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James Gattuso from CEI dispels the over-reactive argument that the iPhone, with its single carrier service offering, constitutes a kind of consumer slavery. Apple’s new iPhone has gone from cool new innovation to a new form of slavery in less than two weeks.
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Contracts or no, people seem to like the deal that is being offered to them. And for good reason — as explained by former FCC commissioner Harold Furchtgott-Roth... the requirements allow providers to better manage demand, while allowing consumers to enjoy lower monthly rates. At the same time, consumers are hardly locked-in to their carrier — in fact they switch all the time, both during and at the end of a contract. While Gattuso's position can be taken as a defense of private party contracting and mass market commercialization in the cellular space, his arguments readily apply to DRM and other kinds of proprietary systems, which some have argued deprive consumers of certain kinds of freedom. Nobody forces consumers to buy proprietary offerings from firms like Microsoft and Apple. Consumers who do purchase products/services from such firms are often informed on issues like switching costs and other implications of their buying decisions. If consumers didn't think they were getting a deal, they'd go somewhere else, and firms would have to adapt to market demand.
Yet Gattuso argues against regulation of cellular markets, whereas DRM, enforced by the DMCA, can be seen as a kind of regulation. Various segments of the free market world may differ on the iPhone and DRM issues based simply on this factor of regulation, and those who per se oppose regulation (what I call buzzword Libertarians) will hype up all mole-hills to argue for consumer harm and stifled innovation where none occurs.
posted by Noel Le @ 6:30 AM | Markets: Business, Investment & Innovation
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