Business/Finance

The iPhone and AT&T: it’s a devil’s bargain

400iphone02.jpg

By Martin Bosworth

For everyone who is slavering with anticipation at the debut of the shiny new Apple iPhone, keep this in mind: If you buy one of those admittedly slick new devices, you’re essentially subsidizing efforts to violate your privacy and restrict your ability to use the Internet freely.

Why?

Because when you sign up for an iPhone, you’re not just getting a phone from Apple–you’re locking yourself into a two-year exclusive contract with AT&T, the sole carrier of the iPhone at present. The phone carries a hefty price tag, and you’ll incur an equally nasty $175 termination fee if you decide to break your contract early. Most people I know don’t have the scratch to pay as much as $675 for testing a phone, so you’re pretty much stuck with it.

And that means for the next two years or so, your bills are going to support a company that is turning over your calling records to the government without your knowledge or consent. AT&T also provided extensive assistance to the NSA in developing and facilitating its massive illegal wiretapping initiative, which violates everything from FISA to the Constitution.

Not to mention that AT&T is a staunch foe of net neutrality, and has spent millions of dollars in faux grassroots lobbying designed to convince the public that it’s preferable to prioritize Internet traffic by who pays the most, and that it’s better to be a passive consumer of content through high-priced services like AT&T’s U-verse, which can facilitate targeted marketing right down to the individual home. (Indeed, it was former AT&T chair Ed Whitacre’s famous rant about Google paying for using his pipes that first set a match to the whole NN debate.)

Most recently, AT&T announced that they would be happily emulating their friends at the RIAA and aggressively monitoring their networks for signs of “piracy,” which means that anything that gets you on their radar–even if it’s completely innocent–could result in loss of Internet access, threatening letters, and the turning over of your information to law enforcement authorities.

It’s disheartened me to watch a lot of so-called progressive political leaders and pundits join the masses in slobbering over the iPhone, apparently forgetting what it’ll REALLY cost you if you buy one. Yes, it’s shiny, and yes, it’s cool, but I’m a techie guy, so that doesn’t go very far with me anymore. When you have a universal bad actor like AT&T trampling on your rights and your privacy, that’s more important than all the cool features in the world.

And besides, if you really want iPhone functionality, you can use a little elbow grease and turn your Windows Mobile phone into an iPhone–or at least a good facsimile! 🙂

38 replies »

  1. You leave out AT&T’s appalling customer service and the fact that they will, if necessary, tell you any lie they have to in order to get you signed up.

    Those aren’t political issues, but from a consumer standpoint they’re incredibly real.

    My contract is up. We’re going to tell Verizon that we’re leaving to get an iPhone, I think, but only to see what kind of deals we can beat out of them.

  2. I hate to say it, but I can’t really leave AT&T – they have the best cell phone coverage along I-70 and I-15 between Denver and San Diego of all the wireless suppliers. And if you have an emergency along I-70 in Utah, that extra coverage matters a great deal.

  3. Sam,

    Oh, indeed! That’s a major faux pas for me–a consumer-issues guy–to have overlooked it.

    Brian,

    You have kids and a wife to take care of. No one would blame you for doing what you had to do about keeping them safe. But it’s important you be aware of the downside, so that you can hopefully get a better bargain when other options present themselves. 🙂

  4. Is Verizon’s network really a problem through there, Brian? I haven’t tested the two on that trip, but I’ve been a customer of both companies and have so far never found a place where Verizon isn’t at least as good, if not better.

  5. My brother – who’s an engineering tech and a hard case about media services – was a loyal Cingular customer. Once AT&T bought Cingular, he got out. Glad the service is good out west, Brian, because honestly, it’s crap here in the South. Both the coverage and the customer service….

  6. Jim,

    I’m curious–is that AT&T itself or BellSouth, which is now a part of AT&T? 🙂

    Sam,

    If there was ever an argument for diversity in the marketplace, AT&T is it. 🙂 I’m glad you brought that coverage issue up–when you have literally ONE choice in any given market, is it any wonder that said choice can provide whatever level of service they desire? 🙂

  7. AT&T doens’t have a monopoly on spying programs.. Verizon inherited MCI/Worldcom’s snooping program that routs calls by “desired number” through a live agent to listen to and record. Not sure of the details because I didn’t write any of the actual transfer/detection code, but the team I worked on had to know the call record was modified (and why) and had to use different rules for populating customer records (to hide the fact that it was listened to).

    Make no mistake, when you have monopolies in industry (we’re back to what, 3 companies that carry all our calls/data?) they can (and do) work with the Government to solidify the fascist state that will make them even more money..

  8. I agree that AT&T is quite evil.

    I want an Iphone anyway. It appears that there are some other companies that will sell unlocked Iphones (for a price).
    Or so they claim.

    For those of us who have cash to buy what we want,
    get one from those other companies, and get a sim card.

  9. Savantster,

    You’re absolutely right. I just singled out AT&T because of the iPhone mania, but all (both?) of the major telecoms have engaged in egregious privacy-violating behavior as part of their regular business practice.

    AT&T Is Bad:

    I’d recommend looking very closely at any company that’s claiming to have access to unlocked iPhones. It could be legitimate, but you’re definitely aware that it could also be a scam. For me, it’s not worth it, but your mileage may vary.

  10. Your suggestion of getting a Windows Mobile phone from monopolist and terrible-tech-maker Microsoft leaves much to be desired though. Why not from Symbian/Nokia/Samsung/Motorola, etc.? or Palm? or Blackberry?

    I’m getting an iPhone when it becomes unlocked (which’ll be next year maybe abroad). Meanwhile, I’ll make do with my Palm Treo which leaves much to be desired (no Wi-Fi, always having to reset).

  11. I’m with Savantster,
    I get really fascist vibes from Verizon, and was seriously dogged by MCI in the old days, until I photocopied reams of their false bills, charges and customerservice jive, and sent it to the FCC (ha! if i knew then what I know now, re: Colin Powell’s son…) That got them off my case finally.
    AT&T came from Bell Labs, which really has given us some miraculous communications tools over the years. And Verizon came from AT&T anyway…they all probably suck as far as Privacy Concerns…
    Until we change our governing parties to people that AREN’T concerned with snooping to protect their shennanegans, I think ALL the big telecoms, the data pipe providers, will be under irresistible pressure to furnish that data to these evil snoopers.
    Maybe Google, or tomorrow’s Google will rise up and change all that, but from what I see, Google’s just as bad, as far as advertizing snooping. So the title of the original post IS accurate: it’s a deal with the devil. No other way, save goin back to 2 orange juice cans and a string.
    Disclaimer: this poster bought $10k of AT&T stock in 1983: by 2000, with all the baby-bell splits, etc, it was worth $200k. After that bubble burst, it was down to around $80k, which mostly evaporated to pay bills, etc. This poster now owns a small bit of Apple stock, bought around $55. Finally, this poster would rather have a Nokia N95 than an iPhone. At least today.

  12. Vipster:

    I used to be a dedicated Palm user myself, but I’ve been extremely unhappy with the OS’ performance on higher-end Treos. My 650 crashed constantly and could barely handle even the slightest demand placed on it. I realize Microsoft is the root of much evil in its own right, so my next phone will probably run on a Linux or Symbian OS as well.

    Tommy:

    Yep, they’re all pretty much evil bastards. Sprint (my current carrier) is the best of a bad batch–they didn’t participate in the spy program, but their customer service and tech problems are legendary.

  13. Vipster and Martin:

    Yeah, I tried a Treo 680 yesterday at an AT&T store, I beamed in my Handpainter-Pro drawing program (from my Zire 71!) and it wasn’t nearly as responsive as the Zire. I guess that can be legitimately explained, but it soured my TreoEnvy anyway.

    Martin:

    I didn’t realize Sprint didn’t participate. Thanks for that info. Good to know.

  14. wait ’til you can buy an iphone that doesn’t have att’s firmware embedded into it….

    unlocked GSM phones are where it’s at…..

    t-mobile will have them within a year and euro grey market ones will sprout up sooner than that..

  15. 2 things-
    First, AT&T (when it was Cingular) had to change some serious code for Apple to get the ‘visual voice mail’ to work. (which is a fancy name for random accessed message retrieval) Instead of having to listen to each VM in the order it was received, on an iPhone, you can listen to any VM in any order. No other phone company does that, and so Apple’s iPhone is locked into AT&T because of this feature. This is not the only reason, but is one of many.

    Second, only 38 states have AT&T service, so the iPhone will only be for sale in those 38 states. I live in Vermont, I will NOT be able to buy ine even if I wanted one. I am a Mac user, and my wife assumes I want one … I really don’t. I use Unicel, a company devoted to providing service in rural areas abandoned by the major carriers. Unicel does things like strap antennas to farmer’s silos, something AT&T would never even think of doing…

  16. Kudos on the article. I think the costumer service is going take a hit as well, like the last Cingular-AT&T merger.

    Didi you check out the animated call-center conversation music video about a guy’s speaker getting blown by Electro Magnetic Interference from his GSM AT&T phone (http://www.youtube.com/watch?v=pRG1iB8NF14). They know it can happen, and completely blew him off and said he’d have to pay the termination fee if he canceled his contract despite the known issue. It’s on his site http://www.feelingcingular.com. Who know’s what the iPhone is going to be like, but I know what AT&T will be like. No thanks.

  17. I’ve used Cingular for years, I though their Customer Service was awesome. I had to buy a new phone recently becasue I washed mine and I had no issues with the AT+T replacing it. I am a bit of a skeptic when it comes to one company merging with another, but time will tell. My main problem is paying $500 for something that i’m bound to drop 3 times a week. Sure the interface looks cool and I can listen to music but $500?

    As far as privacy issue, it’s pretty safe to assume that the government will help certain companies that participate in the info sharing by alowing them easier access to build infrastructure.

    Either way, $500 for a phone!

  18. Some great points.

    Got disagree with a bit though, not regarding the IPhone, but other issues you bring up.

    I’ve worked in Telecomm for more than a decade now. Every time the wiretapping issue comes up, I cringe. Folks need to look back to the 90’s when the telecomms had to implement ICOS (Increased Court Ordered Surveillance), then CALEA (1994 – Communications Assistance for Law Enforcement Act), and issues within the 1996 Telecomm Act as well. Privacy issues were brought up by all the carriers in 1996, and our complaints were chalked up as the companies wanting an extra buck out of the customers. In truth, each step led to a sizable loss of privacy, and simplicity of tapping where the telecomms didn’t even need to be involved (no notification from law enforcement in some situations).

    So, while we can pick the examples you listed above, you should know, all the carriers across the board have to open up your records to “law enforcement” very easily now. Not just AT&T. Just so happens people are perking up to this now, but privacy took a huge hit back in the 90’s. Shame. I’ve implemented multiple CALEA installations, and take issue with the black box nature of the equipment.

    With the rest…. well, the telecomms, OS makers, equipment manufacturers, etc., are all Oligopolies. Nature of networks, utilities, etc.

    My bottom line with the IPhone….. I just want a phone to be a phone! Rather send a real e-mail from a real keyboard over texting any day. We’ll see how it plays out, but over priced, network access is gonna cost, and I’m sure the first version will have a few bugs.

    Thanks for the article!

  19. So, um… who isn’t evil in the provider market?

    Look. You enjoy your Skype enabled life. We’ll enjoy the iPhones. Nice work if you can get it.

  20. Um, what service offering or product that it’s touched *hasn’t* AT&T effectively failed at?

    Yes, where sheer bulk is an asset AT&T can continue to survive. But AT&T have never been able to react in anything approximating real-time to any dynamic technology marketplaces. Thus the all to common phenomenon wherein one is exposed to a massive six-week-long barrage of advertising about a “new and exciting” AT&T service, only to find that the service is no longer offered in six to eight months.

    So, what sort of fool, exactly, wants to get themselves into a two-year contract for AT&T’s *already sub-optimal* EDGE network simply so they can play with an iPhone for a few weeks before the novelty wears off?

  21. Since the iPhone isn’t subsidized in the U.S., I don’t believe you can be required to contract with AT&T.

    We’ll find out soon enough just how locked down the current iPhone is, but I’m confident that it won’t be long before these are being used on T-Mobile, one way or another. Too many clever people want this to happen.

    For years, I’ve been avoiding AT&T/SBC for most of the reasons mentioned, and I fully sympathize.

Leave us a reply. All replies are moderated according to our Comment Policy (see "About S&R")

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s