Senators Question iPhone Type Deals with Carriers

Four U.S. Senators are urging the Federal Communications Commission to investigative whether exclusive deals between cell phone makers and wireless carriers are unfairly impacting competition and restricting consumer choice in the commercial wireless marketplace.

Unlike wireline services, which are required by law to allow consumers to connect the legal devices of their choice to carriers' networks, the wireless market is pocked with exclusive deals such as Apple's iPhone arrangement with AT&T. The Rural Cellular Association May 20 filed a a petition for rulemaking on the exclusive deals.

"Based on this record, 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," Senators John Kerry (D-Mass.), Roger Wicker (R-Miss.), Byron Dorgan (D-N.D.) and Amy Klobuchar (D-Minn.) wrote to FCC acting Chairman Michael Copps June 15.

Kerry, chairman of the Commerce Subcommittee on Communications, Technology and the Internet, is also holding a hearing June 17 over the exclusive deals.

"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 wrote.

The stimulus package passed by Congress earlier this year requires that any organization or enterprise receiving grants or loans to build broadband networks to allow any legal device to be connected to the new networks. Network operators are prohibited from discriminating in the handling of network traffic, at least as defined by the FCC's network neutrality principles, which are currently under legal challenge by Comcast.

But, as Public Knowledge's Art Brodsky notes of the stimulus, "It's important to realize that whatever open network and non-discrimination conditions are applied as part of the stimulus will be very limited in scope, applying only to projects generated as a result of grants, loans or loan guarantees made under the legislation."