HomeMobileCell PhonesApple iPhone has 5-Year Agreement with AT&T, Memorialized 3 Years Ago

    Apple iPhone has 5-Year Agreement with AT&T, Memorialized 3 Years Ago

    Apparently back in 2007, Apple signed an exclusive deal with AT&T to market and distribute the iPhone. Just now, we are getting confirmation that the iPhone exclusivity deal Apple signed with AT&T back in 2007 was good for 5-years.

    In 2008, Apple’s legal team was in a courtroom in California over a 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. Apple responded with this:

    Apple iPhone has 5-Year Agreement with AT&T, Memorialized 3 Years Ago

    […] 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.”

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    So is the contract valid?  If it was signed in a courtroom, so sure it’s valid.  But that’s not to say that it could not be amended or cancelled if any breach from either parties consideration was not fulfilled wholly or partially.

    Additionally, the two companies recently met 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 negotiated until 2012.  News will follow whether we will see the iPhone stay at AT&T until then, or whether iPhone and Apple will expand their horizons with the Big Red V, (Verizon).

    Published on May 12, 2010

    David Novak
    David Novak
    For the last 20 years, David Novak has appeared in newspapers, magazines, radio, and TV around the world, reviewing the latest in consumer technology. His byline has appeared in Popular Science, PC Magazine, USA Today, The Wall Street Journal, Electronic House Magazine, GQ, Men’s Journal, National Geographic, Newsweek, Popular Mechanics, Forbes Technology, Readers Digest, Cosmopolitan Magazine, Glamour Magazine, T3 Technology Magazine, Stuff Magazine, Maxim Magazine, Wired Magazine, Laptop Magazine, Indianapolis Monthly, Indiana Business Journal, Better Homes and Garden, CNET, Engadget, InfoWorld, Information Week, Yahoo Technology and Mobile Magazine. He has also made radio appearances on the The Mark Levin Radio Show, The Laura Ingraham Talk Show, Bob & Tom Show, and the Paul Harvey RadioShow. He’s also made TV appearances on The Today Show and The CBS Morning Show. His nationally syndicated newspaper column called the GadgetGUY, appears in over 100 newspapers around the world each week, where Novak enjoys over 3 million in readership. David is also a contributing writer fro Men’s Journal, GQ, Popular Mechanics, T3 Magazine and Electronic House here in the U.S.

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