iPhone: Innovation to Slavery in 13 Days

by on July 13, 2007 · 10 comments

Everything in the digital world moves fast, but this has to be a record. Apple’s new iPhone has gone from cool new innovation to a new form of slavery in less than two weeks. Just released on June 29, Rep. Ed Markey (D-MA) seems to consider it already a “must-have” — complaining yesterday about restrictions placed by Apple and AT&T on its availability. Speaking yesterday at a Commerce Committee hearing, he lambasted the fact that the iPhone is only available with AT&T service, as well as the $175 early termination fee on its 2-year contract.

The iPhone is like the Hotel California, he said — “you can check out any time you like, but you can never leave.”

Some critics go even farther. On CNBC’s “On the Money” show last night, I debated the issue with Gary Goodman, of Customersatisfaction.com, who (and I’m not making this up) argued that “what we have here today is the equivalent of consumer slavery.”

Slavery? I’ve heard people say they are slaves to their cellphone, but are they slaves to their provider because they signed a contract? Is there perhaps a Thirteenth Amendment problem here that should be examined?

The idea is of course ludricrous. If this is slavery, it is a strangely popular kind.


At last report, 213 million Americans have willingly signed themselves up for wireless service, an increase of some 28 million over the previous year. Contracts or no, people seem to like the deal that is being offered to them. And for good reason — as explained by former FCC commissioner Harold Furchtgott-Roth, now an economic consultant — the requirements allow providers to better manage demand, while allowing consumers to enjoy lower monthly rates. At the same time, consumers are hardly locked-in to their carrier — in fact they switch all the time, both during and (without penalty) at the end of a contract.

But what about those people who don’t want a contract at all? For them, alternatives — such as pre-paid monthly service, are available.

Of course, if you want an iPhone, that’s not an option, you need a contract. Is that unfair? Not at all. Apple — along with AT&T — created the iPhone, and should be able to sell it however they want, with whatever restrictions they want. If you don’t like those terms, you don’t have to buy one. That’s the way the market works. And in the wireless industry, it’s working well.

  • http://www.cato.org/people/harper.html Jim Harper

    For those who haven’t yet taken the time, the video is a wonderful example of rhetorical jousting. I really like the Big Mac/Burger King analogy. I’m willing to ignore it’s weaknesses because, by gosh, you just sounded so reasonable, Gattuso! The other guy not only gave up credibility with the “slavery” comment, he was too aggressive to win people over.

  • http://www.cato.org/people/harper.html Jim Harper

    For those who haven’t yet taken the time, the video is a wonderful example of rhetorical jousting. I really like the Big Mac/Burger King analogy. I’m willing to ignore it’s weaknesses because, by gosh, you just sounded so reasonable, Gattuso! The other guy not only gave up credibility with the “slavery” comment, he was too aggressive to win people over.

  • http://www.davidmcelroy.org/ David McElroy

    If you want to avoid a contract with AT&T, you can still buy prepaid minutes. The option is hidden, but here’s how to do it if you’re interested:

    http://www.tuaw.com/2007/07/02/iphone-prepay-the-right-way/

  • http://www.davidmcelroy.org/ David McElroy

    If you want to avoid a contract with AT&T;, you can still buy prepaid minutes. The option is hidden, but here’s how to do it if you’re interested:

    http://www.tuaw.com/2007/07/02/iphone-prepay-th

  • http://tieguy.org/blog/ Luis Villa

    I don’t see why it can’t be both. The phone is obviously brilliant and innovative, and also obviously crippled by AT&T and AT&T’s oligopolist business model, where all the participants have clearly agreed that they can compete on intangibles like call quality but conveniently refuse to compete on tangibles like contract length and free SMSs. As only one example, iPhone doesn’t have iChat, when even the simplest child can see that that would be a desirable. There isn’t any good reason why the phone can’t do it, except that it would threaten the business model of the phone carriers.

  • http://tieguy.org/blog/ Luis Villa

    I don’t see why it can’t be both. The phone is obviously brilliant and innovative, and also obviously crippled by AT&T; and AT&T;’s oligopolist business model, where all the participants have clearly agreed that they can compete on intangibles like call quality but conveniently refuse to compete on tangibles like contract length and free SMSs. As only one example, iPhone doesn’t have iChat, when even the simplest child can see that that would be a desirable. There isn’t any good reason why the phone can’t do it, except that it would threaten the business model of the phone carriers.

  • Solveig

    Next call will be for iPhone universal service. Just wait.

    -SS

  • Solveig

    Next call will be for iPhone universal service. Just wait.

    -SS

  • LarsG

    While Markey didn’t argue his point very well, Carterphone for wireless carriers is high overdue.

  • LarsG

    While Markey didn’t argue his point very well, Carterphone for wireless carriers is high overdue.

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