Forever Is… Um, really?

Ok, so I’ve been reading Daring Fireball again, and I think that John has missed the boat. He says:

Admittedly, for all we know, even if hackers had never figured out a way to SIM-unlock the original iPhone 1.0 OS, Apple still might have closed access to the iPhone file system in the 1.1.1 update. For example, it’s worth noting that the iPod Touch, which has no SIM card or network-carrier exclusivity, is locked in apparently the same way as the 1.1.1 iPhone. But hypotheticals aside, we do know that the 1.0 iPhones were SIM-unlocked. And if you think Apple could have simply let that be without breaking the contracts they’ve signed guaranteeing exclusivity to its carrier partners around the world, you’re nuts. (Emphasis mine)

I must be nuts. There’s a good chance of that, but hang with me on this for a moment. I don’t think that the guarantee of exclusivity works in the way that John thinks. I think that it’s fundamentally about the patents in use, especially that for Visual Voicemail. That feature, and that feature alone, is the only thing that breaks when moving the iPhone to another cellular service, such as T-mobile. I realize that with the 1.1.1 update this isn’t possible anymore, but that’s really immaterial. Visual Voicemail requires the tech patents that Apple owns, and while it’s true that AT&T has the exclusive rights to the iPhone, that is more a byproduct of having the exclusive rights to the patent license for Visual Voicemail combined with the inability of Steve Jobs to sell something that doesn’t just work.

To further this, let’s look at the laws in Europe. I know this is a bit early, but again, hang with me. In the EU it’s illegal to lock a phone to a system. How is Apple getting around this law and only offering the iPhone through T-mobile in Germany and O2 in the UK? They can’t lock the SIM directly, it violates the law. They can, however, require that the GSM system the iPhone is attached to have the capability to drive all the features of the iPhone (at least for a while, then this too may fail in court, which is exactly where this will head, and Apple surely is aware of this). Since, again, Visual Voicemail is the only function that requires something new of the GSM system, Apple has a way to lock the phone – the patents and licensing of those patents to exclusive partners.

Licensed patents and technologies are always specific and costly, and tend to go in the favor of the patent holder. Which is a bit of a “duh!” thing to say, but it’s worth repeating because it hits to the heart of the iPhone exclusivity contracts. AT&T gets the iPhone because they get the exclusive rights to the patents. AT&T pays for those rights through the nose. Apple doesn’t guarantee that the iPhone will stay locked to AT&T, but they won’t release software to unlock it nor will they allow another U.S. company to build the Visual Voicemail service. De facto exclusivity on the iPhone via contractual exclusivity on the patents.

This agreement is the exact opposite of the problematic contracts that Apple has with the various music labels. In that nightmerry-gore-round scenario Apple is forced to update the Fairplay DRM technology within a certain amount of time of a public hack opening it up. A timed bit of cat-and-mouse play, with clauses in place that will cost money if they don’t follow through.

If AT&T had a clause guaranteeing exclusivity of service, it would be the same situation for Apple. Apple has publicly denounced the hackers, but not in a “we hate you, we have to kill you now” sort of way. They did a more “meh, we care, but not enough to worry about it because it’s not money from us and it’s not money at AT&T we care about” thing. If AT&T had Apple by the balls on exclusivity, don’t think for a minute they wouldn’t squeeze to get what they want.

So, while I think John is brilliant, I still think he’s wrong on this.






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