Verizon Defends Exclusive Handsets, Except for Small Carriers

(We discussed this about a month ago, and I've been reading about Verizon's new policy change, but I didn't understand it until I read this.)


Verizon Defends Exclusive Handsets, Except for Small Carriers

By SAUL HANSELL
The New York Times
July 17, 2009, 12:22 PM

Verizon Wireless is defending AT&T’s right to keep the iPhone to itself.

The company today announced a policy that it says will give small wireless carriers more access to phones that Verizon had the exclusive rights to sell. From now on, when Verizon strikes a deal with a manufacturer for exclusive sale of a handset, it will let any carrier with fewer than 500,000 customers sell the phone after six months.

There has been increasing interest in Congress over whether wireless carriers are hurting consumers by shutting out rivals from hot phones. Of course, the hottest phone right now is Apple’s iPhone, which is sold only by AT&T in the United States.

It may not be a consumer issue. Much of the political pressure on the issue is coming from smaller wireless carriers that worry that they are being shut out from all the cool phones by a giant carrier.

Verizon’s move, announced in a letter to Representative Rick Boucher, the Virginia Democrat who is chairman of a crucial telecommunications subcommittee, appears to address the concerns of the small companies while preserving the right of big carriers to offer handsets their rivals can’t.

The letter defends these arrangements:

In other words, please don’t make Apple sell us the iPhone because we want to have the next cool phone and keep it from AT&T.



SW

 

(Another article on this topic)

Verizon's Concessions On Handset Deals Fail To Satisfy Rural Carriers

The smaller carriers complain that Verizon will retain exclusive access to popular handsets such as the BlackBerry Storm.

By Marin Perez
InformationWeek
July 22, 2009 01:56 PM

The Rural Cellular Association said the changes Verizon (NYSE: VZ) Wireless made to its exclusive deals don't go far enough.

Facing increased government pressure, Verizon said last week it would allow any carrier with fewer than 500,000 subscribers to offer devices it sells after a six-month exclusivity window. The RCA said the major flaw with this deal is that it only affects future handsets, and it excludes popular devices like the Verizon-exclusive BlackBerry Storm.

"The commitment does not go far enough to rectify the consumer and competitive harms caused by these agreements," the RCA said in a statement. "More than 180 million of the nation's wireless customers are unable to benefit from the new policy."

Exclusive handset deals are facing increased scrutiny from lawmakers, as the RCA and consumer advocate groups say these agreements limit choice and provide an unfair advantage for major carriers like Verizon, AT&T, and Sprint Nextel. Major mobile operators have argued that these deals represent a lot of risk because if the exclusive device isn't a success, the carrier will be left with excess inventories.

Additionally, AT&T (NYSE: T) has argued that its exclusive deal to be the sole U.S. provider of Apple's iPhone has benefitted consumers because it has brought "unprecedented competitive reaction." For example, to counter AT&T's iPhone, Verizon nabbed the Storm, Sprint is the sole provider of the Palm Pre, and T-Mobile is the only carrier to offer the T-Mobile G1.

AT&T likely will not adopt a similar exclusivity deal as Verizon because the iPhone has been the main driver of new subscriber growth over the last two years. AT&T is reportedly pushing to extend its iPhone exclusivity, but rumors suggest Apple will eventually bring an iPhone-live device to Verizon.



SW

 

Yes, that's what they're saying. They want to defuse the appearance of hurting the little guy, but not actually hurt their competitive position against the other big guys.

Also, I don't see how anyone could expect that any policy change would affect current handsets. They are not going to go back and renegotiate contracts already in place. It doesn't make business sense and would probably be very costly.


SW