US consumer groups battle against handset exclusives
Published: 24 February, 2009
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High profile handset exclusives have been a key competitive weapon for mobile operators in the US and Europe for years, and their importance was enhanced by the impact of the iPhone on AT&T's and O2's customer numbers and data revenues. But the approach, which is already under fire from the open access lobby, is also facing legal and regulatory threats. Orange France's iPhone exclusive was recently ruled illegal, and now US consumer groups are joining the fight against the practise.
Although Julius Genachowski is still waiting for Senate confirmation as new chair of the FCC, he already knows open access will be a key issue for his administration, and handset exclusives will fall within this thorny debate. Last week, a group of public interest and consumer campaigners banded together to push their opposition to handset exclusives on the FCC.
"Handset exclusivity arrangements are harmful to consumers," the Ad Hoc Public Interest Spectrum Coalition told the agency. "These anti-competitive practices limit consumer choice, raise consumer prices and limit innovation in the device market. The arrangements tie together the markets for devices and services, allowing the market power of wireless carriers to invade a competitive market for devices and to use successful devices as hooks to reduce competition in the wireless services market."
These lobbyists - which also included the Consumer Federation of America, Consumers Union, Free Press, Media Access Project and New America Foundation - are joining their voices to that of the Rural Cellular Association, which last year called on the FCC to probe exclusives, and how they could reduce small carriers' ability to compete with the majors.
AT&T and Verizon are arguing against these views, and Verizon also claims the FCC has no jurisdiction over carriers' contracts with handset makers.
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