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Apple, AT&T iPhone exclusivity lawsuit granted class-action status

post #1 of 204
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Anyone who ever bought an iPhone on AT&T is now part of a class-action lawsuit taking aim at both the wireless carrier and Apple for their exclusive contract.

The lawsuit, filed in 2007, accuses both the iPhone maker and AT&T of illegally exerting a monopoly over iPhone customers. It alleges that iPhone users are forced to stay with AT&T after their two-year contract expires, because neither AT&T nor Apple will unlock the iPhone for use on another carrier, such as T-Mobile.

As first reported by Wired.com, this week Judge James Ware of the U.S. District Court in Norther California granted class action certification to the complaint, meaning the plaintiffs now represent anyone who has ever bought an iPhone in the U.S. Mark Rifkin, attorney for the plaintiffs, has argued that AT&T and Apple secretly formed a monopoly with their exclusive iPhone agreement.

"The court has allowed (multiple) plaintiffs to represent 20 million customers who have been forced to use AT&T for iPhone voice and data service," Rifkin reportedly said, "despite an agreement that allows them to terminate at any time and presumably switch carriers."

AT&T, like all U.S. wireless carriers, allows customers to pay an early termination fee and get out of a two-year contract that must be signed in order to purchase an iPhone at a subsidized price. AT&T has been the exclusive carrier of the iPhone since the handset launched in 2007.

In May, Engadget's Nilay Patel dug through old documents in the suit to discover that Apple had revealed in October 2008 that it had initially granted exclusive iPhone distribution rights to AT&T until 2012. While the origianl agreement meant Apple's iPhone could not be offered on a competing carrier's network until 2012, those terms may have changed in the years since. Regardless, the iPhone remains exclusive to AT&T.



Patel write on Friday that it's possible the continuing lawsuit could yield more information on the terms of the private contract between Apple and AT&T.

"While we're definitely curious to see if the plaintiffs can... win something more than a token settlement, we're far more interested to see if they can get any more documentation from Apple nailing down its actual agreement with AT&T," he wrote.
post #2 of 204
Where do I collect my chump change?
post #3 of 204
This is a stupid lawsuit and won't go very far. Companies have a legitimate right to choose the distribution method for their products. Toyota is free to sell their cars only through Toyota dealers. If I invent something new, I'm free to sell it only through Best Buy or Walmart or Billy Bob's Bait and Tackle if I wish.

Consumers do not have an absolute right to any product they wish to buy. They have a right to buy it under terms that the seller chooses to offer. Any other rule would be a disaster.


We really need 'loser pays' for lawsuits in this country.
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post #4 of 204
For those people that are interested, it would be nice to be able to unlock the iPhone to get to any other carrier (read T-Mobile) after their contract was up. T-Mobile might be able to supply some relief (I realize the radio issue would make T-Mobile suboptimal) for lower demand users at a lower price. I don't care, but its at least a good thing if it happens. I don't know about all this exclusivity=monopoly stuff though, it seems quite a stretch. All these complainers about Apple/iPhone/AT&T are trying to get action through anti-trust/monopoly complaints it seems. I just don't buy it.

My .02.
post #5 of 204
"Consumers do not have an absolute right to any product they wish to buy. They have a right to buy it under terms that the seller chooses to offer. Any other rule would be a disaster."

CORRECT.
But the agreement between customer and supplier will override the agreement between manufacturer and supplier - ie the "under terms that the seller chooses to offer". It is the agreement signed by the user which governs the conditions of use for said user - not any agreement that the user did NOT sign, and (probably) had no knowledge of.
post #6 of 204
Actually, I think that they might have a case about people being unable to unlock their phones. I just bought an iPhone4, and committed to AT&T for a 2-year contract... why can't I go to Europe, slip a sim card into the phone and use it there? I'm still paying the AT&T contract, and there is no technological reason I can't (the same model phone works just fine on Orange in the UK).

I don't really think that kind of logic is what's motivating the people suing, but it is a reasonable question, and one that I wouldn't mind seeing addressed.
post #7 of 204
The valid part of the lawsuit is their refusal to unlock the device you paid for after you have satisfied your contract terms. They can force you to sign up with ATT in order to buy a new subsidized phone, but to force you to stay on ATT after your contract is up, or have your $600+ device rendered useless is pure BS. I don't want money from Apple or ATT, I want my phones all unlocked. Of course "our" lawyers will never accept that. They will go for a cash settlement so they can steal 60% of it and then send me a $3 coupon.
post #8 of 204
It seems to me most people really want to take it to Verizon but Verizon uses a CDMA network, same with Sprint and Virgin Mobile. So the only other big name really would be T-Mobile and to be honest, I haven't heard many people yelling about desperately wanting to go with T-Mobile.

It may be about to change though as Verizon have today hopped on the GSM train:

http://www.gsmworld.com/newsroom/pre.../2010/5105.htm

"The GSMA today announced that Dick Lynch, EVP and CTO of Verizon, a leading telecommunications operator in the U.S., has been appointed to the GSMA's Board. Lynch's appointment follows Verizon gaining full membership to the GSMA as a result of its commitment to deploy commercial services based on Long-Term Evolution (LTE), the next-generation technology for Mobile Broadband and part of the GSM family of technologies, in 2010."
post #9 of 204
Quote:
Originally Posted by jragosta View Post

This is a stupid lawsuit and won't go very far. Companies have a legitimate right to choose the distribution method for their products. Toyota is free to sell their cars only through Toyota dealers. If I invent something new, I'm free to sell it only through Best Buy or Walmart or Billy Bob's Bait and Tackle if I wish.

Consumers do not have an absolute right to any product they wish to buy. They have a right to buy it under terms that the seller chooses to offer. Any other rule would be a disaster.


We really need 'loser pays' for lawsuits in this country.

Toyota can force you to buy NEW cars from an authorized dealer, but they can not force you to buy Shell gas for the life of the car YOU paid for. That would violate anti trust laws.

Offering a phone through an exclusive provider who subsidizes the phone is legit, but permanently tying you to the network is a grey area and certainly unethical if not also illegal.
post #10 of 204
as far as I'm aware: in the US there is:

AT&T - GSM - global standard
T-mobile - GSM
verizon - CDMA
Sprint - CDMA
virgin mobile - CDMA

apple decided to go with the global standard, gsm. The only other compatable network is t-mobile and their 3G won't work with iPhone.
Since Customers cant force apple to make new hardware or change existing hardware they have 3 choices:

Stick with AT&T
Get apple to go T-mobile - but you don't get 3G!!!
shut up and stop winging that the US uses ancient CDMA technology.
post #11 of 204
As usial they are fighting the wrong fight and going about it all wrong. Apple is doing what all vendors and carriers do, to varying degree. The iPhone being th phone they want and AT&T being te carrier thy don't want doesn't change the way a free market works.

On top on that, tuning the iPhone on EDGE on T-Mobile USA will not suit most users. You can't make Apple support T-Mobile's UMTS operating band or create a CDMA iPhone for Verizon and Sprint.

Somewhere around reality and pragmatism is getting legislation to require phone unlocks for all products using cellular networks once the contract has been satisfied.


Quote:
Originally Posted by jragosta View Post

This is a stupid lawsuit and won't go very far. Companies have a legitimate right to choose the distribution method for their products. Toyota is free to sell their cars only through Toyota dealers. If I invent something new, I'm free to sell it only through Best Buy or Walmart or Billy Bob's Bait and Tackle if I wish.

Consumers do not have an absolute right to any product they wish to buy. They have a right to buy it under terms that the seller chooses to offer. Any other rule would be a disaster.


We really need 'loser pays' for lawsuits in this country.

QFT
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post #12 of 204
When I've paid fully for something, it's mine. Apple and ATT need to respect that. Its not much more complicated than that. Period.

I hope this lawsuit succeeds, and then some.
post #13 of 204
Quote:
Originally Posted by solipsism View Post

As usial they are fighting the wrong fight and going about it all wrong. Apple is doing what all vendors and carriers do, to varying degree. The iPhone being th phone they want and AT&T being te carrier thy don't want doesn't change the way a free market works.

On top on that, tuning the iPhone on EDGE on T-Mobile USA will not suit most users. You can't make Apple support T-Mobile's UMTS operating band or create a CDMA iPhone for Verizon and Sprint.

Somewhere around reality and pragmatism is getting legislation to require phone unlocks for all products using cellular networks once the contract has been satisfied.




QFT

I agree with you that they are going about it all wrong. Maybe they need smarter lawyers. However, i do think that users should be able to get their iPhones unlocked if they fulfill their contract obligations. The fact that there are not enough compatible carrier is irrelevant in my opinion. AT&T just settled a lawsuit few months ago that gave users the ability to get their devices unlocked but that lawsuit excluded the iPhone.
post #14 of 204
Hope something comes of this, but wouldn't hold my breath. It shouldn't be legal to lock a phone, especially after satisfying the contract term... but when they use the term monopoly they lose a lot of credibility.

I think the real question is why Apple chooses to not unlock phones. Only manufacturer I am aware of doing it in the US.
post #15 of 204
Quote:
Originally Posted by Joe hs View Post

as far as I'm aware: in the US there is:

AT&T - GSM - global standard
T-mobile - GSM
verizon - CDMA
Sprint - CDMA
virgin mobile - CDMA

apple decided to go with the global standard, gsm. The only other compatable network is t-mobile and their 3G won't work with iPhone.
Since Customers cant force apple to make new hardware or change existing hardware they have 3 choices:

Stick with AT&T
Get apple to go T-mobile - but you don't get 3G!!!
shut up and stop winging that the US uses ancient CDMA technology.

The iPhone 4 has 5 UMTS operating bands. The previous iPhones had 3 UMTS operating bands. I think 5 radios is the max the current Infineon chips can support off one chip; things may be different next year.

http://en.wikipedia.org/wiki/UMTS_fr...bands#UMTS-FDD Apple chose to support the operating bands that most of the world uses, however, this year they have added a secret spectrum that I primarily used by Japan's lafgest carrier, NTT docomo. Note that they current only support Japan's 3rd latest carrier SoftBank. Excluding any potential contract issues, when you look at the subscriber numbers adding the band for NTT docomo looks like the best option.

http://en.wikipedia.org/wiki/List_of...c_region#Japan
http://en.wikipedia.org/wiki/List_of...#United_States
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post #16 of 204
The Sherman Act of 1890, believe it or not, is still the key legal document to antitrust cases in the U.S. And, according to the Sherman Act, there is a difference between "coercive" and "innocent" monopoly. This is quoted directly from Wikipedia (with my own underlines added for emphasis):

"Monopoly
Section 2 of the Act forbade monopoly. In Section 2 cases, the court has, again on its own initiative, drawn a distinction between coercive and innocent monopoly. The act is not meant to punish businesses that come to dominate their market passively or on their own merit, only those that intentionally dominate the market through misconduct, which generally consists of conspiratorial conduct of the kind forbidden by Section 1 of the Sherman Act, or Section 3 of the Clayton Act."

I would say that Apple has had major success with the iPhone. But that is a result of the iPhone's quality and ease of use. If anything, AT&T has drawn criticism for its relative lack of coverage and relatively poor call quality in many areas. And that may have driven customers away from the Apple + AT&T iPhone experience. All the haters and trolls who claim they're quitting AT&T are helping Apple's case here. Apple should thank you guys.

I don't believe Apple has conspired to monopolize the smartphone market in any way. In fact, I think if Apple had wanted to illegally monopolize the smartphone market, they should have done deals with every single U.S. cell carrier, not just with one. That way, they could have attempted to leverage iPhone's success to force all carriers to favor iPhone over other smartphones. And that would be illegally anti-competitive and conspiratorial, at least according to the Sherman Act.

But that didn't happen. Legally, Apple and AT&T have achieved nothing even close to a monopolistic stranglehold on the smartphone market. They have done nothing to prevent users from buying Android phones through Verizon. Or T-Mobile. Or Sprint. And let's not forget the Pre or the late, unlamented KIN.

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post #17 of 204
Quote:
Originally Posted by anantksundaram View Post

When I've paid fully for something, it's mine. Apple and ATT need to respect that. Its not much more complicated than that. Period.

I hope this lawsuit succeeds, and then some.


AGREED!


I pay for something in full, I should own it.



post #18 of 204
Quote:
Originally Posted by voodooru View Post

AGREED!


I pay for something in full, I should own it.




You paid, in full, to use it under the licensers terms.

EDIT: when you bought it, it was only AT&T that was "permitted" by apple, so even if that changes at a later date 'your' iPhone is still going to be locked to AT&T

EDIT II: on second thought, you could buy an iPhone from abroad and use it with t-mobile.
post #19 of 204
Quote:
Originally Posted by NasserAE View Post

I agree with you that they are going about it all wrong. Maybe they need smarter lawyers. However, i do think that users should be able to get their iPhones unlocked if they fulfill their contract obligations. The fact that there are not enough compatible carrier is irrelevant in my opinion. AT&T just settled a lawsuit few months ago that gave users the ability to get their devices unlocked but that lawsuit excluded the iPhone.

This is where writing your politician can come in handy, so long as one doesn't focus on the iPhone but the industry.

I think once the AT&T contact is officially over (we really don't know the full time yet) things will change. Add to that all MNOs moving to LTE, sans Sprint (but I think they'll have to or die), the playing field will be easier for politicians to understand the issue.

Note: To be crystal clear, because I believe in a free market I don't believe Apple should be required to sell unsubsidized, unlocked iPhones, or sell through any and all carriers if they dont want to. The only issue I have is the phone still being unlocked after the contract has been fulfilled.
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post #20 of 204
Quote:
Originally Posted by voodooru View Post

AGREED!


I pay for something in full, I should own it.





What about the providers Service ? surely you rent that. Which means you're under the terms of that provider.

Besides Apple don't have room to insert a CDMA chip so your iPhone will work on Sprint/Verizon. They're already supporting all the frequencies they can. Currently 5 I believe.
post #21 of 204
If you go against the law, don't be surprised if the law bites you in the behind.
Fragmentation is not just something we have to acknowledge and accept. Fragmentation is something that we deal with every day, and we must accept it as a fact of the iPhone platform experience.

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post #22 of 204
Apple and AT&T need to unlock those iphones that are out of contract. Since the users pay for the product, they should be able to use it any way they want after their contracts expire. Either that, or give those customers their money back. Perhaps AT&T and Apple can STOP SELLING those iPhones. Instead they can start leasing them. For example: GIVE the customer an iphone to use for as long as they are on AT&T. The customer, of course, needs to pay a deposit fee for the iPhone in case it gets lost or stolen. Once they no longer want to use AT&T, they can return the phone back to AT&T or Apple and get their deposit back provided the iPhone isn't abused. This is the model that DirecTV uses. Once my contract with them ends and I no longer wish to use DirecTV, I simply return the receiver to them. It's that easy.

[EDIT] If Apple, and AT&T do that, then there is no cause for a lawsuit. If the customer wishes to keep the iphone, they will need to pay for full price of the phone just like when you decide to keep the DirecTV receiver... which is useless to the user who doesn't use DirecTV anyway.
post #23 of 204
Quote:
Originally Posted by Joe hs View Post

You paid, in full, to use it under the licensers terms.

Yes, there is currenty nothing illegal about keeping a product paid in full locked to a carrier (in the US) but many of think it should be.

A civil lawsuit is bollocks.
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post #24 of 204
Quote:
Originally Posted by voodooru View Post

AGREED!


I pay for something in full, I should own it.




Quote:
Originally Posted by Joe hs View Post

You paid, in full, to use it under the licensers terms.

EDIT: when you bought it, it was only AT&T that was "permitted" by apple, so even if that changes at a later date 'your' iPhone is still going to be locked to AT&T

EDIT II: on second thought, you could buy an iPhone from abroad and use it with t-mobile.


Also we didn't technically pay for it in full AT&T pays for a large portion of the device via the unsubsidized price which is what like 699? for my 32gb iPhone 4
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post #25 of 204
Like many other class action lawsuits, the lawyers will get all of the money and the plaintiffs will get a coupon for their next purchase.

On a more serious note, this is a free country....you can buy a product or not. There is no case here.
post #26 of 204
Quote:
Originally Posted by noexpectations View Post

On a more serious note, this is a free country....you can buy a product or not. There is no case here.

Agreed.
post #27 of 204
Quote:
Originally Posted by Flash_beezy View Post

Also we didn't technically pay for it in full AT&T pays for a large portion of the device via the unsubsidized price which is what like 699? for my 32gb iPhone 4

Apart from $$$, it seems as though they believe you have the right AFTER your two year contract has expired, to use have the phone UNLOCKED, to use with whatever compatible carrier you may choose.
The fact that in the US the only technically compatible (semi at best) is T-mobile, so I dont really understand ATT/Apple reticence to unlocking after the contract 2 years is up.
post #28 of 204
Quote:
Originally Posted by Right_said_fred View Post

Apart from $$$, it seems as though they believe you have the right AFTER your two year contract has expired, to use have the phone UNLOCKED, to use with whatever compatible carrier you may choose.
The fact that in the US the only technically compatible (semi at best) is T-mobile, so I dont really understand ATT/Apple reticence to unlocking after the contract 2 years is up.

maybe because they want you to buy a new iPhone.
post #29 of 204
Apple contracted with Cingular because no one else would and they were able to get an exclusive contract and agree to the iPhone and the unknown Apple company site unseen, and Apple got to demand from Cingular that Apple would control what apps were available, unlike Verizon, which controlled the phone manufacturers and customers who otherwise had no say.

Verizon was my carrier for years, and dealing with them felt like a contract with the devil. I purchased some then very "smart" cell phones with all these promised capabilities, which Verizon refused to support. When my Verizon contract ended, I jumped to AT&T and Apple as soon as it was feasible.

Do I think AT&T is the ideal carrier -- absolutely not -- but far better than Verizon. Without the Apple/Cingular contract breaking the carriers' monopoly control of phone features and capabilities, the smart phone as we know it now would still be in the infantile stage in the US. We would still be waiting for some European/Japanese/Chinese/Korean company to invent what Apple in the US gave us in 2007.

Seems like a good deal for all of us. And, further, Cingular (now AT&T) has the burden of building out their overtaxed network to support the iPhone and us customers who demand such extraordinary bandwidth from the cellular network. Some commenters seem to forget that the iPhone has been referred to as the Hummer of the cell phones.

But for the experience of AT&T needing to significantly build out its network to support the iPhone, Verizon would have had no notice of the capital requirements to enhance their system. Verizon's and some clueless customers' bluff that Verizon could handle the iPhone traffic but for the exclusivity of the AT&T/Apple contract not allowing them a piece of the action strikes me as laughable.
post #30 of 204
Quote:
Originally Posted by Joe hs View Post

maybe because they want you to buy a new iPhone.

i like many like to buy each new iphone as it comes out, because each new version is even better than the last. Why would allowing someone to unlock their old out of contract phone stop them wanting to buy a new phone?
post #31 of 204
I think you'll see an out of court settlement to keep the bigger question of why I can't buy any phone I want and use it anywhere I can.
post #32 of 204
You know what? Monopolies place massive costs on consumers so it's very interesting to see that those costs are being turned around and acting as a disincentive to activities that prevent a normal competitive landscape.
post #33 of 204
Quote:
Originally Posted by benice View Post

You know what? Monopolies place massive costs on consumers so it's very interesting to see that those costs are being turned around, and acting as a disincentive to preventing a normal competitive landscape.

¿Que? Are you saying that Apple and AT&T have a monopoly on the smartphone market?
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post #34 of 204
Quote:
Originally Posted by Right_said_fred View Post

i like many like to buy each new iphone as it comes out, because each new version is even better than the last. Why would allowing someone to unlock their old out of contract phone stop them wanting to buy a new phone?

Maybe they wouldn't buy a new phone if they could still use their old one (I know you and I wouldn't, you have said you like to buy the new one each year) but on another carrier.
post #35 of 204
Quote:
Originally Posted by Oldandintheway View Post

I think you'll see an out of court settlement to keep the bigger question of why I can't buy any phone I want and use it anywhere I can.

You should be able to buy an unlocked iPhone - but would you really want to? A fully unlocked iPhone wouldn't cost $299 more like $500 or more. The Wireless service provider subsidizes the phone.
post #36 of 204
Quote:
Originally Posted by Magic8Ball View Post

You should be able to buy an unlocked iPhone - but would you really want to? A fully unlocked iPhone wouldn't cost $299 more like $500 or more. The Wireless service provider subsidizes the phone.

a 16 gb iP4 is £499 (unsubsidized) and a quick currency conversion makes that $751.73 ;o
post #37 of 204
I bought a second hand pay-as-you-go iPHONE last year, which was only just within the (1 year) agreement. After a couple of weeks the contract finished and I paid £ 15 to the network (which was O2 in GB) to have it unlocked. Now I am using it happily on Vodafone.
post #38 of 204
They really should just let people jump to T-Mobile after the contract. Very few people would ever do so anyway.
post #39 of 204
Quote:
Originally Posted by Magic8Ball View Post

You should be able to buy an unlocked iPhone - but would you really want to? A fully unlocked iPhone wouldn't cost $299 more like $500 or more. The Wireless service provider subsidizes the phone.

iPhone 4 16GB $599
iPhone 4 32GB $699

And you still get no change to your plan and still wouldn't work on any carrier but AT&T and T-Mobile USA, and only on EDGE on T-Mo. Te only benefit is for international travelers.
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post #40 of 204
Quote:
Originally Posted by solipsism View Post

¿Que? Are you saying that Apple and AT&T have a monopoly on the smartphone market?

Apple don't as the phone is subject to the full competitive forces of droid, rim, nokia and the rest. It has to prove itself all the time because of that. But having a single supplier or distributor of your product clearly reduces competition.
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