Senators to examine exclusive handset deals
A group of U.S. senators plans to discuss possible issues with handset exclusivity deals this week, and they've asked the Federal Communications Commission to also examine the practice.
On Monday, four members of the Commerce Subcommittee on Communications, Technology and the Internet sent a letter to the FCC expressing their concern around agreements, like the one between Apple and AT&T, that allow an operator to exclusively sell a phone for a period of time.
Based on a request that a group of rural operators sent asking the FCC to examine the practice, the senators say they wonder if the exclusive agreements restrict customer choice of handsets depending on the user's geographic location, limit a consumer's ability to use certain technologies like multimedia messaging services and tethering, inhibit the ability of smaller operators to compete and discourage innovation in the handset market. Senators John Kerry, a Democrat from Massachusetts; Roger Wicker, a Republican from Mississippi; Byron Dorgan, a Democrat from North Dakota; and Amy Klobuchar, a Democrat from Minnesota, signed the letter.
It's a hot issue in the mobile market particularly since the emergence of the popular iPhone. AT&T has clearly benefited from its two-year exclusive deal for the iPhone. In the first quarter, AT&T signed up 1.6 million iPhone customers, presumably some of whom migrated from other operators.
Other new hot phones have also been tied to a particular operator. Verizon exclusively sells the first touch-screen BlackBerry, the Storm, and Sprint got the newest Palm, the Pre.
Small operators, which often offer services in rural areas where the large operators don't have coverage, say that such deals put them and their customers at a disadvantage. "Exclusive handset contracts divide wireless customers into 'have's' and 'have not's' with many customers in rural areas having no option to subscribe to the services of the large, national carriers, thus denying these customers access to the most desirable and advanced handsets that are only available through exclusive arrangements with the national carriers," wrote U.S. Cellular, in support of the request for rule-making filed by Rural Cellular Association. "Turning rural consumers into second class customers by blocking their access to smartphones and other innovative handsets is not consistent with the purposes and policies of the Act," the operator wrote, referring to the Telecommunications Act.
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This is something that
This is something that completely does hurt the consumer. There is a growing number of iphone users that are stuck doing business with AT&T because of these exclusive contracts. American wireless carriers intentionally make their networks and phones incompatible and yet even worse cripple built in functionality and the ability to move to another carrier by locking phones. If Mobile phone companies were forced to do business based on SERVICE instead of who has the prettiest shiny new handset on the market both the carriers and consumer would benefit. Consumers would see better choices and have better service from the carriers and the carriers would be able to become more efficient in their service offerings to the consumer. Rather than spending time locking out all the features of their handsets they could redirect their efforts into improving their networks and selling services that the customer actually WANT's to buy!Congress should go farther and ban exclusive contracts as well as carrier locking! They already had to drag the wireless carriers kicking and screaming into the last pro consumer mobile phone regulations. And of course even after all the resistance and screaming they are using the return policy as a selling point now which is HELPING THEM sell handsets to people who are having trouble deciding on what carrier to go with.
Senators to examine exclusive handset deals
The current practice hurts the consumer. Let us pick a network and pick a handset so we can choose the best of both.