What decade are we living in? There are protests on the streets around Iran, raising gasoline prices and now the government is looking at the telecommunications industry, including AT&T! Ask any student of recent history, and they’d say that those were pages from the chapter on the 1970s, but ironically those things describe the state of affairs this week.
The latter item on the surface sounds like the beginning stages of the breakup of AT&T. First some history of that historic breakup: It began with filings by the U.S. Department of Justice in 1974, which led to an antitrust lawsuit against Ma Bell. The case of the United States vs. AT&T even led to a settlement that broke up the company, with the creation of seven “Baby Bells.” Three of those companies were bought by a fourth, Southwestern Bell (later SBC), which eventually acquired AT&T Corp. to form the AT&T we know today. Meanwhile, two other Baby Bells (Bell Atlantic and NYNEX) eventually became Verizon. As a side note, the final Baby Bell, US West was acquired to become Qwest, which now offers wireless through Verizon! And that’s where we are today.
Verizon Wireless, which is in fact co-owned by Verizon and U.K.-based Vodaphone, remains the number one wireless carrier in the United States followed by AT&T. Ma Bell should be proud that these off spring have done so well. Of course where there is success in the U.S. government eyes will soon be looking at you. Personally, this reporter finds it an odd trend, we’re taught all through school to do our best, to try to be winners, but succeed too well in business and you get the regulators looking at you!
This week several U.S. senators have started a campaign that calls for regulators to review the exclusive arrangements between mobile carriers and cell phone makers. According to Bloomberg News, in a letter to Michael Copps, acting chairman of the Federal Communications Commission (FCC), the senators said they were concerned about exclusivity, and how this affects competition and choice in the marketplace.
The letter is quoted as saying:
“We ask that you examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace.”
The four senators signing the June 15 dated letter include Democrats John Kerry, chairman of the Senate Commerce Subcommittee on Communications, Technology, and the Internet; Byron Dorgan of North Dakota; Amy Klobuchar of Minnesota and Republican Roger Wicker of Mississippi.
This isn’t the only item that Copps is likely reading on the subject either, as The Rural Cellular Association, a trade group that represents more than 80 rural wireless providers, also recently filed a petition to the FCC urging it to look into how the arrangements between carriers and makers might affect consumers.
The irony of this is that the big issue seems to be that AT&T has an exclusive arrangement to carry the Apple iPhone, a deal that has been in place for two years and will expire next year when Verizon will begin carrying the iPhone as well. Meanwhile, Sprint has the sole rights for the Palm Pre, which was released just a week ago, and was seen a boost for a company that is trailing in third place to its rivals.