Telecoms Faulted for Blocking Services
11.07.2007 21:28
Computers
- Source: Forbes
AT&T Inc., Verizon Wireless and other major telecom carriers are coming under fire for blocking tech companies' services from their networks. Some technology companies accuse the telecom carriers of dictating what can and can't be offered on their wireless networks, stifling innovation and competition. Research in Motion Ltd., which wants to offer new video, music and mapping services over its popular Blackberry devices, is tangling with AT&T, which denied RIM from offering a free mapping service because the carrier plans to offer its own subscription-based version. The tech companies, as well as consumer groups, say customers will lose out if telecom carriers can block rival services on their networks because consumers will have fewer choices of services and providers. They're asking the federal government to intervene and open up the wireless networks. The telecom carriers and their supporters say new regulations would not increase innovation or competition. "The wireless industry is indisputably, workably competitive, said Philip Verveer, a former attorney in the Justice Department's antitrust division and at the Federal Communications Commission. However, last month, 15 tech company executives signed a letter sent to FCC Chairman Kevin Martin, requesting that a small percentage of wireless spectrum, which is scheduled to be auctioned to the highest bidder before year-end, be designated as open access. Essentially, the spectrum would be available to all wireless devices. The FCC is considering rules that will dictate how the spectrum will be used. Jason Devitt, chief executive of San Mateo, Calif.-based Skydeck, signed the letter to Martin. Opening up the wireless spectrum is necessary "as long as no harm comes to it," said Devitt at a House Commerce and Energy subcommittee hearing Wednesday. Steven Zipperstein, vice president and general counsel of Verizon Wireless - a joint venture between Verizon Communications Inc. and Vodafone Group Plc. - argued that open access is unwarranted because no one has identified that the current system is failing consumers. He said the fact that consumers are being offered hundreds of applications and services reflects sufficient competition exists in the industry. For example, when Cingular Wireless first offered Motorola Inc.'s Razr phone, the product cost about $500 and could only operate on one network. It has since come down in price to about $50 and the service is available on other networks, he said. "The market really addressed the problem in a quick and efficient way," he said. Some lawmakers at Wednesday's hearing criticized the recently launched Apple Inc. iPhone - a hybrid mobile phone, media player and wireless Internet device - because it can only be used on AT&T's wireless network. Of the first 1 million iPhones purchased after launch, up to 40 percent of the buyers had to switch carriers, Rep. Fred Upton, R-Mich., said at the hearing. Even having to pay costly early termination fees didn't seem to impede consumers' desire for the gizmo. Verveer added that there will be iPhone rivals soon enough and that at some point, the iPhone likely will be offered on other wireless networks, as happened following the launch of other innovative wireless communications gadgets. AT&T did not immediately comment. Shares of AT&T fell 6 cents to $39.75 in after-hours trading and ended up 31 cents to $39.81 in the regular trading session. Verizon shares rose 28 cents to close at $40.80 while Vodafone's stock price fell 8 cents to $32.99 in after-hours trading after rising 24 cents to $33.07 in the regular trading session. RIMM shares rose 23 cents to $211.30 in after-hours trading after gaining $1.82 to $211.07 in the regular session. Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
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