The feds are looking into whether AT&T and Verizon, along with an international standards body, have been in cahoots to make it difficult for people to switch carriers, according to a report from The New York Times.
The US Department of Justice has been investigating the companies and the GSMA, an industry standards group, for the past five months after at least one device maker and one wireless carrier filed a formal complaint with the DOJ, the report says. The newspaper cites six people with knowledge of the inquiry and alleges the wireless carriers worked in coordination to make it more difficult for people to switch carriers.
Seeking Alpha cites a Bloomberg report (no link available yet) that Apple is the handset maker behind the investigation.
The DOJ and the GSMA declined to comment. Apple wasn't immediately available for comment.
The Justice Department is looking into whether AT&T and Verizon worked with the GSMA to thwart a technology known as eSIM, which lets people remotely switch wireless providers without having to swap out a SIM card. The government contends the companies worked with the GSMA to try to establish standards that would allow them to lock a device to their networks even if it had the eSIM technology, according to the article.
Verizon spokesman Richard Young brushed off the investigation and said the company has been "proactively and constructively working with the Justice Department for several months." Verizon will continue to work with federal officials until they come to a "mutually acceptable solution," he said.
"The accusations regarding this issue are much ado about nothing," he said in a statement. "The reality is that we have a difference of opinion with a couple of phone equipment manufacturers regarding the development of eSIM standards. Nothing more."
A spokesperson for AT&T said it's also cooperating.
"We are aware of the investigation into GSMA's process for developing eSIM standards that provide a better experience for consumers," the spokesperson said. "Along with other GSMA members, we have provided information to the government in response to their requests and will continue to work proactively within GSMA, including with those who might disagree with the proposed standards, to move this issue forward."
AT&T and Verizon together account for more than 70 percent of the US wireless subscribers. But the companies have been under threat from other mobile wireless providers, such as T-Mobile, which has cut prices and aggressively marketed its services. As subscriber growth in the mobile market slows, retaining customers is a top priority. A technology that would make it easier for consumers to switch carriers could be a blow to these companies' mobile businesses. The DOJ's investigation could show that the companies along with the GSMA were trying to influence the development of this technology in order to maintain their market dominance.
The investigation comes as the Justice Department is suing AT&T to block its $85 billion merger with Time Warner. The DOJ argues that the deal will hurt competition and lead to higher prices. One of its arguments is that a combined AT&T and Time Warner could work with other large players, like Comcast, which owns NBC Universal, to unfairly manipulate prices of cable channels owned by Time Warner.
AT&T and Time Warner have disputed the claims in court. The federal trial is expected to end later this month.
First published April 20, 1:27 p.m. PT
Updates, 2:12 p.m.: Adds comment from Verizon; 2:49 p.m.: Adds additional background on Apple's possible role; 4:14 p.m.: Adds comment from AT&T.
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