DOJ Looks Into Wireless Carrier Exclusive Deals

Acccording to a Wall Street Journal report, the U.S. Justice Department has begun looking at big telecom companies such as AT&T Inc and Verizon Communications to try to determine if they have abused their market power.

The journal, which cited unnamed sources, said the Antitrust Division's review was in its very early stages and was not yet a formal probe of any specific company.

The report said that a probe could concern exclusive agreements between phone companies and handset makers or whether phone operators are 'unduly restricting' services third parties companies can offer on their network.

The Department of Justice declined comment and the country's biggest operators, AT&T and Verizon, said they had not been given notice of any formal probe.

Lawmakers have recently raised questions about whether large wireless carriers were hurting smaller rivals by entering into exclusive agreements with the makers of popular phones. Deals like AT&T's pact with Apple Inc for exclusive rights to U.S. iPhone sales are at the center of some lawmaker concerns.

Other phone companies have struck similar deals with handset makers. For example, Sprint Nextel has an exclusive arrangement with Palm to sell the Palm Pre. And T-Mobile is the exclusive carrier for the first two Google Android phones made by HTC that are on the market.

The Justice Department's top antitrust official Christine Varney had said in May that the DoJ would be 'aggressively pursuing' companies that abuse their power to crush competition.

Forbes reported that consumer groups said on Monday that they were hopeful that Varney's comment and the latest report were positive signs the government was looking at their concerns.

'There are definitely some things in the marketplace that we believe as consumer advocates should trigger scrutiny from the anti-trust authorities,' said Ben Scott, policy director for consumer advocacy group Free Press referring to handset deals and the blocking of certain applications from phones.

It has been a long standing practice for carriers to forge exclusive deals with phone makers giving them a head start in luring customers with a particularly attractive handset.

The iPhone has made this trend a bone of contention among consumers because of the devices' widespread popularity and the fact that AT&T has been the sole U.S. provider selling it since 2007. Exclusivity deals often end after about a year.

The new chairman of the Federal Communications Commission, Julius Genachowski, plans to review the exclusive deals.

According to a copy of the written responses to questions from Senator John Kerry obtained by Reuters in mid-June, Genachowski said he would 'promote competition and consumer choice.' Senator Kerry encouraged the idea of a review.

(July 6, 2009)

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