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Antitrust Pressure Mounts For Wireless Providers 300

Over the past few weeks, the cellphone industry has been criticized on a variety of subjects, from distracted driving to handset exclusivity deals to everything else that's shady within the industry. Verizon's CEO has now responded, addressing what he claims are "myths" about standard practices. Reader DJRumpy points out that the chairman of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights has been calling for an investigation into whether competition is being stifled through many of these practices, "including possible text messaging price fixing and questionable roaming arrangements." Apparently the new antitrust chief is hitting resistance from within the government over the aggressive inquiries into this and other major industries. However, a small victory was achieved the other day when the National Telecommunications and Information Administration "told incumbent carriers that they'll have to prove their cases just like everyone else if they want to challenge broadband grant proposals from smaller players." There is also legislation in the works that would require states to impose a ban on text messaging while driving or lose a significant portion of their federal highway funding.
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Antitrust Pressure Mounts For Wireless Providers

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  • by Logical Zebra ( 1423045 ) on Wednesday July 29, 2009 @09:40AM (#28865447) pro-rated fees for breaking a contract early. If I decide Sprint sucks and break my 2-year contract after 18 months, I should have to pay the full $200 fee. I should pay $50.

  • I should have to pay

    No, you should have to pay whatever the contract, which you signed voluntarily, in good health and sound mind, stipulates.

  • by popo ( 107611 ) on Wednesday July 29, 2009 @09:45AM (#28865513) Homepage

    The Consumerist reported that Verizon text messaging is marked up by 7314% when compared to the relative cost of other data transfer services. Prices for text messages have also risen from .10 to .15 to .20 in recent years, even as the costs of data throughput have decreased.

    ( [] )

    The reason for this is simple: Greed and collusion.

    Consumer Reports has this to say on the subject:

    "As CU has noted, less than four years ago rates to send a text message were 10 cents per text at the nation's four big wireless carriers: AT&T, Sprint, T-Mobile, and Verizon Wireless. Each company then raised rates to 15 cents, then to 20 cents.

    To CU, these text-message rates, along with exclusivity deals for certain cell phones, exemplify the need for âoemore oversightâ into the wireless marketplace, to âoedetermine if government intervention is necessary.â

  • by shentino ( 1139071 ) <> on Wednesday July 29, 2009 @09:49AM (#28865553)

    Not if monopoly power robs the consumer of bargaining power.

    It's akin to letting a majority of wolves outvote sheep on what's for dinner.

  • Not if monopoly power robs the consumer of bargaining power.

    No wireless company today has a monopoly. Certainly not Sprint, which was the OP's example.

  • by ndavis ( 1499237 ) on Wednesday July 29, 2009 @10:00AM (#28865717)

    I think this is a ploy to get people into lucrative monthly plans where you will almost never send the amount of text messages you need to cost them any money. As an example I sometimes send 150 text messages a month luckily I have a $5 plan that allows 250. However the next three months I might send 5 text messages and Verizon wins as I used no where near that amount.

    Saying that I would love to see the companies not be allowed to run one plan that subsidizes the phones even after you ran through the two year contract. I feel I have to get a new phone every two years or I'm ripping myself off as I'm still paying for a phone that I have not received due to the contracts being overpriced.

  • by dagamer34 ( 1012833 ) on Wednesday July 29, 2009 @10:11AM (#28865873)
    Cell phones are NON-essential? That's like saying you don't need a car in to get around in LA or that you can live without air conditioning in Houston. Sure, if you try hard enough, those things CAN happen, but you'd be suffering much more than you think.
  • by dagamer34 ( 1012833 ) on Wednesday July 29, 2009 @10:14AM (#28865917)
    How would the phone know if a person is driving as opposed to sitting in the passenger's seat. It's almost as bad as car navigation systems that refuse to allow you to put in a new address while driving, even if there's a 2nd person in the car.
  • by cgenman ( 325138 ) on Wednesday July 29, 2009 @10:16AM (#28865953) Homepage

    No, you should have to pay whatever the contract, which you signed voluntarily, in good health and sound mind, stipulates.

    This is America! If you have a greivence against a company, you have rights, you know. Your rights are protected by federal, state, and local laws.

    1. You have the right to binding arbitration by some bought-off company in Northern Virginia.
    2. You have the right to... well, that last one's it, really.

    I don't mean to be too flippant, but laws are definitely there to protect the consumer, and that trumps contracts. This is similar to how California finds most non-compete agreements invalid: a hungry person will definitely agree to one during an economic downturn, but it would unfairly prevent them from getting another job later. In this case, all cellphone companies have similar stupid rules, like binding arbitration.

    The law is your tool to protect you from that. Don't give up your rights too easily.

    WRT to free markets and contracts: I'll believe that *these* contracts fall under free market provisions of binding legal exchange of promises between two equal parties when *they* acknowledge the changes that I had written into the contract before sending it in, or even what the base contract was. Oh look, they've update the terms again. How quaint.

  • by Anonymous Coward on Wednesday July 29, 2009 @10:18AM (#28865965)

    You just want to use the Government to force a change to a private business model because you don't happen to like it.

    No my wants are much more self centered than that. What I want is to just not have to pay anything but get all the things I want. I'll not be happy until I can pick a cell phone off a tree, as many as I like, that makes calls and SMS and MMS and email and web surfing, all with fully FOSS software that I'll never see the source of but I still want FOSS.

    I want it to have a big screen and a fast processor and a long battery life. I do not want any corporate logos on it. I do not want to receive a bill. No contracts. No government tracking of my calls or anything else. No private tracking either.

    I do not want to have to look at an ad. I want to be able to run any software I like easily. I want it to have access for me to torrent any file I want at no cost (to me). It should be able to open every file format there is no matter how obscure or pointless. It should not encumber anyone in any way.

    Rainforests cannot be cut down for this phone, nor can any whales be killed. Sweatshops shall not have any involvement. There should be a crank on the side I can crank if I run out of battery power. There should also be a solar panel. The manufacturing/growing methods for this phone shall be carbon neutral. Nanotubes should be in some way involved.

    It should have a good UI that includes CLI. Multi-touch. Gestures. Handwriting recognition. Stylus capable. If my fingers are slicked over with french fry grease there shall be no ill effects on the screen, either in functionality or appearance.

    The phone will be GPS capable with a compass and full access to maps served up by someone else without and ads or logos on them. I should be able to record TV shows on it. The camera will be a collaboration between Hasselblad and Phase One and do 1080p video in a fully FOSS file format unencumbered by patents. The firmware shall all be FOSS. There shall never be any software errors or crashes. Same goes for the hardware.

    When such a device is delivered I will be only partially happy, as by that time I will have devised new conditions that will ensure I can feel technologically superior to my peers, who think that their tree grown eco-friendly superphones are the pinnacle of phone development. I, in my wisdom, will find fault, room for improvement, despite that fact that I am entirely incapable of advancing the state of cellular phone, the cellular phone industry, its services, or any other aspect of the human condition.

  • by HangingChad ( 677530 ) on Wednesday July 29, 2009 @10:28AM (#28866101) Homepage

    No, you should have to pay whatever the contract, which you signed voluntarily...

    That argument is a codependent enabler for corporate abuses. If all the cell providers are using basically the same language in their contracts, consumers have no effective choice. Try to find a brokerage account that doesn't make you waive your rights to seek redress in the courts. They don't exist, because they're all using the binding arbitration clauses in their contracts. Consumers have no effective choice.

    And, always in the background, some pompous, know-it-all dick saying, "If you don't like it, don't sign the contract." If that was the case, you wouldn't have a cell phone, telephone, car, bank account, investment account, 401(K) or internet connection. When companies collude on contract language, they are functioning as a cartel not free market players. When you don't have a choice, it's not a free market.

    Stop sticking up for abusive behavior, makes you look like a tool.

  • by Weeksauce ( 1410753 ) on Wednesday July 29, 2009 @10:30AM (#28866131)
    Isn't this similar to the 21 year old drinking age though? State laws dictate the actual drinking age (hence why you can have a beer at 18 with your parents in a resteraunt in Texas); however, don't expect to get federal road funding if it's not 21. Not saying that I agree with it, but the 21 year old drinking age is something that's widley accepted and rarely critized.
  • by Anonymous Coward on Wednesday July 29, 2009 @10:33AM (#28866183)
    Not everyone has access to all four major carriers. In my area, the only "good" provider is Verizion - none of the others provide even marginally decent service. The only non-contract option in this area is a prepaid phone.

    I supposed its still my fault: I chose to return to my home town rather than move to a larger cellular market for improved service.
  • by pantherace ( 165052 ) on Wednesday July 29, 2009 @10:39AM (#28866249)

    While I agree, there is no monopoly, there appears to be what one might call a Oligopoly. There are 4 National carriers. (Yes, there are a few smaller ones.) AT&T, Sprint, Verizon, T-Mobile. I count two others with over a million subscribers on ( []) which is currently not being acquired by one of those 4 (Either listed there, or known by myself).

    Their plans are almost lockstep. Comparing some plans last year, they were almost exactly the same, which could be due to one of two things: Collusion, or Cost of Services. One might be tempted to say cost of services, but prior to the absorption of so much, the cost of Sprint was significantly cheaper, and didn't have these crazy 2-year long contracts (it was month to month, which after they introduced the it changed to a $15 per month fee, which is bollocks.)

    The only group I think benefits from this oligopoly are the companies. When there was competition on a large scale, prices were cheaper. I recall in my city, when we originally chose to break from Sprint, we got GSM phones on Cingular's network, on the idea that should service prove unsatisfactory, we could go with one of the other 5 providers in the area. Approx one and a half years later, we decide to go looking at other providers noting a rise in fees, and decreasing service, only to find that all but one (t-mobile) is gone/absorbed. Anecdote, true. However, I've heard a lot of very similar anecdotes, both IRL, and on the Internet.

    While, no, it's not a monopoly, an oligopoly acts in many ways like one. Anyone remember WiMax and it's potential to be wireless data outside cell phone carriers? Anyone heard anything about it recently, at all?

  • by E IS mC(Square) ( 721736 ) on Wednesday July 29, 2009 @10:59AM (#28866557) Journal
    wow. what a twisted way to blame the small timers.

    Of the three of the 'big four', I have shitty experience with AT&T and Verizon. They have "the best network/fewest dropped calls" only in their ads. Don't get me started on their pathetic customer service, their lock-ins, they charges. T-mobile is godsend compared to those two.

    Now talking about your 'great phones' argument - in my opinion, that is the crux of the problem. In fact, AT&T and Verizon are out-muscling other small time providers just because they have big bucks and get the 'best' (I wont call them the best, but that's another discussion) phones, and in turn, screwing up others who don't have that much of money.

    Fuck 'free' phones - they are never 'free'. and fuck AT&T and Verizon. I will never ever do business with them - even if I have to give up my mobile phone.
  • by AP31R0N ( 723649 ) on Wednesday July 29, 2009 @11:09AM (#28866713)

    Together, the major companies are a monopoly in that they don't allow competition. They're effectively one company, they all offer the same crappy service and weak sauce features for the SAME PRICE. They agree between each other how deep to stick it in our asses. Try paying less than 30$ a month for a cell phone service.

    i'd LOVE to have a service that charges me based on my use. i make two or three calls a WEEK, all to my girlfriend and all about 1 minute long. "I'm ready", "OK, i'm on my way". i send a text message every two or three days. i'm not a twelve year old girl who has to yammer constantly. Now that i have an iPhone provided my my employer, my usage has changed little. It's not a matter of cost anymore, it's just how i use the tool. When i was paying, i had over 10,000 rollover minutes from a minimal plan. Fuck that. It was a huge waste of money. Here's where you're make another purely argumentative comment like "but you didn't have to have a cell phone".

    The pay-as-you-go phones are set up so that you have to keep paying to keep your number. The amount you could spend on a busy week can quickly outstrip that of a monthly plan. It wouldn't kill them to offer a monthly plan for 10$ a month.

    Other countries have more competition so they strive to offer better services, more services and better prices. Japan's cell phone system puts ours to shame. They pay less and "get more". We can attribute some of that to Japanese technophilia, but most of it comes from competition. As much as the US obsesses about competition and free market, we don't do it. Powerful companies buy politicians to make laws so that no one else can play.

  • by jdgeorge ( 18767 ) on Wednesday July 29, 2009 @11:16AM (#28866829)

    few years ago all phones were about the same in features and people shopped based on price and coverage. Sprint decided to bottom feed the market with it's pay cash in the store machines to cater to illegals and people who don't have bank accounts or internet access.

    Is there any evidence that suggests Sprint was trying to cater to illegal residents (of the US, I assume)? First of all, note that there is a huge population of legal non-resident aliens who work in the US. Second, the areas of my city heavily populated by foriegn nationals are littered with Cricket [] stores; THEY are the ones who seem to be aggressively pursuing this market. Third, the core of Sprint's subscriber base for many years has been businesses. This comment seems like an inflamatory remark intended to imply that Sprint is blatantly supporting illegal activity.

    VZ and AT&T helped to invest in new phones by giving money to Apple and RIM in exchange for exclusive agreements.We're now in a market cycle where people want a good phone that can do everything since coverage is about the same everywhere.Sprint and T-Mobile are screwed because they cater to bottom feeders and now they're complaining. they want the new phones without paying to develop them. AT&T paid Apple almost a billion $$$ to develop the iPhone.

    Yes, AT&T and Verizon have engaged in exclusivity agreements with phone developers, as have Sprint and T-Mobile. This is not a new practice, though this comment seems to imply that it is. I'm not sure what the assertion that Sprint and T-Mobile "cater to bottom feeders" means. Does "bottom feeder" mean "a consumer who doesn't want to be locked into an expensive long-term contract?"

    Sprint's answer was to fund the Pre which is still in beta. no wonder no one was allowed to see it before launch. if Sprint and T-Mobile want customers they need to help pay for a nice phone on their network with a decent release and all features working. Unlike the Pre which was a disaster. Check all the stories on BoyGeniusReport. Sprint screwed up and is now running to the government.

    While AT&T and Verizon "invest in new phones", Sprint "funds" a phone "which is still in beta"? Haven't there been numerous firmware updates for the iPhone since its debut? Also, does "is still in beta" mean "is generally available and for sale on the market?" In my profession, "beta" testing refers to a test cycle that preceeds general release and sale of a product.

    The strange thing about this comment is that it appears to suggest that Sprint is somehow abetting criminal activity, throws its money away by supporting new product development, releases the product before it is ready, and is demanding help from the government due to rescue it from its ineptitude. By the way, precisely what is the nature of assistance Sprint is asking from the government? I didn't see that in any of the article links.

    At the same time, this comments implies that AT&T and Verizon's similar practices are okay.

    It seems to me that phone exclusivity deals, price-fixing, and costly long-term consumer contracts are equally bad regardless of what company uses them. Or am I missing something here?

  • by plague3106 ( 71849 ) on Wednesday July 29, 2009 @11:21AM (#28866933)

    Irrelevent, since VZW likely had coverage in his home area.. otherwise why would he use them?

  • Logic is flawed (Score:5, Insightful)

    by blahbooboo ( 839709 ) on Wednesday July 29, 2009 @11:29AM (#28867083)

    No, it doesn't. No one forces you to have a cell phone, no matter what possible reason you come up with.

    So by your logic NOTHING is a cartel or monopoly.

    The original Bell Co. which didn't allow any other telephone other than those they create really wasn't a problem. Why, because according to your logic no one was making you have a land line right?

    Standard oil really wasn't either a monopoly right? No one was making the public own a car or own a car that used oil right?

  • by 99BottlesOfBeerInMyF ( 813746 ) on Wednesday July 29, 2009 @11:50AM (#28867483)

    I don't understand, what you are talking about. Maybe, you need to put some more work into your postings, rather than argue in one-liners. Thanks.

    This always amazes me. This is an article talking about potential antitrust problems with cell phone companies and you're chiming in with your opinions, but you don't know what trusts are in this context. Doesn't it seem prudent to learn at least the concept of what you're discussing before forming opinions on it and expressing those opinions?

  • by GooberToo ( 74388 ) on Wednesday July 29, 2009 @12:05PM (#28867777)

    Actually, yes, you did. You could have declined the service.

    The word, "negotiate", clearly doesn't not mean what you think it means. Your statement only affirms negotiation is part part of the process.

    You just want to use the Government to force a change to a private business model because you don't happen to like it.

    Cartels do not exist for the public good. Government exists to protect the public from abusive monopolies and cartels. Furthermore, they are doing so by leveraging a resource lent to them for the sole purpose of furthering public interest. This absolutely falls within the realm of regulation.

    And, what you are calling a "private business model" is actually a government granted Monopoly using scarce resources provided them for the sole purpose of societal benefit. Sure they are allowed to make a profit. In this case, they are making a profit while abusing their monopoly/cartel position to deny rights required under equitable contract law.

  • by Anonymous Coward on Wednesday July 29, 2009 @12:14PM (#28867981)

    One minor alteration:

    I believe the GP is suggesting that Sprint, Verizon, and AT&T all act as a cartel in the US to artificially control prices, keep out competition and constrain consumer choice.

    Is that clear enough?

    Cingular is now a part of AT&T. That actually strengthens the point... we've seen Ma Bell re-integrate after being broken up; who's to say the cell providers won't make their cartel into an official monopoly?

    Oh, and a non-negotiable "contract" that companies in a cartel force you to sign to use their service should be ruled unconscionable. These 'take it or leave it' contracts are already on shaky legal ground, but add to that collusion in the market and the buyer has no option other than NOT using the service. Since mobile phones are becoming necessary in order to do business in this world, contracts of adhesion should not exist.

  • by Algan ( 20532 ) on Wednesday July 29, 2009 @12:45PM (#28868629)

    Then please explain to me how can I stop paying for incoming texts that my idiot friends with unlimited texting plans keep sending me. It's not like I have a choice receiving them. And speaking of SMS, how come the non bundle cost is $0.20 for ALL carriers? Surely one would realize that reducing the price would mean more customers and we all know that the cost of carrying them is practically 0. Oh, and funny how the price went up to $0.20 with ALL carriers AT THE SAME TIME...

    And speaking of voice plans, how come I can't select my international provider? I have been able to do that on my landline forever now, which is why it costs me $0.03/minute to call my family in Europe. Calling from my cell phone? $1.50/minute. I know about (and use) calling cards, but why can't I just call directly?

    Finally, why can't I buy an unlocked phone directly from the carrier? I signed the damn contract, which means I'm on the hook anyway. Even worse, some carriers will not unlock phones even after the contract expires - i'm looking at you AT&T.

    I would be perfectly OK with government regulation that would address these points. Yes, it will probably eat into carriers' profits, but tough nuggets, life's like that.

  • by Ironica ( 124657 ) <pixel.boondock@org> on Wednesday July 29, 2009 @01:08PM (#28869075) Journal

    I don't believe in free market anymore. There's just too many loopholes, lobbying being the biggest.

    If government is so involved in the economy that lobbying is worth the effort, then it's not a truly free market. In a real free market, the government simply wouldn't have the power.

    In a TRULY free market, the government wouldn't have power to establish currency, protect ownership, extend licensure... all sorts of things that the economy depends on.

    The "hypothetical free market" requires perfect information, perfect competition, and perfect mobility. As none of these are feasible to attain, government regulation is required to simulate them or compensate for their lack. For example, legal definitions of what "organic" produce is, and establishment of certifying bodies (which are private enterprises, but have some sort of charter or something from the government that establishes their certification as adequate for usage of the term "organic") help compensate for the lack of perfect information about farming practices. Without them, someone could say "Yeah, my produce is organic!" after spraying it with tons of pesticides, and you wouldn't really have any way of verifying that unless you traveled out to their farm yourself and watched them for a while... or brought your own lab kit to the market.

    So, markets that work on the scale we expect them to will always require SOME amount of regulation, and insofar as there is such regulation, there will be disagreements about how that regulation should be put in place. Some methods would favor the producer or the consumer. Hence, there's a business interest in attempting to shape the regulatory process.

    I'm all for making lobbying illegal... but that, some say, is over-regulating the market.

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