FCC Probes Wireless Contract Chokeholds

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By Michele Masterson, ChannelWeb


8:28 AM EDT Fri. Jun. 19, 2009


Right now iPhone users may have no choice but to use AT&T as their wireless carrier, but that may change as the Federal Communications Commission investigates whether such wireless exclusivity contracts are fair -- both to users and competitors.

Speaking at The Broadband Policy Summit in Washington Thursday, acting FCC Chairman Michael Copps said he will follow up on complaints from four U.S. senators as to whether the Goliaths in the cell phone carrier industry are locking out the Davids, such as rural carriers. The big carrier partnerships accused of having a stranglehold on contracts include Sprint Nextel's exclusive deal with the Palm Pre; Apple's iPhone partnership with AT&T and Google's Android phone contract with T-Mobile.

Copps' investigation comes on the heels of a letter sent Monday by four U.S. senators asking for the probe. The senators included John Kerry, (D-Mass.), Byron Dorgan (D-N.D.), Amy Klobuchar (D-Minn.) and Roger Wicker (R-Miss.), who are members of the Commerce Committee.

"We ask that you examine this issue carefullywhether exclusivity agreements place limitations on a consumer's ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to 'tether' a device to a computer for Internet use," the senators said in the letter.

Four U.S. senators asked the agency in a letter Monday to review the exclusive deals. Examples include AT&T Inc.'s arrangement to offer Apple Inc.'s iPhone on its network and Sprint Nextel Corp.'s sole rights to Palm Inc.'s Pre.

Copp agreed that a closer look into the issue is warranted.

"I appreciate the concerns that have been expressed on Capitol Hill and elsewhere, and I agree that we should open a proceeding to closely examine wireless handset exclusivity arrangements that have reportedly become more prevalent in recent years, and I have instructed the Bureau to begin crafting such an item," Copp said according to a written transcript of Copps' remarks.

"The Commission as the expert 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."


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