Congress getting involved in this locked phone hoopla

The article we cite is about the iPhone specifically, but that’s only because it’s the “it” item right now. But the overreaching message being sent be the House Telecommunications Subcommittee is that locked devices impede competition. Not only that, but they’ve also made statements as to the unfairness of non-prorated early termination fees. To be specific, the committee is saying that these two aspects are “stultifying innovation and unquestionably [diminishing] consumer choice.” We could not agree more. Here’s the argument made by Congress, in a nutshell:

“This highlights problems with the current marketplace structure, where devices are provided by carriers, portability of devices to other carriers is limited or non-existent, and many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching,” Markey said.

We feel this is significant. Telecommunications carriers have lobbyists in DC trying to persuade Congress that they’re doing what’s right not only for them, but for consumers. While it seemed to have worked for a while, these recent proceedings suggest that the message has worn thin. The major carriers’ reactions to this? Change the message! We’ve heard the whole bit about there already being plenty of competition among wireless carriers, so it’s time to mix things up. Take it way, Mr. Zipperstein:

Open access for wireless markets would reduce companies’ incentive to innovate, Zipperstein argued. “In this model, wireless network operators would have a decreased incentive to develop new products or services, because they would simply be in the business of providing airtime access for products chosen by the consumer, deterring investment away from network upgrades,” he said.

Note: Mr. Zipperstein is Steven Zipperstein of Verizon, a frequent player in these proceedings. We’re sure you’ll soon be as familiar with him as we are. Wait, wait. So you mean that the wireless carrier would provide the wireless service, while tech companies would provide the phone? Uh, that works for us. We also don’t see how it would reduce competition; it’s not like no one’s going to need a phone anymore. The tech companies will compete over handsets, while the providers will compete over service. It’s not a technical business model, but it works in theory. We’re much more on board with Chris Murray of Consumers’ Union:

Murray, the nonprofit organization’s senior counsel, testified that “[w]ithout open access to the full range of wireless services and devices, consumers will continue to face unfair charges for service modification or termination, inability to use innovative applications, devices that have been hobbled to minimize competition, and other troublesome practices currently used by the dominant cell phone and broadband providers.”

See how that argument makes a lot more sense? We’ll see how everything plays out, but the more we learn on this topic, the harder it is for us to see the case of the major carriers. [Consumer Affairs]]]>