Two FCC Members Back Handset Exclusivity

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The two Republican members of the Federal Communications Commission said Thursday that they support exclusive arrangements between wireless carriers and handset manufacturers, such as AT&T's iPhone deal with Apple. But the three Democrats, including chairman Julius Genachowski, said that they couldn't give a simple yes-or-no answer to the question.

The remarks came in response to a questions by Rep. Steve Buyer (R-Ind.) at an oversight hearing by the House Energy and Commerce Subcommittee on Communications, Technology, and the Internet. Buyer asked all five FCC members to briefly state whether they supported exclusive handset arrangements. The session was running out of time, so Buyer asked the commissioners to just give yes or no replies.

Genachowski, the first to respond, began to formulate an answer when Buyer cut him off to repeat that he was asking for a one-word response. Genachowski then said that the question "doesn't lend itself to a yes or no." Democrats Michael Copps and Mignon Clyburn agreed with Genachowski, while Republicans Robert McDowell and Meredith Attwell Baker simply answered, "Yes."

Handset exclusivity deals drew attention earlier this year when Sen. John Kerry (D-Mass.) along with three others -- Roger Wicker (R-Miss.), Byron Dorgan (D-N.D.) and Amy Klobuchar (D-Minn.) -- asked the FCC to investigate whether such arrangements "unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace."

Some broadband advocates have said they think exclusivity deals are bad for consumers, and have urged the FCC to ban these deals. Chris Riley, policy counsel at Free Press, said the FCC could still end up prohibiting or limiting exclusivity deals despite the Democrats' answers today. "Without more information, they're not going to say, 'We should ban exclusivity,'" Riley said.

Genachowski has already promised that the FCC will open a proceeding in response to a request by the Rural Cellular Association. That group argued that deals tying devices to wireless carriers result in higher prices and prevent some consumers from purchasing particular devices at all. "For carriers able to command these exclusive arrangements, the end result is a significant and unfair advantage over competitors," the group said in its May 2008 petition.

When he served as acting chairman earlier this year, Copps also promised to open a new proceeding to investigate exclusivity arrangements.

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