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Wednesday, June 17, 2009, 06:00 am PT (09:00 am ET)

U.S. senators ask FCC to examine exclusive cell phone deals

A group of U.S. senators this week asked the Federal Communications Commission to step in and examine whether exclusive relationships between wireless carriers and handset makers are in the best interest of customers.

Four members of the Commerce Subcommittee on Communications, Technology and the Internet fired off a letter to FCC chairman Michael Copps on Monday, expressing their growing concern over the deals, like the one in place between Apple and AT&T regarding the iPhone.

Their request actually stems from a petition filed last month by the Rural Cellular Association, a group of smaller tier II and tier III wireless carriers that provide service to parts of the U.S. where tier I brands like AT&T, Verizon, Sprint and T-Mobile do not.

They argue that their inability to provide their customers with some of the most popular mobile handsets and smartphones makes it difficult for them to compete, especially in markets where their coverage does overlap with some of the big tier I operators.

In their letter to the FCC, the senators asked the commission to examine five specific issues carefully and act expeditiously should they find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace.

Specifically, they request a determination on whether exclusivity agreements are becoming increasingly prevalent between dominant wireless carriers and handset manufacturers, and whether these agreements are restricting consumer choice, particularly for those living in rural America.

The senators also asked the commission to decide whether the agreements place limitations on a consumer’s ability to take full advantage of handset technologies, such as the ability to send multimedia messages (MMS) or the ability to "tether" a device to a computer for internet use.

This particular requests comes amid word that AT&T, despite the hefty service and data fees it charges iPhone customers, won't be able to provide iPhone 3G S customers with those two services from the onset of their new wireless contracts.

Among the other topics up for debate are whether the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete; and whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace.

The letter — signed by senators John Kerry (Dem. from Mass.), Roger Wicker (Rep. from Miss.), Amy Klobuchar (Dem. from Minn) and Byron Dorgan (Dem. from N.D.) — precedes a hearing by the Senate Committee on Commerce, Science and Transportation on the matter set for Wednesday to help determine whether legislative action is necessary.