Wireless Competition Debate Hits Senate Committee Floor

The testimony before the Senate Committee on Commerce, Science & Transportation comes as Washington considers whether to regulate the wireless space because competition and innovation may be being hindered.

Smaller competitors argue that exclusivity agreements that large carriers such as AT&T, Verizon Wireless, Sprint Nextel and T-Mobile have with device manufacturers prevent other carriers from acquiring these devices, hurting competition for wireless customers.

Victor Meena, president of Mississippi-based Cellular South, said that AT&T Wireless, Verizon Wireless, Sprint Nextel and T-Mobile dominate 90 percent of the U.S. wireless arena and have fostered an anticompetitive market.

"The largest carriers use their market power to prevent competitors from having access to devices and roaming," Meena said, according to Reuters. "If this trend continues, and I believe it will without intervention from Congress, then there will once again be a duopoly in the wireless industry."

John Rooney, president of Chicago-based U.S. Cellular, which provides services in regional pockets throughout the U.S., urged the committee to act to allow customers the ability to choose both the handset and the network.

Sen. Amy Klobuchar, a Minnesota Democrat, said users should have more choices on the plan and phone that best fit their needs.

"We need to make sure consumers are getting a fair deal," Klobuchar said, according to Reuters. "Right now, some consumers have severe limitations in wireless options and are subject to confusing and anticompetitive business practices like early termination fees and other charges."

Meanwhile, Paul Roth, president of retail sales and services at AT&T, told the committee that the wireless market has never been more fierce. "Competition in the wireless marketplace is white hot," Roth said.

Roth said the wireless industry is investing several billions of dollars and competing "fiercely" to offer customers an array of services to access the Internet, listen to music, send e-mails, among other things.

"The wireless industry is just beginning to tap these possibilities," Roth said, according to Reuters. "Seemingly every month a new and innovative wireless device bursts onto the scene."

More than 270 million Americans subscribe to wireless phone services, compared with 3.5 million consumers in 1989, according to the Government Accountability Office. About 35 percent of U.S. households use wireless phones as their primary or only means of telephone service, the GAO said.

As the number of subscribers increase, several U.S. senators have urged the Federal Communications Commission to review the exclusive arrangements and how they affect competition and choice in the marketplace.

They want the FCC to act expeditiously if agency officials find that exclusivity agreements unfairly restrict consumer choice or hurt competition in the commercial wireless marketplace.

"I think the Commerce Committee should consider how the wireless industry is functioning and whether current practices are in the best interest of competition and the consumer," said Massachusetts Democrat Sen. John Kerry, a committee member.

Timothy Karr, campaign director of Free Press, a consumer group, said wireless companies make a lot of promises through the exclusive deals but fall short of those promises.

"Wireless companies have stifled innovation, crippled applications, and stuck users with the bill," Karr said.