FCC To Probe Exclusive Mobile Deals

On Tuesday, we discussed news that four US Senators would be looking into the exclusivity deals between carriers and cell phone makers. Apparently, they didn't like what they heard. Reader Ian Lamont writes with an update: "The Federal Communications Commission is planning on launching an investigation into exclusive handset deals between mobile carriers and handset makers. In a speech on Thursday, acting FCC Chairman Michael Copps said the agency 'should determine whether some of these arrangements adversely restrict consumer choice or harm the development of innovative devices, and it should take appropriate action if it finds harm.' It's not hard to imagine who might be targeted — at a separate Senate Committee on Commerce hearing on Thursday, much of the discussion centered on AT&T's exclusive deal to carry the iPhone. AT&T claimed 'consumers benefit from exclusive deals in three ways: innovation, lower cost and more choice,' but carriers and senators from states with large rural populations disagreed, saying that their customers had no choice when it came to the iPhone — it's not available because AT&Ts network doesn't reach these areas. One panelist also brought up the Carterfone precedent (PDF), which concerned an 'electrical acoustic coupling device' that a man named Tom Carter developed in the 1950s to let field workers make phone calls using a radio transceiver connected to AT&T's phone network. AT&T, which was then a monopoly, claimed no foreign devices could be connected to its network, but lost when it challenged the Carterfone in court. The result spurred innovation such as the fax machine."

Comments

beyond the rural issue

[YesIAmAScript]

There's AT&Ts recent withdrawal of the iPhone from Pay As You Go availability.

Basically, if you want an iPhone on an affordable plan, you can't get it, because AT&T doesn't offer PAYG and because affordable operators like MetroPCS can't offer one either (yes, I realize MetroPCS isn't GSM, it's just an example).

Re:This is what I'd like to see

[R3d M3rcury]

But, you see, this doesn't preclude subsidized phones.

Look, I have no problem with AT&T saying, "Hey, join our network for two years and we'll give you an iPhone for $199!" That's a fine way to get business and I have no problem with it. I don't even have a problem with Apple making this deal exclusive with AT&T.

Where I have the problem is when that's the only way. If I want to spent $700 on an iPhone and use it on T-Mobile, Commnet, Indigo Wireless, Smartcall, or Union Wireless, that's fine, too. If any of the above companies want to support Visual Voicemail, they should be able to get the specs from Apple and implement it as well.

This way, I can sit down and determine what kind of plan I want. Do I want a contract where I'm locked in for x years, but I have less immediate out-of-pocket expenses, a subsidized phone, and more predictable bills? Do I want a pay-as-I-go plan which may mean some really heavy months but some really light months, too? Must I have an iPhone? Is it better to spend $700 for the iPhone and $50/month for my plan, or spend $200 for iPhone and $70/month for my plan. Have I gotta have the latest/greatest phone and I'll want to switch every year? Am I the kind of person who keeps a cellphone for three or four years?

Carterphone led to purchased phones and ...

[Ungrounded Lightning]

The carterfone and that whole line of reasoning has nothing to do with the iphone on competitor networks.

Carterphone is directly applicable.

The carterphone decision is specifically about letting people buy phone equipment of their own choice and requiring the phone companies to let them attach it to the network, rather than renting the limited choice of company-provided equipment.

It led to the "foreign attachments tariffs" and in two steps to the type-approval process, where any equipment that would meet the standards for interoperability could be certified by a lab hired by the manufacturer, then bought and connected by a customer.

(It also led to long-distance service competition, antitrust litigation, and the breakup of the AT&T monopoly: MCI was formed, strung microwave links between cities, hooked 'em up to local phone lines, and let people bypass the AT&T long-distance service by dialing a local number then a customer ID and a long-distance number. AT&T sued, MCI counter-sued on antitrust and won, Southern Pacific Railroad strung fiber beside the tracks for their train signals and formed Sprint to sell the extra bandwidth on their network, ...)

Carterphone was about breaking an anticompetitive tie-in between a network provider and its captive equipment supplier - with wireline rather than wireless equipment. Yes, in this case the bite is on the other carriers more than on the customers of the offending carrier (though the tiny General Telephone company, with its smal islands of local-phone customers, couldn't get Western Electric phones back then - a similar situation). So though the precedent won't transfer directly, IMHO the comparison is still apt.