Senators Call For Probe Into iPhone-AT&T Deal

Dennis Faas's picture

Four senators have written to the Federal Communications Commission (FCC) calling for an investigation into exclusive deals between cellphone manufacturers and network carriers.

Though the letter doesn't name any particular companies, it appears that Apple's deal with AT&T over the iPhone is a major target.

The group signing the letter includes former presidential candidate John Kerry, chairman of the Senate committee on communications issues. He's joined in writing the letter by members of both major political parties.

The letter says the committee already has a "comprehensive record" of evidence about exclusivity deals, in which a handset can only be used on one service network for a certain period after launch. Such deals usually involve the network subsidizing the cost of handsets, which may otherwise be too expensive for the mass market. (Source:

Four-Pronged Attack

The senators ask that the FCC investigate whether or not such deals are on the increase, and then consider four possible drawbacks for consumers:

  • Do the deals restrict choice for consumers who live in rural areas and are not covered by the particular network tied to a particular handset?
  • Do the deals unfairly restrict the user's ability to take full advantage of a phone's capabilities such as tethering? For example: using a phone to provide an Internet connection to a computer, rather than use the computer's WiFi connection -- this is banned under Apple's deal with AT&T.
  • Do the deals unfairly hurt the competitive position of smaller local networks which aren't big enough to sign exclusive deals?
  • Do the deals encourage or discourage the development of new ideas in handset development?

The committee is holding its own hearing into wireless consumer issues later this week and says exclusive network deals will be a "focal point" of its questioning.

Apple's deal with AT&T isn't the only exclusive agreement in the news recently. Palm has a similar deal with Sprint to provide service for its newly-released Pre smartphone. That deal also bans tethering, and Palm has already asked one website to ban its members from even talking about unofficial methods to tether the phone. (Source:

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