Four members of the U.S. Senate Committee on Commerce, Science and Transportation are expressing concern about exclusive deals between the nation's dominant wireless carriers and handset makers. On Monday they asked acting Federal Communications Commission Chairman Michael Copps to review the practice.
Currently, several wireless carriers hold exclusive arrangements with handset manufacturers to offer devices through their networks, noted Sens. John Kerry (D-Mass.), Roger Wicker (R-Miss.), Byron Dorgan (D-N.D.), and Amy Klobuchar (D-Minn.).
"We ask that you examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace," the senators wrote in a letter to Copps.
Applying a Recent Court Ruling
The senators' letter follows an FCC filing from the Rural Cellular Association (RCA), which believes that exclusivity agreements -- such as AT&T's U.S. monopoly on sales of Apple's iPhone and Sprint's lock on the new Palm Pre -- end up harming consumers and impeding marketplace competition.
"We hope that the commission will recognize the increasing use of these restrictive agreements and act expeditiously to benefit consumers and promote competition among wireless competitors," the RCA said.
In its latest FCC filing, the RCA noted that a recent U.S. Court of Appeals decision affirmed the commission's right to prohibit exclusivity deals in the cable-TV industry that restrict the provision of service in multiple dwelling units and other private real-estate developments.
"The D.C. circuit endorsed the commission's finding that exclusivity agreements between cable companies and apartment owners 'would likely raise prices, limit access to certain programming, and delay deployment of fiber-optic and broadband technologies,'" the RCA said.
Now the RCA wants the FCC to apply the approach to regulating the wireless industry. The appeals-court decision "lends support to the commission for similar action that could be taken to ban exclusive distribution agreements for handsets between wireless service providers and equipment manufacturers," the RCA said.
A Senate Hearing
The Senate committee will hold hearings on Wednesday to examine various issues facing wireless customers, including handset availability.
"The subject of exclusivity agreements between wireless carriers and handset manufacturers will be a focal point of this hearing, and the record will help to determine whether legislative action is also necessary," the senators said.
The investigative guidelines the senators provided to Copps are likely to serve as the key criteria to be examined during the hearing. For example, they want to determine whether exclusivity agreements are restricting consumer choice, particularly in rural America.
The legislators also expressed concern that handset-exclusivity deals could enable a dominant carrier to inhibit the ability of smaller, more regional carriers to compete. Additionally, they say they want to find out whether exclusivity agreements are placing limitations on a consumer's ability to take full advantage of the latest handset technologies, such as the ability to send multimedia messages or tether a wireless device to a notebook PC.