Does Verizon Stand to Benefit From the FCC's Probe?
The FCC’s probe of cell phone contracts and exclusivity deals will reportedly focus on markets where the iPhone and the Palm Pre aren’t available — that is, where AT&T and Sprint don’t have service. FCC chairman Julius Genachowski told Bloomberg, “There are markets in the country where if you wanted an iPhone, if you wanted a Pre, you couldn’t get it — from anyone.” Indeed, a look at AT&T’s coverage viewer (see image) shows large chunks of the country that don’t have access to the carrier’s network; ditto for Sprint. So is Verizon onto something with its approach, which allows smaller carriers — including those that focus on rural areas — access to its “exclusive” phones?
Two weeks ago, Verizon changed its policy around exclusivity arrangements, agreeing to limit them to a maximum of six months, and to give smaller carriers (like those that focus on rural areas) immediate access to its “exclusive” phones. At the time, Stacey wrote: “These concessions on exclusivity are likely a response to heightened federal scrutiny around” handset deals. Aha! Putting two and two together, Verizon’s policy changes are a nearly perfect response to the concerns that Genachowski voiced above — and, as Stacey pointed out, puts Verizon in an excellent position to point fingers at the “anti-competitive practices” of its competition. Of course, giving up long-term exclusivity deals is easier for Verizon than its competitors because Verizon doesn’t have an exclusive deal on any hot phones like AT&T and Sprint do, with the iPhone and Palm Pre, respectively.
(Image courtesy of AT&T)
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Something missing in all this talk about phone exclusivity is the fact that all different providers are not on the same system, unlike the rest of the world (excl. Japan). Even our two GSM providers do not share the same 3G frequency so the iphone wouldn’t even work properly on t-mobile.
So let’s say that the gov’t somehow ban’s phone exclusivity agreement. That still would not guarantee that phone manufactures will develop multiple versions of their phones to work on the different networks.
While the economic benefit of increased market share for a company like Apple is potentially great, right now they produce basically 1 model of the iphone. It is hard to imagine them selling a different iphone for att, t-mobile, verzion, sprint, etc each with different hardware (don’t even bring up the idea of 1 phone for all networks…it if was so easy it would have been done already) . It’s completely against the entire ethos of the company.
I can’t get over how laughable Verizon’s “offer” is. Almost all exclusivity deals expire after 6 months anyway, and to give away exclusivity 6 months after you launch really means that other carriers can actually launch devices 3 or 4 months after that.
To me, it’s far more important that MAJOR carriers gain access to major handsets. Everyone is complaining about how awful AT&T is and how their network can’t handle all the traffic from the iPhone, but right now you have no other choices. Even if you open that phone up to rural carriers, you still don’t allow people that don’t want AT&T but want the iPhone on a national carrier.
“Of course, giving up long-term exclusivity deals is easier for Verizon than its competitors because Verizon doesn’t have an exclusive deal on any hot phones like AT&T and Sprint do, with the iPhone and Palm Pre, respectively.”
Ummm the Blackberry Storm says hello!
The BlackBerry Storm is far from a hot phone. :-)
Well, I have read the same remarks made about the iPhone and Pre despite their respective sales successes.
While I do actually agree with your sentiment, Mr. Golson, it is an incontrovertible fact that the Blackberry Storm is exclusive to Verizon. Also coupled with the fact that it is the only touchscreen Blackberry officially available in the United States, it’s hard to off-handedly dismiss it as an exclusive “hot” phone. It’s difficult to imagine that there would not be a plethora of Sprint, AT&T, T-Mobile, U.S. Cellular, etc. subscribers that would purchase this phone were it easily available from their carrier of choice. Now whether most of them would actually keep this less-than-stellar phone is a different matter. ;-)
The Storm is a POS. If it was a desirable phone, then they would be in the FCC discussion with the iPhone and Pre.
NIMBY vs tower location, tower capacity vs devices connected, voice vs data. You can’t compare networks unless they are evenly spread with equal backbone connections and identical numbers of transceivers. Out west having att does not make sense, in those areas it should partner and allow partner in those areas to get first run phones, even iphone. Give the people blanket coverage all ready it isnt that hard. People are afraid that cell phone towers will make their kids grow 3rd arms or something, when in fact the sun & nearby celestial events pound more radiation into and through our bodies than anything we could ever construct without killing us first. Half our radio signals don’t make it through the ionosphere, hell some technologies use that fact to create long distance communications.
More towers, connected with fiber to backbone with equal low and high frequency capability is the only way to properly solve this coverage issue. I get tired of my iPhone wasting its battery struggling to hang onto one bar in parts of my house & then i get 4 and 5 bars a few feet away. Even when i have 1 bar i still get great data speeds on 3G, but my battery pays the price. Better coverage would allow phones to use power less, polluting less from wall charging and so on. Plus there’s the added benefit of leaving the computer off to save some noise heat & electricity.
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VZ has the Storm as exclusive. Sprint has always had an agreement with Palm to carry their new phones first for 6 months. The two companies that should be singled out are AT&T (iPhone) and VZ (Storm). VZ will be getting Pre in early 2010. Also, I know of several areas around the country where all carriers have weak or no coverage. Also, since Sprint and VZ/Alltel are on CDMA, they have roaming agreements in most markets. So the AT&T/T-Mobile GSM 2G/3G footprint is not nearly as good as Sprint/VZ footprint. Also, Sprint/VZ have very mature 3G networks built out while AT&T’s 3G network is only about 1/3 size and T-Mobile is almost non-existent in 3G. I would say the AT&T(iPhone) deal is what the FCC should go after. AT&T will lose millions of customers if iPhone is offered by CDMA carriers in the US.