Verizon's Handset Offer Continues to Draw Fire

Verizon's July 17 offer to limit exclusive handset deals to six months and make the devices available to the nation's smallest carriers continues to be dismissed by critics as an empty political gesture meant only to stave off possible legislation.

The exclusive handset deals offered by carriers have already gained the attention of Congress with the Senate Commerce Committee holding a hearing June 17 questioning the practices of wireless carriers. 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 AT&T's arrangement with Apple's iPhone.

"Effective immediately for small wireless carriers (those with 500,000 customers or less), any new exclusivity arrangement we enter with handset makers will last no longer than six months – for all manufacturers and all devices," Verizon Wireless CEO Lowell McAdam wrote to Rep. Rick Boucher, chairman of the U.S. House Energy and Commerce Committee's Subcommittee on Communications, Technology and the Internet.

Since the letter was made public, a firestorm of criticism has followed. The latest group to dismiss Verizon's offer is a coalition of MAP (Media Access Project), Free Press and the Consumers Union.

"In response to...political pressure, Verizon Wireless has taken a small step in the right direction. However, the impact of this action is largely insubstantial, and benefits few consumers," the groups wrote to Boucher in a July 20 letter. "Furthermore, industry self-regulation cannot be a substitute for meaningful consumer protection laws, particularly in a market that demonstrates insufficient competition."

MAP Vice President Parul P. Desai added in a statement, "[The] attempt by Verizon to limit concerns over its exclusive handset deals with mobile device manufacturers falls short of serving the public interest. It is clear Verizon continues to embrace and defend unlimited handset exclusivity practices for all consumers, save a small minority. The fight for greater access and innovation in our wireless market is far from over."

The groups note that only five percent of the nation's carriers have 500,000 subscribers or less. The letter to Boucher also points out that a six-month period of handset exclusivity could result in as much as 15 months of exclusivity in practice, considering the time it takes for carriers to bring new handsets onto the market.

"Fifteen months in the handset market is the difference between 'cutting edge' and 'obsolete.' Without the ability to negotiate for all devices, the Verizon Wireless offer does not offset this harm," the groups stated in their letter to Boucher. "The better solution is to encourage manufacturers to make interoperable phones from the outset by doing away with any exclusive deals in the wireless market."

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