Rural Carriers Question Exclusive Phone Deals

Exclusive deals between carriers and handset makers establish monopolies and harm consumers, says an advocacy group.

The Rural Cellular Association wants the Federal Communications Commission to ban exclusive deals between telecommunications carriers and handset makers. The small carriers claim the exclusivity deals are monopolistic and anti-competitive.

The so-called Big 5 carriers-AT&T, Verizon, Sprint Nextel, T-Mobile and Alltel Wireless-frequently cut deals with handset manufacturers to gain control over the features, content and design of a particular handset. The deals also give a carrier absolute control over the market availability of a product.

Small and rural carriers, however, are rarely privy to such deals. Vermont residents, for instance, are unable to use an iPhone without violating the terms of AT&T's two-year contract with Apple since AT&T provides only roaming service in Vermont. The iPhone is also unavailable to most rural residents of Alaska, Arizona, Colorado, Idaho, Kansas, Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, South Dakota, Utah and Wyoming.

When Research In Motion announced its new BlackBerry Bold on May 12, company officials said the new handset would be available only through an exclusive deal with AT&T.

"For many consumers, the end result of these exclusive arrangements is being channeled to purchase wireless service from a carrier that has monopolistic control over the desired handset and having to pay a premium price for the handset because the market is void of any competition for the particular handset," the RCA said in a May 20 filing with the FCC.

The other top carriers are also without service offerings in many rural areas, denying customers access to such popular handset models as LG's Voyager phone (offered exclusively by Verizon Wireless) and Samsung's Ace (an exclusive product available only through Sprint Nextel).

The Rural Cellular Association added in the filing, "The time to protect consumers and smaller competitors from these ongoing harms and re-establish a truly competitive U.S. wireless marketplace is now."

The group is seeking an FCC investigation into the "widespread and anti-competitive effects of these exclusivity arrangements."