How long is AT&T's Exclusive Contract with Apple?

---- David Weintraub <qazwartgmail.com> wrote:
> I've just finished talking to a friend in the mobile phone business,
> he was telling me that next year we'll see other cell phone carriers
> selling iPhones in the U.S.
>
> I mentioned that most people believe Apple and AT&T have a five year
> exclusive contract, but he said two things why he doesn't believe
> that's true:

A quick Google turned up this reliable source:

http://www.usatoday.com/tech/wireless/2007-05-21-at&t-iphone_N.htm

>
> * Five years is an extremely long time in the cellular business. Five
> years ago, Motorola was hot. Now, Motorola is splitting into two
> companies in order to stay in business.

Motorola, like Nokia and others before it, got blown away by other product introductions. And Motorola did release an iTunes mobile phone in conjunction with Apple that didn't sell well, to put it mildly. On its own, Apple developed a product that was FAR superior to it.

>Heck, two years ago, Apple was
> negotiating with Cigular about the iPhone, and now Cingular no longer
> exists. Who knows where AT&T will be in five years?

AT&T swallowed Cingular. Apple talked to Cingular, but they talked to practically every other major wireless network provider too.

Sony Walkman owned pretty much owned the mobile music hardware market till iPod was introduced about 10 years ago. In the intervening decade, though many companies have tried (including Sony), nobody has come close.

> * Apple's EULA on the iPhone is for only two years. Once those two
> years expire, customers can legally use their iPhones on any network.
> That mean that almost a million customers will be free of the EULA
> come July 2009. Almost 5 million by December 2009.
>
> He explained the reason AT&T has such a tight hold on the iPhone now
> is due to other cellular carriers worried that Apple will sue them if
> they help consumers break Apple's EULA with customers.

This is something carriers probably won't want to mess with.

>Once it is safe
> to assume that a substantial number of iPhone users aren't under
> Apple's EULA, these mobile carriers will be free to advertise their
> networks to iPhone users. And, they can actively assist iPhone users
> to get connected to their networks. They can unlock iPhones, provide
> customer support, and even sell "second hand" iPhones.

This could result in very nasty, and expensive, litigation that the carriers probably couldn't win.

>
> These carriers will have no obligation to ascertain the customer's
> status with Apple's exclusive EULA. This will put Apple in a tough
> spot: They could sue individual iPhone users for breaking their EULA,
> but that would be hard to do. They'd have to investigate, gather
> evidence, and then sue individuals one at a time. And, even Steve Jobs
> isn't going to want all the negative publicity such suits will bring.
> More likely, Apple will do what they did in Europe: Sell unlocked
> iPhones at a $200 premium while remaining the main partner with AT&T.

One of the big reasons why iPhone is so successful is that it is transparent, easy to use and set up. The geeky market for this is very small, and probably wouldn't be profitable enough for other carriers to pursue.

Marilyn

On Apr 29, 2008, at 5:47 AM, David Weintraub wrote:

> * Apple's EULA on the iPhone is for only two years. Once those two
> years expire, customers can legally use their iPhones on any network.
> That mean that almost a million customers will be free of the EULA
> come July 2009. Almost 5 million by December 2009.

Any network on which it works. Unless CDMA is hidden in the radio
chip, that means T-Mobile (useless where I am, but useful to others)
and some little guys (probably quite useful where they are important).

   --John (for whom AT&T provides the best coverage of anyone--
couldn't have bought if Verizon (other radio), T-Mobile, etc)

--On 4/29/2008 5:47 AM -0700 David Weintraub wrote:

> Heck, two years ago, Apple was
> negotiating with Cigular about the iPhone, and now Cingular no longer
> exists. Who knows where AT&T will be in five years?

This is a bit misleading--AT&T _is_ Cingular.

Cingular came into being in 2000 as the name for mobile service provided
jointly by BellSouth and SBC; the former was one of the "Baby Bells" from
the original AT&T break-up in 1983 and the latter was a merger of three
"Baby Bells", with the former Southwestern Bell at its core.

In 2005 SBC bought AT&T and started using that name; SBC/AT&T and BellSouth
then merged in 2006 and kept the AT&T name. Since the wireless service was
now wholly owned by AT&T--the partners to the joint venture were now all
merged into the same company--there was no real advantage to maintaining
the separate "Cingular" name.

The iPhone actually played a role in this rebranding. The original plan
called for the Cingular-to-AT&T transition to be more gradual and take
place later in 2007, but the change was accelerated in order to get the
AT&T name completely in place before the initial iPhone release.

Dave Scocca

David Wrote:
> > These carriers will have no obligation to ascertain the customer's
> > status with Apple's exclusive EULA. This will put Apple in a tough
> > spot: They could sue individual iPhone users for breaking their EULA,
> > but that would be hard to do. They'd have to investigate, gather
> > evidence, and then sue individuals one at a time. And, even Steve Jobs
> > isn't going to want all the negative publicity such suits will bring.
> > More likely, Apple will do what they did in Europe: Sell unlocked
> > iPhones at a $200 premium while remaining the main partner with AT&T.

On Tue, Apr 29, 2008 at 11:11 AM, <mmattynyc.rr.com> wrote:
> One of the big reasons why iPhone is so successful is that it is transparent,
> easy to use and set up. The geeky market for this is very small, and probably
> wouldn't be profitable enough for other carriers to pursue.

As long as all iPhones are under an exclusive AT&T/Apple EULA, other
carriers are not going to risk helping users break their EULA with
Apple. Apple will sue there keisters off. Those who break their EULA
on their own do represent a fairly small market although we've seen
evidence on this list that T-Mobile will offer some unofficial help in
order to retain customers.

However, once there is a sizable number of users who aren't under the
EULA, other carriers are no longer under threat that Apple will sue.
They can offer their service for iPhone customers who are no longer
under the EULA. Plus, they have no real obligation to investigate
whether or not a specific customer is under such an agreement. At that
point, they can merely take the customer's word for it. Apple could
still sue the other carrier for encouraging iPhone customers in
breaking their EULA commitment, but that would be much harder to
prove.

If Apple can't sue the other carriers, they could enforce their EULA
by suing customers who knowing break it. Or Apple could find each
customer breaking their EULA, go to the other carrier and request it
stop service to that particular customer. Either way, Apple would have
to track down individual customers which won't be easy. And, any
action Apple takes will reek with bad publicity.

The solution is selling unlocked iPhones at a premium: $600 instead of
$400. Apple already does this in Europe. But unlike Europe, American
carriers are use to subsidizing cellphones for long term commitments.
I could imagine a carrier subsidizing iPhones for $200 in order to be
competitive with AT&T. But, as my friend pointed out, AT&T doesn't
have any real advantage because they lose a bit more than $200 to
Apple in revenue sharing. It all balances out in the end.

There is still quite a hurdle for other carriers: With AT&T or Apple,
a customer buys an iPhone, connects it to their computer, answers a
few questions, and they're done. If I want to use my iPhone with
another carrier, I first have to buy an iPhone from Apple, unlock it,
bring it to the other carrier, and then sit around for 30 minutes
while they get the iPhone on their service. Even with unlocked
iPhones, I am still making one trip to Apple to buy the phone, and
another trip to the carrier to get the service installed.

However, imagine if you're T-Mobile, and there's a customer out there
who's deciding whether or not to go with T-Mobile or AT&T. Or imagine
this is a T-Mobile customer who lusts after the iPhone and in thinking
of switching to AT&T to get one. There is quite an incentive to rope
in that customer by giving them what they want.

A QUICK UPDATE: There are rumors (<http://snipurl.com/26i8x>
[techland_blogs_fortune_cnn_com]) in Fortune Magazine blog that AT&T
will subsidize iPhones by about $200. Most commentators are scratching
their heads because the rumor states this is only for customers who
buy their phones at AT&T. Does this mean that people who buy their
phones from Apple will pay more or will Apple also subsidize the
phones too? And, if iPhones are flying off the shelves, why?

This rumor only makes sense if Apple is really selling unlocked
iPhones at a $200 premium as they do in Europe. Then, the rumored AT&T
subsidy is really just AT&T selling the locked iPhone without the
premium.

--
David Weintraub
qazwartgmail.com

 On Apr 29, 2008, at 5:47 AM, David Weintraub wrote:
> > * Apple's EULA on the iPhone is for only two years. Once those two
> > years expire, customers can legally use their iPhones on any network.
> > That mean that almost a million customers will be free of the EULA
> > come July 2009. Almost 5 million by December 2009.
> >
>
On Wed, Apr 30, 2008 at 7:18 AM, <johnbaxterlistsmac.com> wrote:
> Any network on which it works. Unless CDMA is hidden in the radio
> chip, that means T-Mobile (useless where I am, but useful to others)
> and some little guys (probably quite useful where they are important).

In the United States, this is pretty much T-Mobile and some of the
smaller carriers. Sprint, Altel, and Verizon are all CDMA. Only AT&T
and T-Mobile are GSM.

--
David Weintraub
qazwartgmail.com

---- David Weintraub <qazwartgmail.com> wrote:

>
> However, imagine if you're T-Mobile, and there's a customer out there
> who's deciding whether or not to go with T-Mobile or AT&T. Or imagine
> this is a T-Mobile customer who lusts after the iPhone and in thinking
> of switching to AT&T to get one. There is quite an incentive to rope
> in that customer by giving them what they want.

AT&T is the reason I don't own an iPhone. Very frequently, I'm with a friend or business associate and quite often I'm getting great mobile reception while they are unhappily staring at their AT&T phone, i or not, unable to make or receive calls. And I'm in New York City, so we're not talking the middle of the Sahara.

But ever since I first saw it, I have been salivating over iPhone - I know I'd love it, and I think the pricing of the AT&T plan (which Apple dictated) is very favorable.

And people who own an iPhone make me even more envious when they talk about how well it works with iTunes. Considering that it's about 10 years since iPod/iTunes and the music store were introduced, and there still hasn't been a remotely successful product, music management or digital music retail service. Add this on to the easy to use webmail, web browsing experience, etc., and it will make it even harder for mobile phone manufacturers to come up with a superior feature set, let alone the user experience. And think about it - getting iPhones widgets, games, etc. in the iTunes store, as well as podcasts, videos, movies....

>
> A QUICK UPDATE: There are rumors (<http://snipurl.com/26i8x>
> [techland_blogs_fortune_cnn_com]) in Fortune Magazine blog that AT&T
> will subsidize iPhones by about $200. Most commentators are scratching
> their heads because the rumor states this is only for customers who
> buy their phones at AT&T. Does this mean that people who buy their
> phones from Apple will pay more or will Apple also subsidize the
> phones too? And, if iPhones are flying off the shelves, why?
>
> This rumor only makes sense if Apple is really selling unlocked
> iPhones at a $200 premium as they do in Europe. Then, the rumored AT&T
> subsidy is really just AT&T selling the locked iPhone without the
> premium.

I there's an opposite take on this in the NY Times:

http://bits.blogs.nytimes.com/2008/04/29/the-199-iphone-somethings-missing-from-the-picture/index.html?hp

Marilyn

On 1-May-2008, at 09:12, David Weintraub wrote:
> If I want to use my iPhone with another carrier, I first have to buy
> an iPhone from Apple, unlock it,

Right, easy enough.

> bring it to the other carrier, and then sit around for 30 minutes
> while they get the iPhone on their service.

Don't you just swap the sim card from your existing phone, like every
other phone?

On May 1, 2008, at 1:56 PM, LewisGmail wrote:

> On 1-May-2008, at 09:12, David Weintraub wrote:
>> If I want to use my iPhone with another carrier, I first have to buy
>> an iPhone from Apple, unlock it,
>
> Right, easy enough.
>
>> bring it to the other carrier, and then sit around for 30 minutes
>> while they get the iPhone on their service.
>
> Don't you just swap the sim card from your existing phone, like every
> other phone?

No.

The iPhone comes with an AT&T SIM card, and will only work with an
AT&T SIM card.

If you unlock it, then you can try a T-Mobile SIM or whatever, but
you're off the map support-wise that way.

Standard, typical iPhone users never touch the SIM card. If they're
already AT&T customers, then iTunes takes care of transferring the
service from the old phone/account to the new phone; if they're
someone else's customer, then iTunes takes care of that transfer as
well.

The user never has to fiddle with the physical hardware card inside
the phone itself; everything happens between iTunes and the network.

--
Chris Devers

On 1-May-2008, at 12:27, Chris Devers wrote:
> On May 1, 2008, at 1:56 PM, LewisGmail wrote:
>> On 1-May-2008, at 09:12, David Weintraub wrote:
>>> If I want to use my iPhone with another carrier, I first have to buy
>>> an iPhone from Apple, unlock it,
>>
>> Right, easy enough.
>>
>>> bring it to the other carrier, and then sit around for 30 minutes
>>> while they get the iPhone on their service.
>>
>> Don't you just swap the sim card from your existing phone, like every
>> other phone?
>
> No.
>
> The iPhone comes with an AT&T SIM card, and will only work with an
> AT&T SIM card.

Thus the point of unlocking it.

> If you unlock it, then you can try a T-Mobile SIM or whatever, but
> you're off the map support-wise that way.

Yeah, and you are off the map support-wise when you unlock it too. We
are talking abotu using the iPhone with another carrier here.

On May 1, 2008, at 11:12, Dave Scocca wrote:

> --On 4/29/2008 5:47 AM -0700 David Weintraub wrote:
>
>> Heck, two years ago, Apple was
>> negotiating with Cigular about the iPhone, and now Cingular no longer
>> exists. Who knows where AT&T will be in five years?
>
> This is a bit misleading--AT&T _is_ Cingular.

For a very funny look at the entire AT&T vs. Cingular history, check
out <http://youtube.com/watch?v=I6nuwQmhrZ8>.

Alfred

On Thu, May 1, 2008 at 11:37 PM, Alfred von Campe <alfredvon-campe.com> wrote:

> For a very funny look at the entire AT&T vs. Cingular history, check

Even stranger: Cingular use to be part of the AT&T network before it
became Cingular:

AT&T's mobile phone effort was called AMPS. AMPS was split among the 7
Baby Bells as part of AT&T's split into separate companies. These
pieces came back together as a joint operation under BellSouth and
SBC.

Meanwhile, AT&T Wireless was a company that was not even owned by
AT&T. At one time, the biggest shareholder was Japan's NTT. AT&T
Wireless started when AT&T bought McCaw as a replacement for AMPS.
AT&T's original strategy was to use McCaw as a way to get back into
the local phone service. When things didn't work out, AT&T Wireless
was spun out as a separate company from AT&T itself.

So, all the bits and pieces that were once AT&T have almost all come
back together.

The New AT&T: It's not your father's phone company. No, wait a second... It is.

--
David Weintraub
qazwartgmail.com

On May 1, 2008, at 1:56 PM, LewisGmail wrote:
>>> [You have to bring the iPhone] to the other carrier, and then sit
around for 30 minutes
>>> while they get the iPhone on their service.
>> Don't you just swap the sim card from your existing phone, like every
>> other phone?
>No.

Actually, after unlocking the phone, the correct answer is "yes". You
connect the iPhone to your Mac, start an iPhone hacking app, click one
button, wait five minutes, switch the SIM card, and you're done.
There's no "sitting around for 30 minutes" at some carrier's location
involved.


> If you unlock it, then you can try a T-Mobile SIM or whatever, but
> you're off the map support-wise that way.

You can easily revert your iPhone to factory settings and re-lock the
iPhone modem firmware if you need support for your iPhone.

Lukas