Where does smart business end and antitrust behavior begin?
Last time, I raised the question about whether the Department of Justice’s intent to informally review exclusive partnerships between U.S. mobile network operators and smartphone makers is warranted or represents big-government intrusion into the free market. I rarely see issues as black and white. I believe that’s what makes them issues (and is probably why my Meyers-Briggs personality test yields a different result each time I take it).
That said, here’s some more food for thought on vendor-carrier relationships, and I welcome your opinions:
1) It seems the dander gets up especially in the case of Apple and AT&T, while plenty of other carriers have exclusive arrangements with other device makers (Sprint and the Palm Pre being the most recent). The Apple iPhone has been so wildly popular that this particular exclusive arrangement is the one in the spotlight.
2) Both Apple and AT&T have always been control freaks. But let’s face it: Some degree of OCD-ishness is necessary to guarantee certain service levels. Indeed, opening things up to behavior outside your control drives innovation and spurs usage … but can also negatively impact the network or the device and cause performance to plummet. It’s a delicate balancing act.
3) Unlike in Europe, phone makers can’t build a single device that runs on multiple U.S. networks. The technologies have to match and we, unfortunately, have several of them. So it’s an effort and expense to build different versions of devices to run on multiple networks. The situation is analogous to software developers building applications for the most popular operating systems first, which most folks consider a sign of solid business acumen.
4) Speaking of open access, what about the U.S. rules pertaining to the portions of 700MHz spectrum many of the carriers bought last year? The 700MHz auctions took place under the condition that parts of the spectrum allow any mobile device with compatible technology or mobile application to run on it. Will the execution of open access in the United States make the exclusivity deal issue moot?
Kevin DiLallo, a partner at telecommunications law firm Levine, Blaszak, Block & Boothby, LLP in Washington, D.C,, doesn’t think so.
“The 700MHz open access rules … are far too limited to have widespread effect on the market, and they haven’t produced much in the way of product, service, or application differentiation yet. They were a great idea, but they should be extended to all wireless licensees, not just those with the 700MHz C Block,” he says.
Perhaps such a move is what the Justice Department might have in mind.
