justice

Is another MFJ on the horizon? The Justice Department intends to open a review of the telecom industry to determine if large conglomerates like Verizon and AT&T have abused their market power. The Wall Street Journal reports that the telecom industry anti-competitive review (subs. req) is in its early stages and no formal investigation is underway – yet.

The inquiry intends to look at both wireless and wireline issues, including handset exclusivity for wireless carriers. That issue has new relevance, thanks to the success of phones like the Apple iPhone and Palm Pre. The U.S. is unique with locked wireless handsets. Only about 5% of U.S. handsets are unlocked – meaning customers can take their device with them to whatever compatible carrier they like. That’s a stark contrast to Asia (80%) and Europe (70%).

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Verizon and AT&T are natural targets of such an inquiry. Together, they control 60% of the U.S. wireless market and 90 million of the 150 million or so wireline access lines (this is a moving target – hard to quantify at any given time). They are coming under increasing scrutiny, particularly on the wireless side, where their dominant position affords them significant market power. Smaller wireless carriers have stepped up their complaints recently.

On the wireline side, the CLEC industry has long complained about the market power exhibited by all of the former ‘baby bells.’ This is the very early stage of the process with no guarantee that anything will come of it. There is a lot to study – don’t expect any real movement on this for months, perhaps years, if at all.

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