Senators Sniff Around Exclusive Handset Deals

from the lurking-with-intent dept

A group of senators has announced they'll hold a hearing in Washington on Wednesday to examine exclusive deals between mobile handset vendors and operators, and has asked the FCC to look into the practice. The senators want to know if the deals (such as those that make the iPhone exclusive to AT&T and the Palm Pre to Sprint) "unfairly restrict consumer choice or adversely impact competition". Exclusive deals are becoming a big part of the operators' strategies as they look to grab users from their rivals. As prices, coverage and other competitive factors reach a degree of parity, exclusivity on certain devices is a major way the operators seek to differentiate themselves. Smaller and rural carriers argue this puts them at a disadvantage, because of their small size, which makes it impossible to compete for hot devices if a bigger operator wants an exclusive deal. The senators seem to be capitalizing on the recent outcry from some iPhone owners regarding AT&T's upgrade policy, as well as its lack of support for new features in the latest version of the iPhone software. It's unclear just how far the senators want to take this. For instance, if exclusives are banned, would manufacturers be forced to build variants of a handset for any operator's network? Say the exclusive deal for the iPhone was abolished. Would Apple be forced to build a CDMA version for Verizon and Sprint? Would it have to make a model that supported the frequencies used by T-Mobile's 3G network? Hopefully the attempt to gain some publicity by seizing on a hot topic won't lead to rushed legislation that brings unintended consequences.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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