DOJ Probes AT&T, Verizon On Possible eSIM Tech Collusion

The Department of Justice is investigation whether AT&T and Verizon, the cousins who share monopolistic Ma Bell as an ancestor, have colluded with GSMA, the mobile operators trade group, to make it more difficult for consumers to be successfully enticed by, say, T-Mobile come-ons to switch carriers.

In breaking the story Friday, the New York Times’ Cecilia Kang reported that the DOJ issued demands to all three entities in February “for information on potential collusion to thwart a technology known as eSIM,” according to two of six sources she spoke to who know about the overall investigation. 

“The technology lets people remotely switch wireless providers without having to insert a new SIM card into a device. AT&T and Verizon face accusations that they colluded with the GSMA to try to establish standards that would allow them to lock a device to their network even if it had eSIM technology.”



The technology has been around for several years but is not widely used yet.

“eSIM first appeared in smartphones with Google’s Pixel 2 and Pixel 2 XL. But right now the Pixel eSIM only works with Google's own Project Fi service, which uses the devices’ built-in eSIMs to authenticate cellular accounts. eSIM is also used in Apple’s iPad with LTE data, but is unsupported by Verizon,” Ashley Carmen writes for The Verge. It’s also used by the Samsung Gear S2 smartwatch, Microsoft’s Surface Pro LTE tablet and in the Apple Watch Series 3.

“Antitrust officials conducting a similar probe in 2016 found little evidence for the claim and ultimately dropped the inquiry, according to a letter sent by the Justice Department and obtained by the Washington Post,” write that paper’s Brian Fung and Tony Romm.

“In closing the Obama-era investigation, the government said that while mobile carriers had pushed for new industry policies that raised competitive concerns, their initiative proposed little more than a ‘technical capability’ for cellphones without clearly demonstrating how or if companies such as AT&T and Verizon might use it to gain an unfair advantage.”

Meanwhile, the telecom industry is trying to read tea leaves as the current inquiry came to light.

“The fresh probe suggests eliminating anti-competitive practices has moved up the agenda under the Donald Trump presidency. The government already is suing to block AT&T’s $85 billion acquisition of Time Warner Inc., arguing the tie-up will hand AT&T undue bargaining leverage in programming negotiations and ultimately raise prices for subscribers,” write Bloomberg’s Sally Bakewell and Michael McDonald.

“The very fact that the DOJ is looking into this sends a very strong signal to the industry: don’t even try it,” Harold Feld, senior vice president at the policy group Public Knowledge, tells them. “Once these industry standards are set, it’s ‘very hard to pull back’ and underscores that the government will not ‘tolerate any kind of anti-competitive collusion.’”

“Apple Inc. has helped advance efforts to replace the traditional SIM card. In 2014, it introduced an iPad with a built-in SIM card that allowed users to turn their cellular data plans on or off or switch between three of the four big U.S. providers. The iPad’s ‘soft SIM’ sparked speculation that it might put similar technology into its popular iPhones, but that has yet to happen,” write Drew FitzGerald and Brent Kendall for the Wall Street Journal.

“Apple’s desperate for this technology to be there because they want to make the phone smaller and thinner,” Kyle Wiens, chief executive of iFixit, which tears down iPhones and writes an iPhone repair manual, tells FitzGerald and Kendall. 

“Consumer advocacy group Public Knowledge applauded the investigation,” Ars Technica’s Jon Brodkin writes.

“[I]t has been disturbing to learn that major carriers may be colluding behind closed doors to make eSIMs benefit themselves instead of consumers,” senior counsel John Bergmayer says. “The two major wireless carriers — AT&T and Verizon — stand to benefit if device portability becomes more difficult. No one else does.”

But a Verizon spokesperson tells Brodkin that the investigation is “much ado about nothing,” claiming it “boils down ‘to a difference of opinion with a couple of phone-equipment manufacturers regarding the development of eSIM standards.’”


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