* Cellular giant makes small compromises to avoid greater regulation
On the heels of reports that the U.S. Department of Justice would informally look into whether exclusive handset-carrier deals are impeding competition, Verizon Wireless stepped up to the plate, saying it would restrict such deals going forward to six months. Mere days later, the wireless giant said it was also willing to compromise on helping out smaller competitors by supplying roaming services for a limited period while those competitors build out their networks.
Currently, wireless providers are not required to offer roaming services to competitors in areas where those rivals have purchased cellular licenses but haven’t completed their networks. Some smaller cellular companies, such as Leap Wireless, have reportedly kvetched to U.S. lawmakers that these roaming regulations — or lack thereof — put small service providers at a competitive disadvantage.
They have pointed out that cellular behemoths like Verizon Wireless have long relied on roaming agreements to plug coverage gaps during multiple generations of nationwide network build-outs of their own.
On the one hand, kudos to Verizon Wireless for taking action that has them at least appearing to play ball. At the risk of sounding overly cynical, however, the players in the telecom industry are usually anything but altruistic. These steps more likely represent a preemptive strike — one that gives the impression of being cooperative and willing to compromise in the hopes of warding off stronger regulation — while minimally impeding Verizon Wireless’s revenues and business plan.
In the handset exclusivity area, for example, the real deal under the microscope is the Apple-AT&T arrangement that makes AT&T the exclusive distributor of the intensely popular iPhone in the U.S. Verizon Wireless’s exclusive arrangement to sell the first generation BlackBerry Storm, which opened to mixed reviews late last year, hardly compared to the success of the iPhone. Why wouldn’t Verizon Wireless limit exclusivity deals? The iPhone has already done its damage.
And in terms of providing roaming services to competitors, Verizon Wireless has suggested a time limit of two years, with a possible extension to three years if competitors meet their network build-out milestone goals. While the smaller competitors are complaining that this isn’t enough time, I have to agree with Verizon Wireless’s theory of at least putting a cap on the length of time it will play nice. Operators who sit on the valuable airwaves without offering services of their own aren’t doing consumers any favors, either.
