updated 12:35 pm EDT, Fri July 17, 2009
Verizon Limits Exclusivity
Verizon on Friday told US federal officials that it would voluntarily limit the duration of its exclusivity deals for phones to six months, albeit with limits. The terms will let any carrier with 500,000 or fewer subscribers pick up a phone regardless of the manufacturer. The carrier argues that it can't drop exclusivity altogether as this gives it a competitive edge and spurs on the phone manufacturers themselves.
"Exclusivity arrangements promote competition and innovation in device development and design," Verizon's wireless chief Lowell McAdam claimed in a letter announcing the news.
While positioned as a compromise, the gesture is believed to be an attempt to head off possible antitrust investigation into Verizon's practices, which have sometimes involved exclusivity runs that last the length of a particular model's useful lifespan. It also does little to help Verizon's actual competition as major carriers like Sprint, as well as smaller but still sizable firms like Cellular South and Cricket, will often still be kept away from the newer devices.
The agreement nonetheless puts pressure on companies like AT&T and Apple, the two of which are believed to be the catalyst for a government look into the competitiveness of allowing these deals. AT&T is expected to have absolute exclusivity on iPhone models in the US until at least 2010 and to be pushing for an extension until 2011, although rumors have circulated of a potential Verizon iPhone next year once 4G is a reality on the latter carrier's network.
AT&T has credited much of its recent success to the iPhone as it has both drawn customers from rivals and pushed average revenues up as more subscribers adopt data plans.