Telecom & Wireless
Cell Phone Carrier Attack (ATT, AAPL, VZ, RIMM, S, PALM, MOT)
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What started as a qu
ery to the FCC last month by Sen. John Kerry, (D-Mass.), and a handful of other senators asking whether exclusive deals between carriers and cell phone makers stifle competition is now an antitrust review.
As of Monday afternoon, the Department of Justice says it is looking at whether the exclusive deals service carriers have with particular phone brands is unfairly limiting competition from small and/or rural carriers, and keeping the prices that consumers pay artificially high.
The announcement could impact the exclusive arrangement AT&T Inc. (NYSE: ATT) has to carry the Apple (Nasdaq: AAPL) iPhone; the deal Verizon Communications (NYSE: VZ) has with Research in Motion’s (NYSE: RIMM) BlackBerry Storm, and even the recent deal Sprint Nextel (S) signed to carry Palm Inc.’s (Nasdaq: PALM) Pre.
The last significant antitrust action that widely affected the way carriers do business was the decision in 2003 that forced them to allow customers to keep their numbers if they switched providers. At the time, the decision was heralded as a way to make it easier for customers to switch services.
It’s possible that the DOJ may again seek a similar goal, saying that once you buy an iPhone, you should always have the choice to get service for it from several companies.
The argument among carriers will be that there are plenty of attractive phones that work universally amongst almost all carriers, like Motorola Inc.’s (NYSE: MOT) RaZr, so consumers have many choices. They also may argue that it will be too expensive for them to make all phones work across multiple networks.
Then again, any argument that the carriers can’t afford to make concessions may fall on deaf ears, especially with the subscriber traffic being generated by new releases like the Pre.
The carriers argued five years ago that they couldn’t afford to give people the right keep their phone numbers. They lost. And that was when many Americans had a lot less trouble paying their cell phone bills
Mike Tarsala.
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