Lawmakers Grill Wireless Companies; Most Customers Are Happy
June 17 2009 - 4:11PM
Dow Jones News
WASHINGTON--U.S. lawmakers are scrutinizing cellphone companies
and their manufacturing partners, worried that service providers
aren't customer-friendly and exclusive deals are impeding
competition.
An independent government auditor says 84% of cellphone
subscribers are happy with their service, although some have
trouble with billing and contract terms.
"I have concerns that too many consumers are bound to confusing
contracts," Senate Commerce Committee Chairman John Rockefeller,
D-W.Va, said Wednesday at a hearing on wireless issues.
Rockefeller wants to focus the private sector's attention on
wireless blank spots like those in his home state of West Virginia.
He displayed a chart depicting wireless networks across the
country, pointing to rural areas that don't have any coverage.
"This is called Maine. It is white. White means nothing there.
This is called West Virginia. It is white. White means nothing
there. It makes a very powerful point to me, and it makes a point
that resonates emotionally," Rockefeller said.
Four other senators on the committee have asked the Federal
Communications Commission to examine whether exclusive arrangements
between carriers and handset manufacturers are limiting consumer
choice and hampering competition.
Large carriers like Verizon Wireless, AT&T Inc. (T) and
Sprint Nextel Corp.(S) argue that exclusive arrangements encourage
entrepreneurs to take risks on different kinds of phones and
Internet gadgets.
Apple Inc.'s (AAPL) partnership with AT&T to produce the
widely popular iPhone has spurred an "unprecedented competitive
frenzy" in the mobile handset and wireless Internet market,
AT&T's president for retail sales and service, Paul Roth, told
the Senate committee.
Verizon Wireless, a joint venture between Verizon Communications
Inc. (VZ) and Vodafone Group PLC (VOD), sent extensive comments to
Capitol Hill last month saying it would be "totally unworkable" to
regulate exclusive handset arrangements.
Verizon pointed out that AT&T and Verizon use different
types of wireless networks, making it impossible for Verizon to
support an iPhone.
Banning exclusive handset arrangements could force Apple to
build a completely new version of the iPhone at great expense,
Verizon's letter said.
Consumer advocates dismiss that argument. "The simple fact of
the matter is if the device manufacturers were untethered, they
would, in my opinion, develop a full range of devices for all the
technologies," said Mark Cooper, rsearch drector for the Consumer
Federation of America, in a telephone briefing Wednesday.
Manufacturers appear quiet about their plans. At the hearing,
Sen. John Kerry, D-Mass., said all the major handset manufacturers
declined invitations to testify on the issue.
Smaller companies like Cellular South Inc. say they would be
happy just to sell devices that operate on their networks. Cellular
South can't access the iPhone, for example.
Before the hearing, Cellular South President Hu Meena said he
also can't give his customers a BlackBerry Storm, produced by
Research In Motion Ltd. (RIM) and marketed exclusively through
Verizon Wireless. Nor can Cellular South offer the Palm Inc.'s
(PALM) Pre, which is marketed exclusively through Sprint
Nextel.Both of those devices could operate on the company's
network.
Meena and United States Cellular Corp. (USM) President Jack
Rooney both told the Senate committee that the top four wireless
companies--Verizon Wireless, AT&T, Sprint, and T-Mobile
USA--have hijacked the handset market. T-Mobile is a unit of
Deutsche Telekom AG (DT).
Kerry said he isn't sure whether legislation is needed. Carriers
may have a right to make deals that help them share risk, he
said.
Yet U.S. customers are generally happy with their cellphones and
wireless e-mail services, an independent government auditor told
the Senate committee.
Eighty four percent of wireless customers are very or somewhat
satisfied with their wireless phone service, Government
Accountability Office Physical Infrastructure Director Mark
Golstein said. GAO conducted a survey of more than 1,100 wireless
customers.
Some problems remain. Four out of 10 people who were unable to
switch carriers (42%) declined to do so because of high early
termination fees, Goldstein said. One-third of customers
responsible for paying bills encountered unexpected charges or had
other billing problems.
The GAO noted that the four major wireless carriers have taken
steps to remedy these problems. All of those companies are
pro-ating their early termination fees.
Rockefeller wants the GAO to conduct a regional study, saying a
national random survey doesn't illustrate problems in rural
areas.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com