Consumer coalition wants to end exclusivity deals

Popular handsets used to force customers into contracts

Consumer coalition wants to end exclusivity deals

The French courts recently ruled that Orange would no longer be allowed to maintain its ‘excessive’ exclusivity deal on the iPhone, and capped all future exclusivity deals at three months so as not to cause "serious and immediate damage to competition on the French mobile market".

This was followed shortly afterwards by Skype and Mozilla filing comments with the US Copyrights Office to block Apple’s move to outlaw the jailbreaking of the iPhone, which has prompted further legal discussions regarding the negative effects exclusivity deals have on the global mobile market.

Mozilla has now joined a coalition of organisations - including the Consumers Union, the New America Foundation, the Electronic Frontier Foundation and independent carriers MetroPCS and Leap Wireless International - in petitioning the Federal Communications Commission, the Copyright Office, the Federal Trade Commission and congressional leaders in the US to ban the use of handset exclusivity deals.

The coalition argues that linking hardware and software to mobile service providers is restricting the consumer’s freedom of choice and constitutes and anti-competitive act.

“It is unthinkable that you could only use a Macintosh on an AT&T connection,” says Michael Calabrese of the New America Foundation, while the Rural Cellular Association insists:

“The large carriers use [exclusivity deals] as a vehicle to drive customers away from the smaller carriers.”

BlackBerry manufacturer RIM and AT&T have answered the arguments and state the exclusivity deals are actually an important form of competition, and that:

“The popularity of the iPhone and its innovative features and applications have provoked a strong competitive response, accelerating not only handset innovation but also the pace of wireless broadband investment and applications development”.

Should this legal argument find any footholds, it could cause a wide ranging shakeup of the burgeoning industry (affecting the likes of the App Store and its exclusive distribution of iPhone software, for instance).

But choice is an important factor in the consumer’s decision making, and many are currently refusing, or unable, to buy a device because of its link to an unsuitable or expensive service.

It’s an issue that’s unlikely to be resolved in this one legal battle, but it does highlight the fact that the issue exists - and is on the mind of consumers, providers and manufacturers alike.