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Mac Musings

No iPhones Going to Cingular Stores or Independent AT&T Wireless Dealers

Dan Knight - 2007.06.20

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Sorry, fans of the iPhone, but you won't be able to buy an iPhone from your local Cingular dealer when Apple officially launches the device at 6:00 p.m. (local time) on June 29.

You will be able to buy it at the Apple Store, retail or online (and we can only hope this means they'll also be selling AT&T wireless packages). And you'll be able to buy an iPhone at any AT&T retail store - but only at the 1,800 owned by AT&T.

Problem is, a lot of Cingular dealers are franchisees, not company stores, and thus not allowed to market themselves as AT&T stores. According to AT&T, there are 8,000 franchise outlets and other retailers selling AT&T wireless phones and service - and not one of them will be selling the iPhone.

"...odds are, your local Cingular store (until recently, Cingular was the brand for AT&T's cell phone service) probably won't have iPhones," according to Peter Burrows of Businessweek. And that's going to create a lot of confusion and frustration among those who have a working relationship with their local Cingular franchise or simply assume that the iPhone will be available from anyone offering AT&T wireless service.

Greed

It's a horrible example of corporate greed, as is Apple's decision to make AT&T wireless the exclusive iPhone service in the United States.

Apple tempted us all with the iPhone, and then let us know that for the next two years (and more recent sources are saying five!) it would be a Cingular exclusive - thus alienating those who have abandoned Cingular over poor service, those who don't have Cingular coverage, who are locked into other carriers for up to two years, or who are simply happy with the service they're getting from Verizon, Sprint-Nextel, T-Mobile, Alltel, and regional carriers.

Cingular became AT&T wireless, and they're ready to reap the harvest of Apple's innovation - and they're not going to share it with their franchisees. That's like Apple introducing a new Mac and making it available exclusively through its own online and retail stores - but not to any other Apple dealers.

It's wrong (but probably not illegal) to arbitrarily block a franchisee from selling the same products sold in the company store, although there may be some restrictions based on sales volume and training.

Price Fixing?

Bruce Hamilton of the Cingular store on University Ave. in Palo Alto, CA, says five people a day have been asking to be put on their iPhone waiting list - which doesn't exist, as the store is a franchise. He speculates that Apple wants to make sure nobody offers the iPhone for less than its US$499 (4 GB) and US$599 (8 GB) retail price - and AT&T can't tell retailers what price to charge.

That would be illegal. According to the Wikipedia, "In the United States, price fixing can be prosecuted as a criminal felony offence under section 1 of the Sherman Antitrust Act." So rather than allow franchisees to undercut Apple's established retail price, it looks like AT&T is simply refusing to let them sell the iPhone at all.

Well, not completely. There is an AT&T sancationed workaround. Franchisees are allowed to help customers order the iPhone from Apple's online store and sell them AT&T wireless service.

But for those hoping to take an iPhone home on June 29, that's not an option. If they don't go to an Apple retail store or an AT&T company owned store, they're going to be upset at the controlling practices of AT&T and Apple Inc. LEM

Further Reading

Dan Knight has been using Macs since 1986, sold Macs for several years, supported them for many more years, and has been publishing Low End Mac since April 1997. If you find Dan's articles helpful, please consider making a donation to his tip jar.

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