Senators Ask FCC to Examine Handset Exclusivity Deals
On June 15, four members of the Senate Commerce, Science, and Transportation Committee asked the FCC to review handset exclusivity agreements. A handset exclusivity agreement is one in which a wireless carrier and a handset manufacturer agree to make exclusive certain models of that manufacturer's handsets to that carrier's customers only during a contracted period. These arrangements have reportedly become more prevalent in recent years.
Sens. John F. Kerry (D. Mass.), Roger F. Wicker (R. Miss.), Byron L. Dorgan (D. N.D.), and Amy Klobuchar (D. Minn.) wrote a letter to acting Chairman Michael J. Copps asking the FCC to examine these handset exclusivity agreements. In particular, they asked the FCC to consider whether the agreements: (1) "are becoming increasingly prevalent between dominant wireless carriers and handset manufacturers", (2) "are restricting consumer choice with respect to which handsets are available depending on a consumer's geographic region, particularly for consumers living in rural America", (3) "place limitations on a consumer's ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to 'tether' a device to a computer for internet use", (4) "are manipulating the competitive marketplace between commercial wireless carriers"; and (5) "play a role in encouraging or discouraging innovation within the handset marketplace."
"[W]e ask that you examine this issue carefully," wrote the four senators, "and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace."
On June 18, the committee held a Senate Judiciary Committee hearing to explore exclusivity arrangements between wireless carriers and handset makers. There, Chairman Jay Rockefeller (D. W.Va.) said that exclusive arrangements will be a continuing focus of the Senate Commerce Committee.
On the same day, Michael J. Copps, FCC Acting Chairman, said at Broadband Policy Summit V that he agrees the FCC should open a proceeding to closely examine wireless handset exclusivity arrangements. "I have instructed the Bureau to begin crafting such an item," he said. "The Commission as the expert agency should determine whether some of these arrangements adversely restrict consumer choice or harm the development of innovative devices, and it should take appropriate action if it finds harm."