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Sprint, AT&T square off over phone exclusivity

updated 11:55 am EDT, Thu September 17, 2009

Sprint argues for exclusivity limits

Sprint and AT&T revealed signs of tension between carriers this morning over cellphone exclusivity in back-to-back presentations at the Goldman Sachs Communacopia conference. Speaking at the New York City event, Sprint chief Dan Hesse said it would be a "fair question" for the US government to challenge the length of exclusive phone deals and implied that he might agree to shortened periods of sole access to a given model.

AT&T executive Randall Stephenson, however, disagreed and argued that these deals were imperative for the cellular industry. The executive contended that "innovation would not take place" without such deals and pointed to both rapidly falling device prices as evidence. The availability of the $99 iPhone 3G, as well as Sprint's own $149 Palm Pre, was interpreted a sign that phone designers were taking advantage of exclusivity to sell to more people than if they sold to everyone. Single-carrier deals give carriers more room to heavily subsidize device costs knowing that customers are less likely to exit their contracts early.

Stephenson further claimed that network upgrades at AT&T and others to accommodate the extra data load from the iPhone and other 3G smartphones also benefits everyone, not just those using the device that sparked the original upgrade.

The dispute sets the stage for a larger battle in the industry spurred on by legal and competitive issues. The FCC recently began a formal inquiry into anti-competitive practices in the phone business that, among other points, will challenge the legality of long exclusive deals, particularly when they prevent rural carriers from offering the same hardware when other major carriers don't co-exist.

Sprint has to some extent been hurt by long exclusivity deals as it hasn't been able to offer the BlackBerry Storm or other high-profile devices for much of is recent history. That turned around in recent months with the launch of the Palm Pre and the soon to ship HTC Hero, but it's believed that Sprint' deals are short. The Pre should be available to Verizon or other competitors as soon as early 2010.

Meanwhile, AT&T has repeatedly benefited from the iPhone's exclusivity as it has seen a surge in its data revenues and drawn many more customers to more lucrative smartphone plans.



By Electronista Staff
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  1. climacs

    Forum Regular

    Joined: Sep 2001

    0

    Big Business wants gov't to butt out

    unless, of course, they can sic government on their competitors that they can't beat in the marketplace.

  1. chrup

    Fresh-Faced Recruit

    Joined: Sep 2009

    0

    Many different iPhone models??

    I'm not sure what Sprint's case is. They, as well as Verizon, metroPCS, and a number of others, are using proprietary technology, preventing devices like the iPhone to work on their network.

    The jailbreak/unlock community has only one other carrier in the US where the iPhone will work, and that doesn't include 3G either. I doubt, Apple will make a device that only ever works on Sprint, or Verizon, or what ever else comes along. I also doubt, that Apple will make a device that works with GSM and CDMA and what ever else these 'strange' carriers use.

    My money is on LTE (a.k.a. 4G networks) that carry voice and data on the same frequency, using the same technology. None of the carriers is currently using those other than in experimental setups but there are rumors out there, that this is what at least at&t and Verizon will use by 2011. Until then, and the release of the iPhone 4GSX (add more letters at random/will), I'll keep my 3G and I stick with the carrier that I have.

  1. Jonathan-Tanya

    Fresh-Faced Recruit

    Joined: Oct 2004

    +1

    standard arguments

    welll, AT&T is not going to go before congress and ask them to remove their competitive advantages.

    However, when competitive advantage is stemming from sheer size, ability to manipulate the market, or general lack of competition, then, its Congresses duty to step in.

    I think one only has to look at Europe and compare prices, to see if prices are competitive.

    Obviously they are not.

  1. slider

    Mac Elite

    Joined: Oct 1999

    +1

    Here's a Thought

    Require that all carriers use the same technology. To do otherwise yet require hardware to work on all networks would ultimately be passed on to the consumer (ie, if my phone has to work on both GSM and CDMA, since I should be able to take my phone to any carrier I want).

    The only true way for consumers to benefit from competition between carriers is to do away with the carrier's leverage over the consumer. If I buy an iPhone and I'm not happy with ATT then I should be able to move over to Verizon. The competing carrier could buy out the remaining subsidy to get me to transfer my business over to them. So instead of holding on to me by essentially trapping me, the way to get my business is the way it should be, by providing the consumer with the best product. How about you work on building the best network you can and provide real customer service at a fair price instead of finding ways to squeeze every dime out of me and use negative incentives to keep me from leaving. One more example is the crippling of specific hardware to prevent it from doing things the hardware is perfectly capable or doing. Verizon was/is the best at this - they crippled the BT tech in most of their phones to limit what kinda of data you could transfer. Contact information would go through, but if you wanted music or a picture you had to use the network and use up your minutes at best, or had to use their network and buy the music at inflated prices. On an equal playing field that kind of BS would not fly with customers and they'd vote with their feet - as things are it's fine, you don't like it, well, then leave, but you'll have to pay a cancellation charge and will also have to buy a new phone.

  1. Austinite007

    Fresh-Faced Recruit

    Joined: Sep 2009

    0

    I agree with this article and with Dan Hesse

    I do not for one second buy Randall Stevenson's BS about how the lower pricing of phones is so good for the consumer and him using the current prices of the iphone as evidence of such. That is total BS, the real money that the consumer spends on cell phones is on the monthly plans, compare AT&T's monthly iphone rates to Sprint's monthly rates for the palm pre and upcoming HTC Hero phone. You will find a big difference there. This seems to often be a very important area that does not get discussed often enough with this whole FCC thing with exclusivity contracts. The price of the device might go down with exclusivity deals, but as a consumer I am more interested in what I am going to be paying every month, especially for the next 2 years as that is the typical amount of contract length you have to agree to when buying a new iphone, palm pre, or most likely also including the upcoming Sprint HTC Hero. Another area that the FCC needs to investigate is how cell pone carriers are requiring people to purchase certain high dollar monthly data plans when buying high profile devices like the iphone, palm pre, or upcoming HTC Hero. All of these devices are wifi capable, not every consumer is going to need a data plan especially if they can use their existing wifi network at home or wifi hotspots elsewhere. It would be nice if the FCC would put their foot down on this data plan requirement BS as well. Also, I do not like Sprint's policy of forcing people to switch to their new higher revenue monthly plans such as the Everything Data and Simply Everything plans to get a high profile device such as their palm pre or upcoming HTC Hero. Some current sprint subscribers are on grandfathered plans that already have data included at a much lower monthly rate, but if you want a new high profile device Sprint forces you to switch your entire monthly plan, where as AT&T just says you can keep your existing plan just add $30/month for iphone data. I would really appreciate it if the FCC stepped in and set some yes and no rules to this area for cell phone providers.

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