Responding to concerns expressed on Capitol Hill this week concerning exclusive arrangements between the cellular industry’s biggest carriers and handset manufacturers, acting Federal Communications Commission Chairman Michael Copps said Thursday that he has instructed the FCC’s Communication Bureau to begin crafting an official investigation.
“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,” Copps said. “In the fast-changing wireless handset market, we must ensure that consumers are able to reap the benefits that a robust and innovative competitive marketplace can bestow.”
Fostering Collaboration
According to Sen. John Kerry (D-Mass.), the question at the heart of the exclusivity debate is whether the practice “is better or worse for competition, for innovation, and for the American consumer if the carrier controls the decision over what devices can and cannot operate on their network.” He added, “I think the Commerce Committee should consider how the wireless industry is functioning and whether current practices are in the best interest of competition and the consumer.”
AT&T defended its exclusivity deal for Apple’s iPhone before the U.S. Senate Subcommittee on Communications, Technology and the Internet on Wednesday, saying that such arrangements encourage the necessary collaboration that accelerates the delivery of next-generation features and leads to optimal handset performance.
“They increase a carrier’s incentives to make purchase commitments and to invest in promotions, network improvements, and special training of sales staff,” said Paul Roth, president of retail sales and services at AT&T Services. “They lower manufacturer entry barriers and serve as a key tool to maintain brand value and, as an important form of competition, they encourage other carriers and manufacturers to do better by improving their own handset portfolios or the prices, features and…