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June 16, 2009
More Mischief By Bored Senators
This afternoon the story broke that four Senators (Democrats Kerry (Mass.), Dorgan (ND), and Klobuchar (Minn.), and Republican Wicker (Miss.) asked the FCC to look into the deal Apple made with ATT two years ago.
Before Apple had an iPhone to sell it conducted talks with carriers. AT&T and Verizon were approached. Apple was willing to sign an exclusive agreement with either carrier if that carrier agreed to share revenues from the iPhone with Apple.
Pretty simple deal. I give you what you want and you give me what I want. The carrier would also be able to "subsidize" the price of the phone the way it does with other phones. Carriers pay more for their phones from the manufacturers than they charge the user. That's because they can make more money from the monthly service usage charges.
User get a phone for much less than the manufacturer would sell it to them, the carrier gets a nice revenue stream, and the manufacturer is able to sell to the carriers at a price above what users would be willing to pay if buying directly.
Verizon said no to Apple's offer, while AT&T said yes. AT&T took a risk when it signed up with Apple. In fact, AT&T didn't even get to look at the iPhone at first. It wasn't ready to be shown. Plus, Apple wanted it to be a secret for as long as possible. Nevertheless, AT&T looked at the potential reward and decided to take that risk. Verizon did the same calculations and came up with a different decision.
Recently, Palm and Sprint agreed to their own exclusivity agreement for Sprint to offer Palm's new Pre cell phone.
While the iPhone has been a great success for AT&T and Apple, there are many people who want to stay with their current carrier, whether that's Verizon, or Sprint or T-Mobile.
Keep in mind that those consumers, even though they are not iPhone owners, have already benefited from AT&T's deal with Apple. The iPhone has spurred other manufacturers to come out with new, more functional phones, than they would have without the iPhone eating their market share. Blackberry, Palm, Nokia, Motorola, etc.
These four Senators, however, want the federal government to interfere with the business decisions of private companies (so long as we have any left). They know better.
Apple has been one of the most important causes of better lives for everyone of us on the planet.
Consider, how productive we would be if we were all still using DOS. We—everyone around the globe—are wealthier, and therefore healthier, because Steve Jobs recognized the revolution that pull-down menus, windows, and a mouse would cause.
In commerce, in science, in our private lives, the replacement of DOS with a graphical user interface has probably done more good for mankind than anything any politician has ever done.
But, now these four Senators—the DOS Four—think that they are smarter. They've never created a job. Have never made a payroll. Have never invented anything. Have never taken a risk to begin a company.
But they know best how businesses should be run.