Business feature: Regulators investigating cell phone providers, manufacturers
July 6, 2009
CNJ photo illustration: Tony Bullocks Smaller service providers are concerned that exclusive contracts between manufacturers and bigger-name companies are hurting their business.
Federal regulators are beginning to take a look at business relationships between cellular phone providers and manufacturers.
And regional providers like Plateau Wireless in Clovis say they are certainly glad for the inquiry.
On Wednesday, the U.S. Senate commerce subcommittee on communications, technology and the Internet will address the practice of exclusivity agreements between carriers and mobile phone gadgets.
According to the Rural Cellular Association — Plateau is a member — the subcommittee will “examine whether or not exclusivity agreements unfairly restrict consumer choice and affect competition.”
It was announced last month that AT&T had reached a new agreement to be the exclusive provider of Apple’s iPhone 3G.
Plateau CEO Tom Phelps said that kind of move limits what his company can provide local customers.
“The big guys, AT&T, Verizon and Sprint specifically, have got deals with specific cell phones that the little guys such as Plateau cannot purchase,” Phelps said. “Consequently, we are at a disadvantage. From our perspective, we’ve got the same technology as AT&T for the iPhone, and if we can’t get access to a significant product, it’s certainly a hindrance to our business.”
Other cellular providers have also made exclusive deals.
Sprint, for instance, has an arrangement to be the lone service provider in 2009 for the Palm Pre.
The Wall Street Journal reported on Monday the U.S. Justice Department has started an initial review of the telecom industry.
Phelps said his company frequently gets inquiries about the availability of the iPhone through Plateau.
“It’s a common occurrence,” he said.
There’s a good reason: AT&T doesn’t provide, according to its coverage maps, even “moderate” cell phone coverage for Eastern New Mexico.
And since AT&T is the exclusive carrier for the new iPhone, that product is a rare sight locally — especially compared to its popularity in the rest of the country.
“My brother got one, but he traded it in for another one,” said Diana Salcido, 13, of Muleshoe, who would like to have an iPhone herself. “He had it for a month or two, but it didn’t work.”
Alltell and Sprint both have stores in Clovis while other nationwide companies like Verizon and T-Mobile do not.
“Since we’re in Clovis, we don’t get the iPhone much around here, so we don’t carry much of their stuff. The only thing we carry is like a car-charger for it,” said Jose Gonzales, who works at the Cell Needs stand at Clovis’ North Plains Mall. “This store, we usually carry what people have around here.”