July 6th, 2009
WSJ: Justice Dept. "reviewing" large telecoms
The U.S. Department of Justice wants to know if the large telecoms, notably AT&T and Verizon, have abused their market power and has launched “an initial review” for a more in-depth look, according to a Wall Street Journal report posted this afternoon. The Journal’s unnamed sources say that this is not a formal investigation of any one company or whether it will lead to an official inquiry.
Specifically, the DOJ seems interested in this issue of carrier exclusivity, which has become a common practice for phone manufacturers and carriers to use to sign customers who care more about the device itself than the service that powers it. The deal that allows AT&T to be the exclusive carrier for the iPhone in the U.S. is the widely-recognized example of this sort of deal.
Also see: FCC reacts, starts looking into carrier-exclusive deal
The Journal notes that these sort of antitrust inquiries as likely go from mostly-dormant during the Bush years to a higher priority for the department under the Obama administration.
With that said, a case against the telecoms would be much harder because there would need to be proof that a company is abusing its power. To abuse power, one company has to be in a dominant position in a market - and it doesn’t appear that any single player has such a hold. After all, AT&T may be tied to the popular iPhone but Verizon has a larger customer base.
The Justice Department declined comment to the WSJ, which isn’t terribly surprising seeing how this isn’t even a formal inquiry yet.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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