Media Wonk

Can you hear me now? - January 29, 2007

Woulda, coulda, shoulda? Maybe not in the case of Verizon taking a pass on the chance to be the exclusive distributor of Apple Inc.’s upcoming iPhone.

Although the decision by the nation’s No. 2 cell phone provider to shut down negotiations with Apple nearly two years ago effectively handed the business to rival Cingular (now part of AT&T), the deal Steve Jobs wanted—at least as described by Verizon execs—was brutal: A piece of monthly cell-phone fees, limitations on where the phone could be sold and—most critically—control of the customer relationship.

The first two points probably could have been negotiated. The third item was a killer.

It won’t be the last time the issue comes up, though.

As service providers of all stripes look to enhance their “user experience,” they will increasingly collide with other service providers looking to do the same. The question will be, whose relationship with the customer will take priority?

If you Slingbox your cable TV service to watch on a wireless device, for instance, is that an extension of your cable service, or of your wireless service?

In some cases, the user could be buying those two services from the same provider. But for most consumers that won’t be the case. In which case, who—in anyone—gets to bill you for the added value?

Should cable operators be able to allow subscribers to designate shows for on-demand playback at a later time, as Cablevision has sought to do? Or should the networks and program owners be able to charge you for an on-demand download, such as Disney/ABC does through iTunes?

In the litigation between Cablevision and the networks, the dispute has been framed as a conflict between the exclusive rights of copyright owners and the fair-use rights of consumers.

But at heart, it is a basic business dispute, over which party gets to be at the other end of the transaction with the viewer.

In the case of the iPhone, Apple wants voice service to be an extension of iTunes, while Verizon wanted iTunes features to be an extension of your wireless service.

One consumer, multiple services, two providers. No wonder the line was busy.

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