Democratic bill could force Apple, AT&T to unlock iPhone
When T-Mobile began selling Apple's iPhone in Germany last fall, a legal skirmish ensued, forcing the wireless carrier to sell it untethered to a contract--at $1,460, no less. T-Mobile eventually persuaded a court that the two-year contract was legal.
Now that same kind of European rule would be imported into the United States--meaning AT&T would be legally required to sell a contract-free iPhone--if a new Democratic proposal in the U.S. House of Representatives becomes law.
Sponsored by Rep. Ed Markey (D-Mass.), a congressman who serves as chairman of a House telecommunications and Internet panel, it's similar to but somewhat more sweeping than a bill proposed in the Senate last year. His subcommittee has scheduled a hearing on the plan for Wednesday morning.
The draft legislation says every mobile provider "shall offer to consumers the opportunity to purchase subsidy-free wireless customer equipment."
The emergence of the 27-page draft bill (PDF), called the Wireless Consumer Protection and Community Broadband Empowerment Act, underscores what is apparently growing concern among congressional Democrats during this session with what they seem to view as insufficiently flexible, forthcoming dealings among wireless carriers and their customers.
Both bills would direct the Federal Communications Commission to establish a number of new rules for wireless carriers. Among other things, those companies would have to give abundant disclosure to their customers about their rate plans in a "clear, plain, and conspicuous manner," breaking out the cost of everything from early termination fees to state and local taxes for the customer.
Carriers would also be obligated to devise more detailed maps of their network coverage areas. And they'd have to permit customers to cancel a contract for any reason without penalty within the first 30 days and to prorate any fees associated with leaving a contract early.
Unlike the Senate bill, Markey's proposal would also dictate that wireless carriers offer customers the choice of buying a wireless service plan with no early termination fee.
Wireless carriers say they charge early termination fees because they've subsidized the cost of the wireless handset used with it, but Markey's draft bill would also require them to offer consumers the ability to buy "subsidy-free" equipment without a long-term service plan--and at the same price as comparable service for a plan with subsidized equipment.
That's where the potential implications for the iPhone and similar devices come in. Right now, signing up for iPhone service is a two-year commitment on top of the price of the gadget itself. But, assuming that AT&T subsidizes at least some of the cost of the phone--one estimate says the subsidy is around $400--Markey's bill would apparently force AT&T to sell it at an unsubsidized price and for a contract length of the customer's choosing.
To be sure, such an option may not even be in some consumers' best financial interests. iPhone unlocking has become a popular pastime, with thousands of consumers buying them without pledging allegiance to AT&T in the first place. But Markey's bill, in the interest of consumer protection, would force carriers to offer such a choice anyway.
The wireless industry has long been lobbying for a uniform set of rules governing its operations from the federal level, complaining that states have imposed a patchwork of obligations for billing and other practices that don't mesh well with the national nature of wireless service. But if its less-than-enthusiastic reaction to the Senate bill is any indication, the House's prescriptive approach likely isn't what it had in mind.
A lobbyist for CTIA-The Wireless Association, which represents the major wireless carriers, is scheduled to speak about the bill at a hearing Wednesday, but the organization declined to speak further about the proposal beforehand.
"Generally, we're looking forward to the hearing and the opportunity to talk about the many consumer benefits that accompany a uniform set of standards for wireless policy in America," CTIA spokesman Joe Farren said Tuesday.
The wireless industry is likely to point out some of the steps it has already undertaken in the absence of regulations in an apparent effort to be more consumer-friendly. Most of the major carriers have announced plans to prorate the early termination fees for their contracts, for instance.
Markey's proposal doesn't stop at wireless issues. It also includes a section that would reserve the right of municipalities to offer their own broadband services--a trend that has encountered mixed success thus far. The bill says such networks "serve the public interest" and that states should not be allowed to make laws thwarting their creation.
Passing federal legislation to promote such offerings isn't new. The idea grew out of attempts by state legislatures, often pressured by major Internet service providers like Verizon and Comcast, to enact laws restricting city governments from getting into the same game. But so far, despite support in both chambers of Congress, no such measure has been made into law yet.
A group of major trade associations representing telephone companies both large and small said in a Tuesday letter to Markey that they're concerned his proposal will create "unintended consequences" that undermine his stated goal of getting affordable broadband to more places.
"We still believe federal municipal broadband legislation would chill private investment in existing and future broadband networks," wrote the association executives. "This ultimately leads to less, not more, broadband deployment as the investment risk for private entities is unnecessarily increased and private capital is displaced with public funds, needlessly burdening taxpayers."
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I can see this as a win for consumers everywhere. I also can see how this would eat into Apple's profits greatly for monthly fees so they will fight strongly to avoid it.
Interesting thoughts indeed.
to pay every time you get a wrong number, "misdialed"
solicitation, political call, etc.
I like how C|Net hangs the iPhone on this so it'll get hits -
Motorola sold millions upon millions upon zillions of RAZRs
because of subsidies. It is arguable whether ATT pays more to
Apple for the iPhone ($12.00 per month) or to Motorola for
subsidies to carry each maker's top-end phone.
But hey - if you like paying $200.00 for a starter phone with no
features in exchange for the freedom to get stuck with equally
bad service on another carrier, be my guest and support this
guy. My guess is the bill will go nowhere because: A. the
telecoms have way too much power in congress, and B.
Intelligent people realize that they have other options, like pay-
as-you-go, 14-day return. etc.
an iPhone, Mac, etc. which means if I jailbreak my phone and a
future update bricks the phone, then too bad for me. It isn't
Apple's fault.
OTOH, if Apple starts selling unlocked phones, any problems
would be covered under warranty, applecare, etc. (IMO)
As far as eating into Apple's profits, I'd think if they no longer
get a cut of the monthly fee they'll get it from the buyer.
"caller pays"?
I guess he thinks there's some real need for people to pay $300.00
for a starter phone. This bill will go nowhere.
treatment from businesses in America or that this is what our
elected officials are spending their time on.
This can bring voters to their house...
so... this becomes "their" business.
Survivors' business!
Sorely, they will make life harder for the rest of us.
the ones which showcase the extra-fee services the phone
companies want to sell us. I don't need a phone that plays
music, and I can't have one with a camera since I work in and
around Federal courthouses. Try to find a phone with bluetooth
handsfree required in California after July 1), WITHOUT a camera
that isn't a Blackberry. Impossible. Verizon just shrugs, and says
there are lots of phones without cameras, but they're basically
stripped junk. Maybe if we could buy the phones with the
features we want, the manufacturers would respond with better
feature sets, not what works best for the telcos.
exclusively by another. What place does this gentleman have
dictated who can sell it and how? Why is that anyone's business
but Apple's, AT&T's and the sucker who pays $500 for a phone?
If it didn't require a 2-year contract and unlimited data plan, I'd
buy one, but until then, I'm using my unlocked Sony phone on
AT&T.
Nobody has a right to own a certain kind of cell phone with
certain features. If you want a free phone from your company,
there are plenty of crappy ones that are free. You can buy a
used phone for barely anything without a contract and sign up
with whoever you want. But why is the government interfering
in who has access to a new device?
Next he will decide the phone costs too much, and suggest the
correct price. The Democrats should stick to limiting who has
access to low quality healthcare and stop worrying about why
someone can't buy an unlocked iPhone to use on T-Mobile...
Thanks to all you rich people for giving up all your hard earned money for buying the little guy universal health care, tax rebates, and the universal iPhone.
As we move further into the 21st century, the old land-line telephone business is starting to die. More and more people are switching to mobile services. In fact, the US market is nearly saturated. So, it stands to reason that the government no longer look at the mobile phone purely as a "luxury", but recognize it as the means by which people communicate. I do not even have a home phone any longer. Every person in my family has a mobile phone, as does nearly every person I call with any frequency at all.
Given how importance mobile communications is to our lives these days, I was utterly shocked that AT&T, which is the largest mobile operate in the US and the only major GSM provider in my area, was able to enter into an exclusive deal with Apple to offer a product that actually undercut all of the competitors in the market, including Motorola, Samsung, LG, HP, and others. Apple's iPhone is definitely a very cool product and very powerful. Nobody can manufacture a phone with such functionality and offer it at such a low price. If I were a manufacturer of mobile handsets, I would be furious.
As a consumer, I am still annoyed by the special treatment and pricing. The reason is that competitors do not even make an attempt to offer such powerful devices, because they would only lose money doing so. The end result is that I am offered fewer choices in handsets.
To make matters worse, what handsets AT&T does offer are locked to their service. Sure, a person who knows the business or is tech-savvy can unlock the phone they buy, but the average person is forced to sign a two-year contract.
Last year, I added a new "line" to my account for my son. Even though I provided my own phone for service, AT&T forced me to sign a new one year contract. I have been a subscriber for years without a contract and I was extremely angry how they jumped on that opportunity to essentially bully me into a contract because I wanted to get a phone for my son. They argued that there are costs in setting up the account, etc., to which I promptly replied that I?d merrily pay a set-up fee. Indeed, I did pay a set-up fee, but I was still forced to sign the contract.
Just this month, I purchased a new phone-- the first I had purchased directly from AT&T since about 2002 or so. I did not sign any piece of paper or any document that I could physically see that said I was entering into a new contract, but when I got home and reviewed my sales receipt, printed on there was a statement that the phone was sold for a special "2 year contract" price. So, they did it to me again, I guess. This one was particularly annoying, since I did not even see it coming.
Bottom line is that I think the mobile operators need to be forced to open up their networks a little more. Consumers are forced into contracts, are given a limited selection of hardware devices, and are sold phones locked to that carrier. All of these practices, in my opinion, are anti-competitive at some level.
These contracts should be illegal - cause they do not help consumers at all. All they do is cripple the market. Carriers are only trying to imprison people into their crippled networks and then do not do anything to improve, cause they know that customers will not be able to switch.
They say iPhone is subsidized...That is complete bullsh*t..Apple makes like 100% on iPhone - so AT&T is just looking for ways to rip people off.
I do not know why here in US it is so messed up with these wireless carriers.
Why do you have to pay for incoming calls in US (does not make sense at all)?
Why do you have to pay termination fee? Especially if you are not happy with the service carrier provides you?
Europe managed to solve all these problems long time ago, but i guess US is still in the stone age...
- Apple-AT&T Deal
- by pstodgel February 27, 2008 4:40 PM PST
- One might want to double check this, but I believe that Verizon
- Reply to this comment
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(19 Comments)was originally contacted to do this deal. They did not like the
make up of the provisions Apple was putting on them, so Apple
went to AT&T. It is not AT&T's fault that the phone became so
popular. None of this is forced down anyone's throat. This is the
deal, you want an iPhone, sign with AT&T, if not sign with
whoever and get whatever phone they provide, but don't crucify
these two companies because they were smart enough and had
enough foresight to put this deal together.