Congress Taps Into Steroids, now Apple iPhone

As if it wasn’t enough for Congress to be wasting its time and spending millions in taxpayer dollars to fight the war for professional sports leagues against steroids. Now four members of Congress have decided to call for an investigation into whether AT&T should be able to have an exclusive agreement with Apple for distrubution of the iPhone and use on its network. I’m unaware that our Constitution provides for the right to have an iPhone on any carrier of one’s choosing.Considering that our government recently found no anti-trust problem with Google’s purchase of DoubleClick (controlling the overwhelming majority of online ads), it boggles the mind that Congress would be concerned with Apple’s exclusive contract with one mobile phone supplier – is this really any different than the Palm Pre, the Blackberry Bold and 96MB RAM version of the Blackberry Curve? Sure the terms are onerous – buy the phone at full retail value and get hit with a termination fee if you leave and an inability to use the phone on another network. But that is the consumer choice and right not to buy an iPhone. Additionally, if you buy a Verizon CDMA-based phone, you wouldn’t be able to use it on another network either. It’s not like this issue is exclusive to the iPhone. Professor Tim Wu comments on this issue – I’ve met him several times at some of his speaking engagements. He’s discussed the problems of switching carriers before and how a phone becomes an “expensive paperweight” in the US.

Committee chair Ed Markey (D-MA) complained that provider exclusivity and high fees are “stultifying innovation and unquestionably [diminishing] consumer choice.” I’m wondering how a GSM-based iPhone “stultifies” innovation and whether providing Major League Baseball and the National Football League with  anti-trust exemptions doesn’t limit consumer choice to watch different professional sports leagues. In the latter example, there is no alternative. In the former, if you don’t like the iPhone, get a Palm Pre, a Blackberry or any other phone you’d like. If the iPhone cannot be exclusively tied to AT&T, then essentially this is a death knell to all freedom of contract for any manufacturer to obtain a premium to distribute exclusively with one or few outlets. Unless I’m missing something here, why is Congress wasting its time on this investigation. Possible reasons:

  1. A few members of Congress are hoping to win public sympathy by providing the iPhone to places where AT&T coverage is not optimal
  2. Several members of Congress don’t use AT&T mobile phone service but badly want an iPhone
  3. Big players are hoping to use Congress to break AT&T’s exclusive deal with Apple for the iPhone

If you’ve got opinions, I’d enjoy hearing them.

Michael M. Wechsler, Esq.

Internet / Mobile entrepreneur since 1989, Intellectual Property attorney since the mid 1990s, former in-house counsel at iVillage.com, Senior Vice President of Business Strategy at Zedge, Co-Founder of the IDT Internet Mobile Group, E-Discovery expert and legal consultant with Kroll Ontrack, and owner and operator of TheLaw.com

Michael M. Wechsler, Esq. – who has written posts on The Law Professor.


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