Senators to FCC: Do cell phone exclusivity deals hurt consumers?

Want a new iPhone (in the U.S., anyway)? You'd better be an AT&T subscriber, then. How about the Palm Pre? Only on Sprint. Craving the BlackBerry Storm? Verizon Wireless—and only Verizon Wireless—has it.

These kinds of exclusivity agreements between wireless carriers and cell phone manufacturers seem to be getting more and more common, and now a quartet of U.S. senators have asked the FCC to consider whether these cozy arrangements are thwarting choice, competition and innovation.

The four senators—three Democrats (John Kerry of Massachusetts, Byron Dorgan of North Dakota, and Amy Klobuchar of Minnesota) and a Republican (Roger Wicker of Mississippi) sent a written request Monday to the FCC to review the matter, according to the Washington Post. An initial Commerce subcommittee hearing is slated for Wednesday.

The letter, addressed to acting FCC head Michael Copps, reads in part (as quoted by the Post): "We ask that you examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the wireless markets place."

Of course, exclusivity deals—such as AT&T's arrangement with Apple for the iPhone, said to extend at least through next year—are great for carriers (who get the chance to woo new subscribers with hot handsets that only they have) and manufacturers (who can wring more money and concessions from the carrier in question).

But are exclusivity agreements good for us, the consumers? Well, I'm sure the carriers will argue that they are—indirectly, at least, as the iPhone on AT&T may have upped the ante for Verizon and BlackBerry, leading to the touchscreen Storm, which in turn brought us the innovative Palm Pre on Sprint.

That said, exclusivity means that someone who's in the middle of a two-year contract with Verizon can't get the Sprint-only Pre without forking a $150-ish early termination fee—and I'm guessing that most of us don't relish the thought of handing out C-notes to cell carriers.

Even worse, take the plight of rural cell carriers who can't offer the iPhone—or the Pre, or the Storm, or any number of red-hot handsets—thanks to the web of exclusivity deals. As Ars Technica reported last year, the Rural Cellular Association has already petitioned the FCC on behalf of rural subscribers who've been left in the cold (literally, in the case of Alaska).

So, what do you think: Should there be limits on wireless exclusivity deals? Should Verizon, T-Mobile, and Sprint subscribers all get a crack at the iPhone, the Pre, and other exclusive handsets? And what about rural cell subscribers who don't live in the coverage area of the big four carriers? Or should regulators take a hands-off approach?

Related:
U.S. senators ask FCC to review mobile handset deals [Washington Post/Reuterrs]