Posted by: Olga Kharif on August 21, 2009
On Aug. 27, the Federal Communications Commission will consider whether to examine the state of competition in the wireless industry. Chances are, the agency will decide to look more closely at the industry’s largest players, including Verizon Wireless and AT&T.
The inquiry would follow months of Congressional hearings and a barrage of letters from various members of Congress, including Sen. John Kerry, asking the FCC to examine the issue. The agency is expected to consider whether exclusive handset deals between carriers and cell-phone makers impede competition. It may also rule on whether various fees carriers charge consumers are excessive and not explained clearly enough.
An inquiry would create an overhang over the industry’s largest players. But proving that AT&T and Verizon Wireless have engaged in anti-competitive behavior won’t be easy. Multiple industry studies suggest that the U.S. wireless industry is one of the most competitive in the world, with three to four providers typically servicing a given market vs. one to two providers in Europe and Japan.
What’s more, carriers make huge investments into their networks, consumer equipment and marketing to make their exclusive handset deals pay off. And many of these deals don’t. So while an inquiry would create an overhang, a ruling against the industry’s giants is far from certain.