[LINK] Wireless phone industry taken to task
ivan at itrundle.com
Thu Jul 12 17:37:31 EST 2007
(I'd post the marketwatch.com URL, but it's far too long to bother...)
Wireless-phone industry tactics criticized
Lawmakers hit early-termination fees, handset restrictions
By Jeffry Bartash, MarketWatch
Last Update: 4:19 PM ET Jul 11, 2007
WASHINGTON (MarketWatch) - U.S. lawmakers on Wednesday took the
wireless-phone industry to task, criticizing high early-termination
fees and the inability to use mobile devices such as the new iPhone
on different networks.
Before switching to another wireless provider, mobile customers
usually have to pay $175 or more to terminate their current plan and
they have to get a new phone. Devices that work on one U.S. wireless
network rarely work on another - in part because carriers use
different technologies or have exclusive marketing arrangements with
The new iPhone by Apple Inc. is a case in point. The device, costing
$500 to $600, is only available via AT&T Inc., with an early-
termination fee of $175. Yet the AT&T network on which the iPhone
operates is much slower than rival networks when it comes to Internet
Rep. Edward Markey, chairman of a key House committee on
telecommunications, noted that customers who don't like AT&T's
network can't move to another provider.
"You're stuck with your iPhone and you can't take it anywhere," the
Massachusetts Democrat said.
Markey and other lawmakers leveled their criticism Wednesday during a
hearing ostensibly to determine whether the federal government should
bar states from regulating the wireless industry. Mobile carriers say
it's very costly to comply with multiple state laws.
At present, states can oversee the terms and conditions of wireless
plans but are prevented from regulating prices.
For the most part, though, lawmakers spent their time focusing on
wireless-industry practices that they say hurt consumers and stifle
innovation. Many would like to see companies reduce early-termination
fees or allow subscribers to use their handsets on any network they
Several industry critics who testified at the hearing noted that Asia
and Europe obligate carriers to ensure that any device will work with
Wireless entrepreneur Jason Devitt, chief executive of SkyDeck, said
800 devices would work on Vodafone Group plc's wireless network in
Europe, whereas only 30 devices work on Verizon's network in the U.S.
He accused mobile operators such as Verizon and AT&T of having a
"deathgrip" on handset choices in the U.S.
Wireless executives defended the industry, saying it's highly
competitive and arguing that costs to consumers would rise if
government required devices to work on all networks.
Some lawmakers, both Democrats and Republicans, also expressed
reluctance to tamper with what most acknowledged was a healthy and
"The wireless-service market is vigorously competitive," said Fred
[Jeffry Bartash is a reporter for MarketWatch in Washington.]
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