Democracy & Technology Blog Telecoms face antitrust scrutiny

The Department of Justice is looking into whether large U.S. telecommunications companies such as AT&T Inc. and Verizon Communications Inc. are abusing the market power they have amassed in recent years, according to the Wall Street Journal.

One area that might be explored is whether big wireless carriers are hurting smaller rivals by locking up popular phones through exclusive agreements with handset makers. Lawmakers and regulators have raised questions about deals such as AT&T’s exclusive right to provide service for Apple Inc.’s iPhone in the U.S.
The department also may review whether telecom carriers are unduly restricting the types of services other companies can offer on their networks, one person familiar with the situation said. Public-interest groups have complained when carriers limit access to Internet calling services such as Skype.

I discussed why cell phone exclusivity is procompetitive here. A small carrier (Madison River Communications, LLC) limited access to Internet calling services, but the FCC intervened. No large U.S. carrier has limited access to Internet calling services.
The Supreme Court has ruled,

The Sherman Act is indeed the “Magna Carta of free enterprise,” but it does not give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition. (citation omitted.)

This was a judgment delivered by Justice Scalia in which Justices Rehnquist, O’Connor, Kennedy, Ginsburg and Breyer joined. Justice Stevens filed a concurring opinion in which Justices Souter and Thomas joined.
AT&T and Verizon are not monopolists, although they are large, successful companies. They are not monopolists because their customers can terminate their service and take their business somewhere else — to a cable company offering Internet voice service or to a competitive wireless carrier.
The Justice Department can review whatever it likes, but it will need to prove a violation of the antitrust laws before it will be allowed to reorganize an entire sector of the economy pursuant to its interpretation of antitrust jurisprudence.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.