Apple, AT&T iPhone exclusivity lawsuit granted class-action status
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.
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.
Comments
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.
My .02.
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.
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.
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."
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.
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.
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.
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
I hope this lawsuit succeeds, and then some.
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.
I think the real question is why Apple chooses to not unlock phones. Only manufacturer I am aware of doing it in the US.
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.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.
"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.
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.
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.
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.
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.