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Proof elusive in claims of five-year Apple-AT&T deal

Contrary to reports, court documents don't prove such a deal exists, says antitrust attorney

May 12, 2010 06:58 AM ET

Computerworld - Ever since Apple Inc. unveiled the iPhone in 2007, users have wondered how long the company and its U.S. partner, AT&T Inc., would be locked in an exclusive relationship.

Despite reports this week claiming that conclusive evidence of a five-year pact is contained in court documents, they're still wondering. According to an expert who has reviewed documents from an ongoing class-action antitrust lawsuit against both companies, it's not clear how long Apple's iPhone is married to AT&T's network.

"At the end of the day, it remains an open issue," Hillard Sterling, an antitrust attorney at Chicago-based law firm Freeborn & Peters LLP, said in an interview yesterday. "I'd be lying if I said this was anything but unclear. But at some point, the contract will be revealed."

One thing is clear, said Sterling: Court documents in a nearly three-year-old lawsuit do not prove that Apple and AT&T have a deal that lasts until 2012.

That contradicts Monday's contention by technology site Engadget, which said Apple's lawyers admitted in court documents that the company had a five-year contract with AT&T. Since that story ran, scores of sites and blogs have referenced the piece, running headlines such as "Apple, AT&T struck five-year deal in 2007; now, who knows?" (Macworld) and "Will an Apple five-year exclusive AT&T deal cripple the iPhone?" (Computerworld).

Engadget's claims received wide attention because iPhone owners, and potential owners, have been asking, almost since the smartphone's debut, when the device would be offered by carriers other than AT&T. Most analysts believe that Apple struck a three-year agreement with AT&T, not a five-year deal. A shorter contract would mean other carriers would get a shot at the iPhone sooner. For example, speculation that Verizon Wireless will soon strike a deal with Apple has been intensifying in recent weeks.

The lawsuit, filed in October 2007, accuses Apple and AT&T of violating antitrust laws by agreeing to a multiyear deal that locks U.S. iPhone owners into using the mobile carrier. The case has not yet reached trial.

According to Engadget, documents in the case -- one a brief that Apple's lawyers wrote to support their demand that U.S. District Court Judge James Ware dismiss all charges, the second an order by Ware tossing out most, but granting some, of Apple's requests -- supposedly confirmed that Apple and AT&T had a deal lasting through 2012.

USA Today story cited

"The duration of the exclusive Apple-AT&T agreement was not 'secret' either," Apple wrote in its June 27, 2008 brief. "The [plaintiff] quotes a May 21, 2007 USA Today article -- published over a month before the iPhone's release -- stating, 'AT&T has exclusive U.S. distribution rights for five years -- an eternity in the go-go cell phone world.'"

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