Verizon Wireless shortens exclusive cell phone deals
Largest wireless service provider in the U.S. says that it will limit the amount of time it offers phones exclusively, aiming to ensure smaller carriers get access to them, too.
Verizon Wireless said Friday that it will modify its cell phone exclusivity deals to ensure that smaller carriers get access to hot new phones more quickly.
In a letter dated July 17, Verizon Wireless CEO Lowell McAdam told key members of Congress that Verizon Wireless, which is the largest wireless service provider in the country, would allow smaller wireless operators with fewer than 500,000 customers to offer phones it was offering exclusively to Verizon customers after six months. Some exclusivity deals that Verizon has had with handset makers have lasted years.
McAdam sent the letter after lawmakers on Capitol Hill have questioned the practice of large cell phone companies striking long exclusive deals with certain handset makers, essentially ensuring that smaller operators that often serve rural areas do not get access to the hottest phones. The Federal Communications Commission and the Justice Department have also been looking into the practice.
The most publicized exclusive cell phone deal is AT&T's multiyear contract with Apple to be the exclusive carrier of the popular iPhone. Consumer groups have long complained that consumers living in areas not served by AT&T have been completely shut off from getting the latest and greatest cell phone technology in the iPhone.
In what looks like an effort to head off any legislation from Congress or further action by the FCC and Justice Department, Verizon said it would amend its policy to ensure that smaller carriers get access to new phones as well.
"Any new exclusivity arrangement we enter with handset makers will last no longer than six months - for all manufacturers and all devices," McAdam wrote in the letter.
But McAdam also defended the practice of exclusivity deals and said that the company still plans to strike such deals with handset manufacturers.
"Exclusivity arrangements promote competition and innovation in device development and design," he said in the letter. "This new approach is fair to all sides."
It will be interesting to see if any of the other major cell phone operators follow Verizon's lead on shortening the time it has exclusive deals. If not, it seems unlikely that such a move by a single operator would be enough to appease law makers and government regulators.