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May 20, 2008

FCC Asked to Investigate Handset Exclusivity Deals

by Matthew

Rural carriers are asking the FCC to look into the handset exclusivity practice that has become common place among the market today. Rural carriers claim that such deals preclude them from offering popular handsets and stifle the industry. What do you think? Is this practice good marketing and position by mobile carriers or is it anti-competitive? 

I have to say I am of two minds about this subject. As a business such offerings are the name of the game. If you have a product that customers want the basic economic principle of supply and demand apply. Why shouldn't Apple, for example, receive a premium from AT&T to give them the right to sell their product -- AT&T in turn has one of talked about mobile devices. On the other hand as a consumer who doesn't want to be forced into the way AT&T's marketing scheme, why should any carrier have exclusive rights to a product in perpetuity or for excessively long periods?

I think Jeffery Silva, RCR Wireless News, is missing three important aspects from his article: The carrier subsidy lock that has been common practice among carriers, at least in the USA and Canada, carriers refusing to accept consumer compatible equipment and the crippling of handsets. Carriers in Europe and Asia not only unlock their handsets they are in many cases are obliged to do so upon completion of the customer's contract. T-Mobile USA will provide an unlock code for most handsets upon request but this is the exception not the rule among US carriers. The US and Canadian mobile markets are somewhat unique in the fact they have such a mix of mobile technologies (GSM and CDMA). Regardless carriers should be allowed to unilaterally declare consumers cannot bring their own equipment because it will degrade the network, as Verizon has done. Carriers throughout Europe customize their handsets with logos, graphics and other options to make it their own , just like the US and Canada. What they do not do is disable Bluetooth (recall the class action lawsuit against Verizon), disable Dial-Up Networking (DUN) and other options or features of the handsets.

What actions I'd like to see from the FCC: 1) Force carriers to unlock equipment 2) Accept network compatible equipment without contracts or penalizing consumers 3) Set boundaries for exclusivity rights such as time, regions, exceptions (in the case of the rural or small regional carriers). All of these practices have hindered the US mobile market. After all aren't North and South America mobile markets hurt enough by having difference frequencies from the rest of the world?

Via RCR Wireless News


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Matt, I agree with you 100%

Amy Gahran

Darla -- excellent recommendations. Being a US mobile user with many friends in Europe and some in Asia, I continually feel like *we're* the backwater as far as mobile is concerned. And that's a shame, because mobile is (in fact) a global market.

If we subsidize anything in the US mobile business, it should be to promote economically beneficial competition and innovation -- *not* to coddle recalcitrant established carriers who'd rather try to force people to be their customers by limiting options (and, consequently, limiting the potential of the US mobile market).

IMHO, of course.

- Amy Gahran


Why do I know I will probably be the only one with this opinion, here it is..As this country is supposed to be about liberty and freedom, the free market ideals should reign supreme. The FCC should not even exist, let alone FORCE carriers to do ANYTHING. As it stands now, i can still but unlocked and unbranded equipment if I choose to, I can enter into a contract for services if i choose to, I can go prepaid if I choose to, or I can use a friggen pay phone if I choose to. Bottom line here is choice, and the cell carriers will shift policy to make happy customers if they want to keep customers. There are so many options out there and the last thing we need is some body of the US government getting involved..its already involved wayyyy more than it needs to be.

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