Cell Phones Aren't Soft Drinks

Two weeks ago the USA Today tackled the problem of handset exclusivity -- exclusive deals between cell phone makers and wireless companies -- and now the New York Times editorial board has taken up the issue as well. I'm sensing a trend.

First, a primer on the exclusivity issue, courtesy of the Times:

Because of exclusivity, unless you are willing to be a hacker, you can use the iPhone only on AT&T’s network, the BlackBerry Storm on Verizon’s and the Palm Pre on Sprint’s. Cellphones from Samsung and LG are also tied up. If you live in a rural community that the large companies aren’t interested in serving, exclusivity generally means you get an outdated handset.

As the Times explains, this is not only about getting the most up-to-date phones. The problem of exclusivity is really about the lopsided amount of power wielded by the "Big Four" wireless service providers (Verizon, AT&T, Sprint, and T-Mobile) in the United States. Together, they account for 90 percent of the market.

When their exclusive and anti-competitive practices are questioned, the Big Four simply compare themselves to other industries strangled by lack of competition.

Phone companies point out that exclusivity agreements are commonplace in other industries. For example, they say, it is not often that one finds a restaurant serving Coke and Pepsi. They argue that the iPhone and its imitators are testament to a competitive and innovative market.

Nice try, cell phone companies! If only phone and data services were soft drinks. But unlike Coke and Pepsi, cell phone choice, network access and the mobile Web are increasingly essential components of a democratic society, giving us access to the news, information and communications technology we need to be engaged citizens in 21st century America. We really can't say the same for carbonated sugar water.

And the mobile Web is the future of the industry. That's why the Big Four don't want to give up their control over it.

Verizon and AT&T also control so much of the country’s land-line market that it could hamper the development of new services like mobile Web access, which requires use of wire-line networks. Consumer advocates and the Government Accountability Office, the investigative arm of Congress, have warned about scant competition, high prices and onerous contracts in this area.

This is more than exclusivity: This is the resistance by the Big Four to anything that might spur competition within the market they dominate. It makes sense from the standpoint of a win-at-all-costs business culture, but the mobile Web is more than just a business; it's an increasingly essential part of our lives. It's high time the FCC and the Department of Justice investigate these practices and free our phones.