone market a lot more closely than I have, so hopefully you can clarify a couple of things for me.

    1. Why is Verizon celebrated? I know they have the best network, but when I looked in to buying a Droid from Verizon, I learned that not only would the data plan be expensive, but I couldn’t downgrade the service ever.

    2. Why is ATT hated on? I understand that they have an exclusive arrangement with Apple, but I also remember reading that someone figured out how to “unlock” the iPhone almost immediately after it hit the market.

  2. trumwill says:

    People like Verizon because it offers the best service. The difference between their network and AT&T’s is exacerbated by the fact that the weak iPhone makes AT&T’s network look worse than it is.

    Verizon’s policy about never being able to ever downgrade from the data plan is why I refuse to go with Verizon. Whether I would want to stick with the data plan or not is beside the point. I think the policy is ridiculous. “We made you pay this much for this device, but for you to use it, we’re going to make you pay this much more.”

    Of course, AT&T has the same policy when it comes to the iPhone. But that’s part of my point: The iPhone with AT&T is merely treated like every phone with Verizon. At AT&T, the iPhone is the exception. Apple is the exception.

    You can unlock an iPhone, but you still can’t use it with Verizon (or Sprint or MetroPCS or US Cellular or Alltel) because the latter use CDMA networks, which are technologically incompatible. Most phonemakers make different variations of each model for the different carriers. Apple chose an exclusive contract. And this becomes AT&T’s fault.

  3. trumwill says:

    Well, screw AT&T. They apparently decided to institute the same policy as Verizon regarding mandatory data plans. They’re still a leg-up on Verizon because they use GSM phones, but color me unusually outraged at this development.

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