Working Assets: Boycott the iPhone

Amid media fanfare and stockholder awe, Apple CEO Steve Jobs announced on June 29 the release of the long-hyped iPhone, making 3 million units available for sale to the public. The promise of a phone device that included a camera phone, music and video player, mobile and Wi-Fi access, among other gizmos, generated the kind of frantic consumerism typically reserved for the release of the latest Sony PlayStation system. In the first few days alone, market analysts estimate that more than 500,000 were sold. The iPhone will cost the customer anywhere from $2,000 to $6,000 over the two-year minimum contract.

Wall Street is crowing, the cable networks are cheerleading Apple's latest hot product, but we haven't heard much about consumer opinion on one of the iPhone's big flaws; if you buy one, your carrier is going to be "locked" to AT&T's service. No way around it. This isn't some technological necessity -- the iPhone works on other networks -- but Apple has cut a deal with AT&T to give them the monopoly on carrying the phone's service for the time being. Even worse, the iPhone is also locked away from outside innovators who might design their own applications to function on the iPhone.

Working Assets, the wireless and long-distance phone service and credit card company with an activist network that does advocacy for a wide range of progressive causes, set up an action alert to fight what it perceived to be iPhone's unfair business practice (Disclosure: Working Assets has donated to AlterNet, among other progressive causes).

Working Assets has argued that if consumers who wanted the iPhone but didn't want a service carrier with unsavory corporate practices, such as "turning consumers' information over to the National Security Agency without warrants, their efforts to wipe out net neutrality, or the close to 100 percent Republican giving of their new chairman," they would be "out of luck."

Pointing out that it is "perfectly legal, according to a recent decision from the U.S. Register of Copyrights, for American consumers to unlock their phones for use on whatever network they would like," and that "Apple is trying to take away that right by locking the iPhone to AT&T's network," Working Assets urged its list of activist/customers and online audience to sign a petition telling Steve Jobs to allow for open access to the iPhone on other phone networks.

Petition signers would write Jobs to say they were going to boycott the purchase of the new iPhone:

We, like many other Americans, are anticipating the release of the iPhones. However, we, like many other Americans, will NOT be purchasing an iPhone when they arrive. We choose NOT to use the iPhone because it is "locked" for use only on the AT&T wireless networks.

The campaign against the iPhone took off on the web, hitting the online tech community and online activists who have been fighting against AT&T's complicity in the Bush administration's war on civil liberties. Working Assets President Michael Kieschnik wrote after the campaign's initial success that it had done well because "it put on the table where we and they would like the wireless industry to go -- a market where consumers can choose their own handsets and move freely among competing network providers, all the while being able to download third party applications without obstacle onto their handsets. This is the ethos of the open internet."

But not everyone was supportive of Working Assets's petition -- including Working Assets's own activist network. Summarized Kieschnik on the member feedback, "Some thought that the issue was a trivial one at a time when soldiers are being killed daily in Iraq. Others thought it was self-serving to criticize anyone else in the wireless industry if we did not already offer service that met our own standards."

Kieschnik justified Working Assets' move by arguing that the invasion of Iraq was attributable to the "failed, captured, lazy mainstream media which served as stenographer to the pronouncements of the Bush administration. Only with an open internet did some of the truth eventually emerge. And it is precisely that open internet that AT&T seeks to suppress." Kieschnik concluded, "Apple made a choice in selecting AT&T. Steve Jobs could have used the immense leverage Apple had in launching the iPhone to demand concessions that changed the wireless market. He did not. I had hoped for more."

Wired magazine blogger Ryan Singel called the petition "almost quaint in its naiveté." Apple's habit keeping its products on a tight leash among even its own customers -- ask anyone who wanted to upload their friend's iTunes onto their iPod without erasing the songs already stored on it -- makes it a shallow vessel for expectations that Apple would push for an open market.

And the argument that Apple's choice to partner solely with AT&T on the iPhone held customers ransom to AT&T's bad practices perhaps overlooks the fact that Verizon, MCI, Sprint and the rest of the big players in the American telecom industry have worked with the Bush administration after 9/11. Additionally, Verizon rejected an offer from Apple to be the sole carrier for the iPhone in 2005 before Cingular -- which was later purchased and absorbed by AT&T -- agreed to terms with Apple, though Apple's offer to Cingular was on different terms.

Working Assets uses Sprint as a network provider for its wireless services, and Sprint and its merged partner Nextel Communication's history of lobbying efforts in Washington for control of the internet and the public airwaves is hardly rosier than AT&T's -- that's the pot-calling-the-kettle-black issue of Working Assets's own "standards" that Kieschnik was referring to in his response. Included in this issue of standards is the issue that Working Assets partner Sprint sells "locked" phones as well (some carriers, including Verizon don't). Sprint has recently been involved in a class action lawsuit where it is alleged that Sprint violated California law by "locking cell phone handsets to make it difficult for customers to switch cell phone service providers without purchasing a new handset, and also by failing to disclose that such handsets are locked."

Additionally, after AT&T, Verizon and BellSouth were reported to be cooperating with the NSA to compile a massive database of call records for domestic spying purposes, Working Assets asked Sprint if it had also participated, but Sprint denied it. But Working Assets later conceded that in cases when it sets up long-distance accounts -- requiring the participation of the local carrier -- "[it is] occasionally required to provide [customer] name and address information" and "cannot state with certainty that the provisions of [its] nondisclosure agreement have been honored by all third parties." In other words, due to its partnerships, it doesn't know if its customer data might be part of the NSA database. Working Assets is quick to point out that it has condemned warrantless monitoring of phone conversations ordered by the Bush administration as "illegal and unacceptable," and that it's the only telephone company participating in the ACLU's lawsuit against the National Security Agency's database, which ironically doesn't speak very well of its partner, Sprint.

However, the nature of Working Assets's petition to Steve Jobs wasn't a scorched-earth demand that Apple should take seismic action to usher in an era of a telecommunications paradise for consumers -- the reality that there are a handful of companies wielding almost total control over the telecom industry means that dramatic attempts to open the marketplace won't go anywhere. This is a reality of the marketplace that even a socially responsible company like Working Assets has had to come to terms with.

The petition was a call for Apple to recognize the opportunity it has to push for change for after cracking into a rigged market that rarely admits new players, starting with itself. But at this point it appears that Apple is just happy to be there, content to keep access to the market "locked" away from everyone else.