AT&T & Apple

A federal judge has thrown down the gavel at Apple and AT&T allowing a class action lawsuit to proceed against the two companies. Here are our thoughts.

Full disclosure: I am a technologist, not a lawyer. I am an AT&T (wireless) customer (because the service at my home is great), and have been from back in the day when AT&T stood for American Telephone and Telegraph and they ran wires (yes, wires) to everyone’s home. And they provided the devices at the end of the wires…actual telephones.

One would think there would be some antitrust lawyers still hanging around AT&T (the name resurrected by Southwestern Bell¹), AT&T Wireless (formerly Cingular) and Apple because the current series of lawsuits makes it very reminiscent of the old days.

AT&T’s biggest saving grace may be it is a separate company from Apple, although words like “collusion” come to mind.

If you buy an iPhone, it only works on AT&T’s network. AT&T sells 2 year deals, and it’s our understanding there is a 5 year agreement between AT&T and Apple.

Apple is tightly controlling the applications on the iPhone. For a company priding itself on being open, they get a little persnickety when it comes to pesky competitors like Google using their device.

If your iPhone drops calls, is it the nifty new case antenna,

Or an AT&T network issue?

Or an AT&T capacity issue? One would think the production and sales forecasters at Apple would share projections with AT&T allowing AT&T to build out capacity on demand.

AT&T’s response is brilliant. Manage capacity by deploying wi-fi in congested areas (a good move), and raising prices.

Consumers have the ability to use other carriers is they are willing to carry extra devices. We’ve done this in our labs and it works fine….albeit with the drawback of needing a Tumi bag to carry all the accessories.

We’re not big fans of litigation and the associated costs. We are big fans of open markets.

So we believe the justice department may have some fun with this one. While separate companies, there’s a certain about of blending going on. Until the result is in years and years from now, we may be better watching “Will it Blend?” video, or using arguably less aesthetically appealing devices offered on other carriers. 

¹ AT&T was “broken up” following the 1974 U.S. Department of Justice antitrust lawsuit against AT&T, United States v. AT&T, leading to a settlement finalized on January 8, 1982, where “Bell System” agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business, AT&T Computer Systems. Effective January 1, 1984, AT&T’s local operations were split into seven independent Regional Holding Companies, also known as Regional Bell Operating Companies (RBOCs), or “Baby Bells”.

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