iPhone's Five-Year Deal With AT&T Challenged By Capitol Hill

Can the FCC and lawmakers break down the five-year exclusive deal between the new Apple iPhone and AT&T?? Lawmakers on Capitol Hill discussed this very topic today comparing buying the phone to checking in to " The Hotel California".

Today's hearing over whether or not Congress should grant the cell phone industry's wish to pre-empt sales from regulating wireless phone companies led to talks about the latest and greatest Apple gadget, the iPhone. Lawmakers were not discussing how awesome the iPhone is, they were discussing whether or not they can force Apple to make the phone compatible with wireless services other than AT&T. iPhone is currently locked in with AT&T and if you want to have one, you have to sign up with AT&T, the exclusive deal is for the next 5 years and has people talking. The problem is that if for some reason you cannot or choose not to use AT&T's service, the iPhone that you just paid $500-$600 for becomes useless. Rep. Edward J. Markey, D-Mass., chairman of a House subcommittee on telecommunications and the Internet weighed in today stating that the buying an iPhone was like checking into "The Hotel California", the subject of a song by the Eagles in which customers can check into the hotel, but they can never leave.

Markey described the phone as a "Hotel California service. You can check out any time you like, but you can never leave _ you're stuck with your iPhone and you can't take it anywhere."

Columbia University Law Professor, Timothy Wu said the cellphone industry is like a "spectrum-based oligopoly" where customers have given up their property rights.

"Imagine buying a television that stopped working if you decided to switch to satellite," Wu said. "Or a toaster that died if you switched from Potomac Power to ConEd."

At this moment the FCC is considering how a "valuable swath of spectrum" that is going to be auctioned in the next 6 months will be used. Among the ideas is a requirement that one entire block of airwaves be made usable to ALL wireless devices... including the iPhone. Can the FCC and government break down the 5-year deal between iPhone and AT&T? Only time will tell... and if the exclusive deal is broken, what kinds of other opportunities will this open the door for?