Senate committee examines handset choice, exclusivity

Thu, 06/18/2009 - 8:05am
Andrew Berg, Wireless Week

The United States Senate Committee on Commerce, Science and Transportation yesterday held a hearing on the “The Consumer Wireless Experience.” The hearing specifically focused on examining handset exclusivity deals between carriers and original equipment manufacturers that some say limit consumer choice.

In his opening statement, chairman of the committee and Sen. John D. Rockefeller (D-W.Va.) noted the wireless industry’s fast growth, brisk competition and innovation. But he also expressed reservations.

“However, in light of this success, we have a serious responsibility to ask what the consequences are for an industry that has grown up so fast in such a short period of time,” Rockefeller said in his opening statement.

“At the heart of this issue is this question: Is it better or worse for competition, for innovation and for the American consumer if the carrier controls the decision over what devices can and cannot operate on their network?” said Sen. John Kerry (D-Mass.). “I think the Commerce Committee should consider how the wireless industry is functioning and whether current practices are in the best interest of competition and the consumer.”

But Hu Meena, president and CEO of Cellular South, a small regional carrier, compared the wireless industry’s current state to that of the banking system before its collapse.

“Our country’s banking and finance policy mistakenly believed that free reign in the marketplace with little oversight was the best course of action and that certain institutions were simply too big to fail. This reasoning will lead to the same market failures in the wireless industry. Congress must take action now to ensure that the wireless industry remains the competitive and innovative marketplace that Congress intended for consumers to have,” Meena said.

Mark Goldstein, director of physical infrastructure issues for the United States Accountability Office, said that the FCC is still learning the ropes when it comes to protecting wireless customers. “The FCC has not articulated goals that clearly identify intended outcomes for its efforts to address wireless consumer complaints and lacks measures to demonstrate how well it is achieving intended outcomes.”

Paul Roth, president of retail sales and services at AT&T Services, said exclusivity deals are all about competition and a better product. “Exclusive handset distribution arrangements encourage the necessary collaboration that optimizes handset performance and accelerates the delivery of next-generation features … and, as an important form of competition, they encourage other carriers and manufacturers to do better by improving their own handset portfolios or the prices, features and other characteristics of their existing offerings.”

In response to the hearings, the CTIA released a statement from President and CEO Steve Largent that echoed Roth’s comments. "U.S. consumers could choose from more than 630 different handsets – including more than 29 Wi-Fi-enabled handsets, manufactured by at least 33 different companies according to a recently released Merrill Lynch survey,” Largent stated.

Largent also cited the wireless industry’s high customer satisfaction numbers in recent years. "The 2008 American Customer Satisfaction Index (ACSI) found that a record-high 69 percent of wireless users were satisfied in the first quarter of 2009.”

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•  Senate committee examines handset choice, exclusivity
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