Europe little help in U.S. probe of cellphone carriers’ deals

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Unlike Europe, not all cellphones can work with every carrier in the U.S. Credit: compujeramey via Flickr.

The U.S. Department of Justice is examining cellphone carriers’ exclusive deals with handset makers, according to a report this morning by the Wall Street Journal. For those who don’t have a online subscription to the Journal, you can get a summary here from Reuters.

The informal probe focuses on agreements such as Apple’s exclusive multiyear deal to supply AT&T with iPhones in the U.S.

Consumers have complained that such deals restrict them to a single service provider and offer them little choice. These deals have also triggered complaints from smaller wireless carriers that don’t have the wherewithal, such as guarantees to buy large volumes of devices, to strike an exclusive contract with handset manufacturers.

The Justice Department may be looking for guidance in European markets, where phones purchased there can work with any carrier, said Charles Golvin, a telecommunications analyst with Forrester Research. But that would be a mistake, he said. That’s because the two markets function differently.

European regulators long ago established a single standard for all carriers, called GSM, so any cellphones purchased in Europe can work for any carrier. But the U.S. has competing standards, including GSM and CDMA. This matters because a GSM phone will not work on CDMA networks. Sprint and Verizon use CDMA, while AT&T and T-Mobile are on GSM.

‘We ended up with an alphabet soup of technologies,’ Golvin said. ‘So the lessons learned in other markets don’t always apply here.’

-- Alex Pham