Carriers Ask FCC to Squash Exclusive Phone Deals

The Rural Carriers Association (RCA) wants the Federal Communications Commission (FCC) to investigate what it calls “anticompetitive effects” of exclusive device deals between handset makers and the nation’s top five leading wireless carriers.

In a petition filed last week, the group claims that such arrangements are contrary to the public interest, hurting both consumers and smaller carriers.

“We want the FCC to consider rulemaking on this issue so that people can comment and contribute to the process as these arrangements are increasing with more frequency,” David Nace, RCA counsel, told The RCA represents 80 small and midsize wireless players. Some members have subscriber bases between 500,000 and one million customers, according to the group.

The group’s filing noted more than 50 exclusive deals in place, including AT&T’s (NYSE: T) rights to sell the Apple iPhone last June, and now Research in Motion’s (NASDAQ: RIMM) BlackBerry Bold, which debuted this month. The filing also mentioned Verizon Wireless’ (NYSE: VZ) exclusive to sell the LG Voyager handset and Sprint Nextel’s (NYSE: S) deal to sell Samsung’s Ace.

Such deals are a market differentiator in the ever competitive mobile device industry. While carriers are getting more competitive in pricing, such as the fixed rate plans pushed our earlier this year, the opportunity to be the sole distributor of the latest and hottest handset is a huge business boon.

While Verizon Wireless and T-Mobile declined to comment on the filing or the value of exclusive agreements, AT&T clearly believes that such deals are benefit the consumer in more ways than one.

“These deals drive innovation and spur manufactures to improve products and gives users more choices,” Mark Siegel, AT&T spokesperson, told “Without these deals carriers would have little imperative to innovate,” Siegel said, adding that such deals drive strong competition in the marketplace that benefits users in terms of pricing and plans.

But RCA counsel Nace contends the exact opposite. He said locking up new devices to specific carrier coverage forces consumers to make a decision to change carriers if they want a new device.

“The large carriers are using their market power to negotiate these contracts and it’s hurting those users who aren’t in their coverage areas,” Nace said. “It means non-customers don’t have the ability to use the best devices that are coming to market.”

While the FCC confirmed it had received the legal filing, it had no comment on the issue and there is no timeline for the FCC to respond. A spokeswoman said it’s the first time that the issue of exclusive handset agreement has been presented to the Federal agency.

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