Cellular Exclusivity Under the Microscope

Carl Weinschenk

Earlier this week, I posted a blog on some of the challenges that Julius Genachowski will face as chairman of the FCC. One of the issues brought up in the post-via a piece posted at USA Today-is whether exclusivity between carriers and cell phone vendors should be allowed.


One of the reasons the old practice is under the microscope is the high profile of the exclusive arrangement between AT&T and Apple on the iPhone. There are many other exclusive deals, of course. eWeek reports that exclusivity-be it the iPhone, the Palm Pre (with Sprint), or the G1 (with T-Mobile) -- is a big problem for enterprises. The writer spells out a fairly long list of the ways in which exclusive cell phone contracts inconvenience enterprises. The crux of the matter is that the practice reduces the choices a company has and the overall effectiveness of its mobile program. This is especially true of big companies with multiple locations and a workforce that carries out highly divergent tasks.

New York Times columnist David Pogue touches on the issue-and promptly says that it wasn't as important as others that he enumerates at the end of the piece. He pointed to hearings held recently by the Senate Commerce Committee and asked why other issues, such as double billing and text messaging fees, haven't gotten Congress's ear.

Pogue also seems unconvinced that exclusivity has to be dealt with. For one thing, the two networking standards-GSM and CDMA-make the engineering necessary to enable a phone to operate on all networks more than incidental. He also says that innovations often require network participation, and this is less likely to happen if the service providers don't get something exclusive for their trouble.


Pogue's skepticism notwithstanding, this actually is an issue that should be looked at, though direct government intervention seems a bit too strong a remedy, at least at this point. It should be noted that progress is being made. Open access is playing a role in both spectrum auctions and the broadband stimulus. Changing the status quo is important to enterprises. The challenges posed by exclusive contracts, which no doubt are addressed by Telecom Expense Management (TEM), add unnecessary complexity to the already complicated world of corporate cell phone management.

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