Verizon, the nation's largest carrier, twice this week offered concessions to smaller carriers in hopes of keeping the new forces in charge in Washington from more heavily regulating its highly profitable wireless business.Verizon announced Monday that it would let some rural carriers have access to some of its exclusive devices after six months, an attempt to mollify lawmakers and regulators who are eyeing the partnerships between device makers and networks (Verizon–Blackberry Storm, AT&T–Apple iPhone and Sprint–Palm Pre) as anti-competitive.
Then Verizon wrote Rep. Henry Waxman (D-California) on Wednesday to say that it would agree to rules mandating limited roaming agreements when the proposed partner owns some spectrum in the proposed roaming area. Carriers are not currently required to offer roaming agreements to companies that have unused spectrum in the same market, but must offer fair rates to other mobile carriers that don't own any spectrum in a given market.
Smaller carriers such as Leap — which operates the month-to-month Cricket service with 4.3 million customers — say such agreements are necessary, because they don't always build out all of a network in a given area. For instance if a company wanted to start service in Sacramento, California, it might start by only building out a network that covered most of the metropolis. But under current law, no existing carrier would have to offer Leap roaming at fair rates in Sacramento's suburbs.
"Reciprocal roaming has been the bedrock of the wireless industry since its inception, yet Verizon has decided that it is somehow in the public interest to dictate where consumers can and cannot roam and for how long they can do so," Cricket spokesman Gregory Lund said.
The FCC has been considering whether to ditch that exception, which is supported mainly by AT&T and Verizon — the country's two dominant carriers with coast-to-coast networks.
Cricket says the FCC should extend the current requirement for fair SMS- and voice-roaming agreements to data as well.
Verizon plainly admits its announcements are a sign of the times.
"The world has changed. Washington has changed," Verizon Wireless spokesman Jeffrey Nelson told Dow Jones. "It's imperative that we negotiate with legislators in a way that recognizes they're in new roles."
But that doesn't mean Verizon wants the world to change too much.
For instance, Verizon will only offer its exclusive handsets to other carriers with fewer than half a million subscribers. Like Sprint, T-Mobile and AT&T, Verizon argues — not unpersuasively — that when carriers work with manufacturers to create a cool device, they should get the rewards and that it forces other companies to keep up. They point, for example, to the iPhone, which has spawned many purported iPhone killers, such as Sprint's lock-in of the Palm Pre.
Most other countries, however, don't follow the United States' device-subsidy model and generally separate device and service, so that users buy their own device and then choose which carrier to use.
The Rural Cellular Association said it was encouraged by Verizon's handset offer, it said it did not go far enough.
"Verizon Wireless' action, as well as the recent concerns expressed by many members of Congress on both sides of the aisle, provide notice to AT&T, Sprint Nextel and T-Mobile that the long-term exclusive handset arrangements that they continue to benefit from — at the expense of consumers and vibrant competition — are coming to an end, particularly as these arrangements receive more scrutiny from the public and private
sectors," the association said in a press release.
Over the last few months, Verizon and other carriers have been trying to convince Congress and the FTC that the mobile phone market is open, competitive and good for customers. But outside groups like Public Knowledge argue that the companies' large profits and continued stranglehold on the devices and applications that run on their networks show that the government needs to step in.
Harold Feld, Public Knowledge's legal director, called Verizon's announcement's "inadequate" and "hollow."
"This is yet another attempt for Verizon to use its version of corporate charity to influence policymakers at a time when substantive, legally binding rules are what is required for fairness," Feld said. "In both cases, the handset-exclusivity terms offered last week, and this one, [the] parties that are supposed to be the beneficiaries, are not impressed with Verizon's offerings. That should signal policymakers that these are hollow offers."
See Also:
