Verizon Eases Up On Exclusive Mobile Handset Deals
Any new exclusivity arrangements it makes with handset manufacturers will last no longer than six months for carriers with up to 500,000 customers, Verizon says.
Verizon Wireless said it would shorten the length of its handset exclusivity deals, potentially enabling smaller carriers to offer popular phones at a quicker pace.
The move comes as the carriers are facing increased pressure from the government regarding their size and deals that prevent other carriers from offering certain handsets. The most well-known exclusivity deal is the one AT&T has had with Apple's iPhone lineup, but Verizon also has these deals with handsets such as the BlackBerry Storm, as well as devices from Samsung and LG Electronics.
Sen. Herb Kohl, (D-Wis.), has been urging the Department of Justice and the Federal Communication Commission to take a closer look at these exclusive deals because it may hamper competition. Smaller, rural carriers argue these deal put them at a disadvantage to attract and maintain customers. Larger carriers would argue they take a major risk with these deals because an unsuccessful device could leave them with loads of excess inventory.
Verizon said 24 small carriers asked it to completely terminate its exclusive deal with Samsung and LG Electronics, and the nation's largest mobile operator appears to have come to a compromise.
"Effective immediately for small wireless carriers (those with 500,000 customers or less), any new exclusivity arrangement we enter with handset makers will last no longer than six months -- for all manufacturers and all devices," Verizon said in a letter to lawmakers.
AT&T doesn't appear likely to follow suit any time soon, as the iPhone has been a major driver of sales, and it has poached customers away from Verizon, Sprint Nextel, and T-Mobile. The second-largest U.S. carrier is reportedly looking to extend its exclusive deal with Apple, and it told lawmakers these kind of agreements lead to "unprecedented competitive reaction" that benefits consumers.
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