Concern grows in Washington over exclusive cell-phone deals
Scrutiny of cell phone exclusivity deals, in which hot new phones are available from only one carrier, is intensifying in Washington. Within the past day, the chairman of one Senate subcommittee has weighed in with a list of recommended steps to address such deals, and the Wall Street Journal reports the Department of Justice has opened an investigation into them.
Senator Herb Kohl, who chairs the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, sent a joint letter to the Federal Communications Commission and the Department of Justice. Calling exclusivity arrangements “a serious barrier to competition,” he urged the FCC to open its own investigation into them and the Justice Department to take “all necessary action to keep the market open to competition.”
The FCC has already announced they’ll open a proceeding to investigate handset exclusivity—another recent development—with the exact question they’ll be investigating expected to be announced within the next few weeks, after which comment will likely be received from interested parties representing consumers, carriers, and manufacturers, among others.
Today’s Wall Street Journal report indicates a parallel, broader investigation at the Department of Justice into whether cell phone carriers are abusing their market power to the detriment of consumers and competitors. Areas of investigation, according to the report, could include exclusivity deals and limitations on the types of competing services that can be offered on carriers’ networks—such as curbs on voice-over-internet calling from smart phones using third-party applications.
Advocates at Consumers Union, the parent company for Consumer Reports, welcome the growing attention in Washington to these issues. Singling out Senator Kohl’s letter, in particular, CU says "exclusive deals with manufacturers and the blocking of applications are common practices among national providers. There doesn't seem to be any market constraint on this behavior. We applaud Senator Kohl for taking a strong stand, because consumers need some relief."
In addition, a bipartisan group of senators, all members of the U.S. Senate Committee on Commerce, Science & Transportation last month asked the FCC to examine exclusivity agreements and act accordingly if the agency finds “they unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace." —Paul Reynolds









