Apple confirmed it signed a 5-year iPhone exclusivity deal with AT&T

By on May 11, 2010 at 1:17 AM
General May 11, 2010

iPhone_3GS

Three years. That’s how long it took for the world to get confirmation that the iPhone exclusivity deal Apple signed with AT&T back in 2007 was good for 5-years. Here’s how the info came about. Back in 2008, Apple’s legal team was in a courtroom in San Jose fending off a lawsuit which alleged that it was benefiting from an illegal monopoly over the iPhone, saying that AT&T’s 5-year exclusivity would really require iPhone owners to re-sign with AT&T for an additional 3-years after their initial 2-year contract had expired. This, in part, was Apple’s response:

[...] there was widespread disclosure of [AT&T's] five-year exclusivity and no suggestion by Apple or anyone else that iPhones would become unlocked after two years. In fact, the iPhone box itself disclosed to the prospective purchaser that a “[s]ervice plan with AT&T [would be] required for cellular network capabilities on expiration of initial new two-year agreement.” This at-purchase information was more than enough disclosure to put consumers on notice that they might never have a choice of cellular service for their iPhone, and to thus preclude a Kodak-type aftermarket.

Moreover, it is sheer speculation –- and illogical -– that failing to disclose the five-year exclusivity term would produce monopoly power, i.e., would allow Apple, a brand new entrant in cell phones, to “exert raw power in the aftermarket without regard for commercial consequences in the foremarket.”

The only question now is whether or not the contract is still valid. As Engadget’s Nilay Patel points out, “Contracts can be canceled, amended, and breached in many ways, and AT&T’s spotty recent service history plus the explosion of the iPhone and the mobile market in general have given Apple any number of reasons to revisit the deal. In addition, the two companies obviously hit the negotiating table again to hammer out the iPad’s pricing plans, and there’s no way of knowing whether that deal involves the iPhone as well. But it’s nice to finally know for certain that AT&T’s initial iPhone exclusivity period was booked until 2012 — now we just have to see if all this recent chatter means something’s changed.”

Read

Tags:
, , , , , , , ,
114 Comments

Related Articles

  • F1

    This must have been one of the best kept tech-secret yet, however to think that for all these years potential consumers/costumers have been lead on… it somehow makes one wonder…is that a smart business practice?

    Alienated, is how I describe my feelings towards this product vendor and it’s exclusive carrier.

    The question is when did VZW know?
    For years (Since 2007), we were lead to believe that it was a 3 year exclusivity contract, as far as I am considered this might as well be a 10 year exclusivity contract!

    Furthermore,
    the handling of the so called “4G iPhone” fiasco and it’s aftermath, made me come to realize the ugliest side of Apple/Steve Jobs yet, hence reconsidering any further company purchase or recomendation of products there of.

    Google, Android has the most to loose, since the ball, to win the number one spot in the “smartphone” category. is now squarely in it’s court.

    Thank You

    • namelesstwo

      That’s just silly talk. There’s no one on this planet that would make a decision not to buy a phone, car, or any thing else they want or like, based on their opinion of the manufacturer CEO’s personal behaviour.

  • Luke

    Even if it is better, I’ll skip the iphone out of principle at this point. How much more disturbing “corporate tyrant” attitude, patent trolling, and pocket gouging will apple groupies endure before finally turning away?

  • http://3dcomputerhomedesign.com Chris Ellis

    Before Apple debuted the iPhone, the carriers had all the marbles. They told the manufacturers what to make and what features it could offer. To break that stranglehold and move “smart phones” into the 21st Century, something big had to happen. With zero leverage other than a spectacularly better device, Apple had to leverage their technology by giving an exclusive deal for a long period of time. They did what they had to do to change the world. Get over it.

  • iPhone Fanatic

    I notice all the upset people are the ones who want an iPhone, but don’t want to pay their $350 dollar cancelation fee! Maybe the newer Android devices match the iPhone 3GS, but from experience, doesn’t go beyond. It did indeed take 3 years for all to finally catch up, but the problem being that they still failed to create something better or the next best thing….which I beleive will be out in June…iPhone 4…or the iPhone 4G….or is it going to come in July….wait, are we sure it’s a 5 year deal? Whatever happened to the flying cars that were supposed to be around by now from the Back to the Future movies?

    • The_Machine

      there is a flying car and its FDA approved- its by terrafugia

  • http://www.chuckbalsamo.com Chuck Balsamo

    I want to purchase the 4G Iphone, but not willing to extend my contract with AT&T for two years. What a shame for Apple… all the people who love the iphone and hate their provider. I’m actually so turned off with AT&T, I’m thinking about leaving iphone for something else (anything else). No kidding, I’ve said. “I hate AT&T” 20 times a day for almost two years. I’m exhausted and not sure how much longer I will be able to remain an iphone fan while AT&T is choking the life out of my daily communications.

1 2 3
blog comments powered by Disqus