The Rural Cellular Association (RCA) has asked the FCC to investigate the common practice of exclusive handset distribution deals for major wireless carriers. RCA claims such practices are anti-competitive and deny rural consumers access to newer and popular wireless devices. Perhaps the poster child of this issue is the iPhone, and the exclusivity AT&T has with it in the U.S. But there are numerous other examples. The RCA assembled an outline of some of the leading handset exclusivity deals in an appendix of their filing. RCA says the situation is “… creating another ‘digital divide’ between urban and rural America.”
This is a tough issue. Exclusivity is a key weapon in the intense competitive battles between wireless carriers. You could easily argue that exclusivity is fair game in this competitive landscape. But RCA brings up valid points – wide swaths of consumers, almost at the statewide level, are unable to enjoy the benefits of these advanced devices, in large part due to exclusivity deals. Perhaps the more concerning argument is do these exclusivity deals create higher prices for consumers, which would not be the case if the devices were offered by competing carriers. The issue will only intensify as new 3G and 4G devices begin to penetrate the marketplace. These newer devices and the “cool” applications they provide will be fertile ground for exclusivity deals by wireless carriers, as they try to differentiate their service from their competitors. Unfortunately, there are no easy answers for this issue. It’s one of many debates created by a marketplace where multiple competitors are chasing billions of dollars of potential revenue. The stakes are quite high.