Movement on Antitrust

Word that the Justice Department is looking more closely at major wireless carriers, namely AT&T and Verizon, for potential violations of U.S. antitrust laws bodes well:

If the telecom investigation is indeed taking place, experts say the government may investigate exclusivity deals like the one Apple has with AT&T for the iPhone.

Through that deal, iPhone consumers’ choice in wireless provider is limited to AT&T, and AT&T can set its service costs without a worry that competitors will undercut them. RIM’s (RIMM) BlackBerry smartphone, on the other hand, is available on all carriers, and has benefited from providers’ promotions, including Verizon’s buy-one-BlackBerry-get-one-free deal.

Of course I’m doubly interested in this, as a former employee of the DOJ’s Antitrust Division, and a brand new member of the AT&T universe.  This potential result of an investigation with consequences for the carriers is particularly heartening:

Castonguay said government pressure could lead companies to change their payment structures so that overage charges would be a thing of the past. For example, a customer with a 450-minute plan that uses 650 minutes could be automatically bumped up to a 700-minute plan, which costs, say, $10 more per month, rather than 45 cents per extra minute charge, which would cost $90.

He also said the telecom industry could be forced to make it easier to switch phones to rivals’ networks or alert users before they are charged for going over their minutes.

“There are a number of things that are bizarre about mobile industry,” said Castonguay. “To the extent that they can implement these tactics, they would come across as much more fair and reasonable.”

Imagine that.  A wireless company that wouldn’t be intentionally screwing over its customers.  It’s really amazing what they get away with at the moment.  That you can be charged $20 a month to send unlimited texts, versus $5 for 200 or whatever, is really ridiculous — it’s as if your cable and internet provider charged you for the number of minutes you used your email each day or for the hours you spent watching a particular channel (there have been rumors in the past of ISPs suggesting that consumers be charged on a per-use/per-bandwidth charge, but that seems to have been roundly rejected — something that could change, of course, but it appears unlikely). And that’s just the tip of the iceberg.

Whatever the end result, it will surely be months before anything comes of this.  Unless the wireless providers act preemptively to ward off an investigation, the DOJ will begin the laborious investigation and work toward a settlement with the companies in question.  Whether an investigation ever moves out of the preliminary stages remains to be seen, but I don’t think there’s reason to doubt the new antitrust authorities will at least take the complaints more seriously than the Bush Administration did.


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