Justice Department to review wireless carriers for anti-competitive practices

The DOJ is reviewing large American telecoms including ATT and Verizon over concerns the companies have abused the increasingly centralized market power they've gained in recent years, according to an item in the Wall Street Journal today:

The review of potential anti-competitive practices is in its very early stages, and it isn't a formal investigation of any specific company at this point, the people said. It isn't clear whether the agency intends to launch an official inquiry.

Among the areas the Justice Department could explore is whether wireless carriers are hurting smaller competitors by locking up popular phones through exclusive agreements with handset makers, according to the people. In recent weeks lawmakers and regulators have raised questions about deals such as AT&T's exclusive right to provide service for Apple Inc.'s popular iPhone in the U.S.

The Justice Department may also review whether telecom carriers are unduly restricting the types of services other companies can offer on their networks, one person familiar with the situation said.

DOJ Opens Review of Telecom Industry (WSJ.com)

• [trippcook]

  This is ridiculous. Go somewhere else if you don’t like it! I live in a small town in SW Virginia, and I have all major wireless carriers, in addition to pay-as-you-go, and small guys like nTelos and US Cellular. Man, monopoly central!

  Also, if you don’t like lock-in, then PAY FULL PRICE for your phone! Phones are expensive and complicated … you want a nice smartphone for $100 or $200, then you get stuck with a contract. This is fucking simple.

• [Anonymous]

  They’ll just say the pricing plans are a matter of national security and congress will back off.

• [zuzu]

  Gotta love it. Sell them the frequencies so they can fragment the market with a bunch of incompatable technologies. Then get upset because of anticompetetive practices. The government should have leased the freq to the providers for a moderate or fee and standardized on something like GSM. Then there would be real competition.

  DOJ, meet the FCC.

  p.s. Legalize more open spectrum!

• [j3nnyb3an]

  It’s about damn time. There is no choice anymore. AT&T and Verizon = GREED. It’s so obvious it’s pathetic. The plans have no options: it’s either cheap with nothing or way overpriced for everything. And, if you have Verizon, have you happened to notice on your online bill if you hover over the link for taxes for your cell phone, it says taxes for service usage (or something similar) and then when you hover over Verizon surcharges it says something like: to offset tax charges-WTFF???? Check it out, I’m not kidding.

• [noen]

  But… but… how can this be? When markets are free everybody wins! I don’t understand…

• [Anonymous]

  Hahahahaha!! Like they are going to do anything to stop the telcos.

• [elfspice]

  I can’t believe how long wireless phone/network providers have been getting away with outrageous overcharging and provider lockin. I hope the DOJ does decide that they will be forced to unlock their phones and charge prices that bring their profit margins on wireless in line with their wired business, and that this spreads to other countries.

  The simple fact is, per subscriber, mobile towers cost less to deploy, maintain, and extend. How is it that they can have mobile service in african countries yet the amount we pay for it in the west would be completely unaffordable to africans.

• [RevEng]

  @Zuzu: I hope you’re not suggesting that spectrum should be completely open. If so, imagine the engineering nightmare that would cause. Nearby towers vying for channels, trying to overpower each other. Just look at WiFi — it’s forced to use this model and it results in noisy signals all around and terribly inefficient use of what spectrum is available.

  On the other hand, if you’re just demonstrating why it isn’t a truly free market, then I agree. :)

  To those complaining about prices, while I share your concern, don’t think that the DOJ is about to do anything about that. They might deem them monopolies, but the most that will do is break them up. Cell phone rates are high because people are willing to pay them — that’s what your free market is all about. It’s the same reason you pay $12 for a bag of popcorn and a drink in a theatre — if people are willing to pay it, the companies will charge it and make tons of money.

  If you really want cell phone rates to drop, stop using your cell phone. Yeah, I know, you need it — so do I, that’s why I pay it — but it’s the only reason they would ever start to drop prices. As long as you “need” it, they’ll charge you as much as you’re able to pay.

• [Anonymous]

  Texting plans are absurd compared to the data-transmission they require.

  AT&T – $20 a month for 1,500 text… OUTRAGEOUS

• [Anonymous]

  Gotta love it. Sell them the frequencies so they can fragment the market with a bunch of incompatable technologies. Then get upset because of anticompetetive practices. The government should have leased the freq to the providers for a moderate or fee and standardized on something like GSM. Then there would be real competition.

• [Anonymous]

  This is long overdue, I hope something comes of this, network providers have been running a racket for years, plain and simple.

• [zuzu]

  I hope you’re not suggesting that spectrum should be completely open. If so, imagine the engineering nightmare that would cause. Nearby towers vying for channels, trying to overpower each other. Just look at WiFi — it’s forced to use this model and it results in noisy signals all around and terribly inefficient use of what spectrum is available.

  Perhaps you’re not familiar with cognitive radio and software-defined radio?

  Read The Myth of Interference by David Weinberger interviewing David P. Reed.

  “Interference is a metaphor that paints an old limitation of technology as a fact of nature.”

  Cell phone rates are high because people are willing to pay them — that’s what your free market is all about.

  Lack of competition due to government-created barriers to entry is not what a free market is all about.

• [romulusnr]

  Dear 2009:

  FIGHT ATT RATES!

  BREAK UP THE TELECOM MONOPOLY!

  Love, 1982

  http://en.wikipedia.org/wiki/Bell_System_divestiture

• [Anonymous]

  finally!

• [zuzu]

  But… but… how can this be? When markets are free everybody wins! I don’t understand…

  Because there’s no free market for using the radio spectrum. The FCC is a captured agency selling monopolies to rent-seeking telecommunications companies.

  Just as Ma Bell / AT&T got their monopoly via regulatory capture from the Universal Service Mandate.

  If we had completely open spectrum, then we’d see real free market competition in wireless telecommunications.

• [Anonymous]

  FINALLY!!! Please put an end to the overpriced cell plans. And text messaging plans are another story. Total rip off, highway robbery to the innocent masses.

• [The Raven]

  Heee. Near as I can figure, cell service is leased at a gross profit of 5 or 10 times cost. …wonder if the DoJ will address that.

• [Nasty]

  Monopolies don’t get broken up too often in this country, I think.

  I remember some of the history of Standard Oil getting broken up..but I think it just created fragment corporations that all worked together.

  I’d expect ATT to do something like that if they got told they’re a monopoly. So nothing changes, except they can’t be called a monopoly.