US Senate poised to investigate carrier handset monopoly

Posted by Aharon Etengoff

San Francisco (CA) - The US Senate is reportedly preparing to investigate a number of exclusive relationships between carriers and handset manufacturers. Four legislators - including former Democratic presidential candidate John Kerry - recently informed the FCC (Federal Communications Commission) of their intention to hold a hearing that will help determine if "exclusivity agreements" effectively limit a consumer's choice of handsets.

"The Senate Committee on Commerce, Science and Transportation will convene a hearing this week to examine issues confronting wireless consumers," the Senators wrote to Acting FFC Chairman Copps. "The subject of exclusivity agreements between wireless carriers and handset manufacturers will be a focal point of this hearing, and the record will help to determine whether legislative action is also necessary. We look forward to your continued attention to this issue, and to a swift examination into the impact of exclusive agreements on the wireless marketplace."

Although the Senators did not specify which companies they intended to review, the hearing is likely to include an examination of the exclusive agreement between Apple and AT&T, in which the latter has been named the sole distributor of the popular iPhone. Similar arrangements between various carriers and manufacturers, such as Sprint and Palm, are expected to be discussed.

The Senators also asked Copps to consider the following for future FFC rulings:

  • Whether exclusivity agreements are restricting consumer choice with respect to which handsets are available depending on a consumer’s geographic region, particularly for consumers living in rural America;
  • Whether exclusivity agreements place limitations on a consumer’s ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to "tether" a device to a computer for internet use;
  • Whether exclusivity agreements are manipulating the competitive marketplace between commercial wireless carriers.
  •  Specifically, whether the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete; and
  • Whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace.