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Copps Wants Inquiry Into Deals Between Handset Manufacturers, Wireless Carriers

Acting FCC Chairman Michael Copps said Thursday he has asked the commission to open an inquiry into the exclusive deals between handset manufacturers and wireless carriers, relating the issue to network neutrality.

That announcement came at a speech to a Pike & Fischer Broadband Policy Summit in Washington Thursday, according to a copy of the text. It also came as the Hill was taking up the issue in hearings this week. Copps said that the FCC would open a proceeding "to closely examine wireless handset exclusivity arrangements that have reportedly become more prevalent in recent years."

He said the FCC was the right place to make the call about whether such deals restrict consumer choice or adversely affect innovation, and it was the one to take "appropriate action" if it finds harm.

"We should always be concerned about potential gatekeeper control," he said. "That is why, from the very beginning, I have supported an open Internet, Internet freedom, network neutrality, or whatever you want to call what it is that we need to keep the Internet dynamic and transformative for consumers, innovation and competition. It is also why I believe the Commission should adopt a fifth principle of non-discrimination in addition to the four principles that we got the FCC to adopt."

Verizon, for one, argues that for the government to step in and stop such deals would be akin to it telling Martha Stewart she had to make her line of products available at all stores and not just Kmart.

Randal Milch, executive VP and general counsel of Verizon, said in a
Hill hearing Tuesday that government intervention into contractural
arrangements for certain handsets "is not going to put a single handset
– getting rid of those exclusives – into the hands of another carrier,"
according to a transcript of his testimony. "That carrier has to work
with the device manufacturer to make sure that it works on their
network. There is a great deal of mutual development. So, if someone
wanted a Verizon experience with a certain phone, I can tell you if
they went to another carrier they wouldn’t get it."

Free Press Policy Director Ben Scott was buoyed by the news of the FCC's inquiry.

"This is an important step in the right direction," he said in a statement. "Senate hearings this week exposed the laundry list of harms caused by exclusive deals in the wireless industry. These exclusive deals back consumers into a corner -- forcing them to choose phone or service. "

Copps told his broadband conference audience that he was beginning to "dive into" comments the FCC received on its national broadband plan "now that the DTV transition commands a little less of my time."

The next wave of comments is due July 7.

He called it a huge funnel of data and analysis the other end of which needed to produce a practical plan that can be deployed in time to meet economic and other challenges.

He warned that the plan, and the broadband economic stimulus grant/loan program, should not get bogged down in an "either-or" debate over definitions of unserved vs. underserved, particularly if that is a proxy for rural vs. urban. If it devolves into that debate, he suggested: "We will not get a national broadband plan that does justice to America’s needs. We just won’t get it."