DoJ Opens Antitrust Probe of Verizon, AT&T
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Friday, April 20, 2018

DoJ Opens Antitrust Probe of Verizon, AT&T

The Department of Justice has opened an antitrust probe of Verizon Communications, Inc., and AT&T, Inc., into whether they coordinated with an industry group to make it more difficult for consumers to easily switch wireless providers, the “New York Times” reported today.

The story, which cited unnamed sources, said that DoJ in February asked Verizon and AT&T, the largest U.S. wireless carriers, and GSMA for information as part of the collusion probe. At issue is whether they tried to make it more difficult to use eSIM technology, which allows consumers to switch wireless carriers without inserting a new SIM card into their devices, according to the report. It said DoJ is looking into whether they colluded with GSMA on the development of standards to allow devices to be locked on their networks even when they are equipped with eSIM technology.

The story said that DoJ began its probe about five months ago in the wake of formal complaints filed by at least one mobile device manufacturer and one wireless carrier.

DoJ, AT&T, and GSMA declined to comment today on the report.

Verizon spokesman Rich Young said, “The accusations regarding this issue are much ado about nothing. We are striving to provide a better experience for the consumer. The reality is that we have a difference of opinion with a couple of phone equipment manufacturers regarding the development of e-SIM standards. Nothing more.

“We've been proactively and constructively working with the Department of Justice for several months regarding this inquiry and we continue to do so,” Mr. Young added. “As we have from the outset, we will continue to work with officials and others in the industry as we strive to find a mutually acceptable solution.”

As for the other national wireless carriers, T-Mobile US, Inc., did not respond to a request for comment and Sprint Corp., had no comment.

Harold Feld, senior vice president of Public Knowledge, told TR Daily, “I can't confirm anything about the DoJ. I can say that I have heard from other GSMA participants that AT&T and Verizon have been pushing for a standard that would make it much harder for consumers to unlock their phones, but this is obviously not something that I can prove. Frankly, this is why I am very glad to hear that DoJ is taking its job as ‘cop on the beat’ seriously. Only an agency with investigatory power can find out if the rumors are true or not.”

Mr. Feld added, “It is very easy in a digital environment to create something that gives the network operator absolute control over devices that consumers can control in the analog space. We saw this when we closed the ‘analog hole’ in cable TV. We have seen it with cars and tractors. This is why it is so important to have an agency that actually puts the interests of consumers first rather than take a ‘wait and see’ attitude that favors special interests.”

In a statement, John Bergmayer, senior counsel at Public Knowledge, said, “New technologies can increase customer choice. eSIMs could make it easier for customers to use their phones, tablets, smartwatches, and other connected devices with multiple carriers, enabling consumers to pick whichever carrier has the best service or lowest price.

“But new technologies can also provide companies with ways to take away consumer freedoms. That is why it has been disturbing to learn that major carriers may be colluding behind closed doors to make eSIMs benefit themselves, instead of consumers. The two major wireless carriers — AT&T and Verizon — stand to benefit if device portability becomes more difficult. No one else does,” Mr. Bergmayer added. “This is especially disturbing given that, just a few years ago, Congress unanimously passed a bill giving consumers the right to device portability. While this was only a temporary fix, it shows that device portability has widespread, bipartisan support. Standards-setting bodies are both extremely valuable, and create an opportunity for collision. Incumbent firms have shown themselves willing to use every tool at their disposal to block competition. The DOJ must investigate this alleged collusion swiftly to protect the rights of American consumers.” —Paul Kirby, paul.kirby@wolterskluwer.com

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