For those not familiar with the Sherman Act, Please read this WIKI first.
The Obama Administration is dusting off the rule book made to keep company’s from unfairly dominating markets and prices. This rule book of laws has not seen the light of day for a while and has a serious long list that it should have applied to in the last 15 years. Banks, Oil Company’s, Oil Refineries, Insurance, Airlines are just the first to come to mind.
At the heart of this current dusting off of the act, is the activity of the cell phone company’s and cell phone manufactures. What most folks do not understand is how they have been manipulated without their knowledge with current market laws and exclusive contracts.
This goes further than just Apple giving a exclusive contract with the iPhone to AT&T because of these facts.
1 – There are 3 basic technologies that cell phone networks use. You can not take a phone from AT&T to Verizon and get service. It could not work if they wanted it to.
2 – When the deal was cut between Apple and AT&T they bought up many existing cell networks using the same cell technology (GSM). Cellular One was bought-out just for the iPhone well before anyone knew what a iPhone was. A new deal is coming with Apple and Verizon probably in 2010 and is why Verizon bought Alltel. So AT&T virtually has a lock on GSM cellular services as well as Verizon having a lock on CDMA cell services in the United Sates and Apple is getting a cut of services provided within the cell network (they are not just selling phones).
3 – Old law still exists when the Original Ma Bell AT&T (not to be confused with “the New AT&T”) with regard to how many cellular networks there can be in any original “baby bell network”. That number is 3. So you have AT&T, Verizon and Sprint leading the way exclusively as the leaders of their respective cell technology that they use. With the power that that brings to the market and exclusive deals that prevents a would be competitor from making a deal as they are not going to be big enough to supply the market for a exclusive position and those smaller cells are now vulnerable to a take-over when they eventually become worthless.
Now I am certain we will hear the muddying of the water once again by the same old neo-capitalist saying that these deals benefit consumers but explain to me how I can have a”Google G1s Cell Phone” when it is only offered through T-Mobile and they have no service for 50 miles of me.
If I want a similarly diverse phone like a iPhone I am left with AT&T and the Apple Store to allow me to do only what they can sell me so where are my choices? OK I have an Iphone that I paid $500 for and a 2 year contract for service that is not being delivered and who do I take the phone to for service as I can not get the bandwidth to do the fancy things Apple advertises to me even if I wait till my contract expires? The Google G1 uses GSM tecnology just as AT&T does but I can’t have(buy) one without the T-Mobile Service in my area.
To take this last a bit further, what happens if AT&T would fail (could happen from a class action suite from not providing services they charge for), who would I take the phone I invested $500 in to for service? Will they need bailed out?I have enough $500 paper weights.
Because these devices use the Public Airwaves Trust, it is double troubling that some company can have a exclusive on their use and what gets used on them and how the user is allowed to interact with their own device. They do not rent these, they sell them. The phone manufacture does not own the network, airwaves or device when purchased.
Regardless of a simple immediate solution that I will suggest, it should not take away from the fact that this clearly is a example of what the Sherman Act was amended to rectify and it is the office of the President that is tasked with Executing the Law through the Justus Dept.
A quick solution that will allow some space here while the President reacts and a legal battle most likely goes through the courts is to allow a 4th or perhaps 5 networks to enter each of the old baby bell networks or remove the restrictions all together as it will not progress to higher levels except where populations are higher.
The problem with this idea is that having that many cell towers in a area is not only unsightly, it is a health risk.
Its either that or a move to bust the mergers of these cell company’s of the last 7 years, and/or not allow exclusive contracts for device distribution where a similar competing carrier of the same technology is not available and/or no 2 year contract to buy one.
In any case I’m Glad to see some sunshine on the Sherman Act as it could be kept busy for the next 12 years just undoing things that have happened in the last 5.