Verizon's exclusivity compromise: unimpressive gesture

The cellular company has caved into government pressure and agreed to loosen its grip on exclusive rights to sell popular mobile handsets

All hail Verizon, the champion of change -- right? After all, the cellular company has caved into government pressure and agreed to loosen its grip on exclusive rights to sell popular mobile handsets. That's a major step. At least, it might seem that way until you read beyond the headline.

All Verizon's exclusivity compromise actually does is allow a limited number of very small carriers to sell the handsets after a six-month period. Specifically, only wireless operators with 500,000 customers or less will be affected. Now, take a moment and think: How many people do you know who use such companies? The top four U.S. carriers make up a whopping 86 percent of the market, according to research by the CTIA, a nonprofit wireless industry association. Even within that remaining 14 percent, the number of carriers with fewer than 500,000 customers on-board is miniscule at best; in fact, one report suggests only seven networks exist in America with subscriber bases below 7 million. Translation: This isn't exactly something with wide-reaching impact.

If we're going to pressure the carriers to make consumer-driven changes, there are far more important things on which we could focus. Things like:

Limiting exclusivity deals on a larger scale.

Want the iPhone on a non-AT&T network? Good luck. Despite ongoing rumors that the iPhone may become available on Verizon, so far, there are no firm indications of it happening anytime soon. While AT&T's exclusivity deal with Apple is believed to expire in 2010, rumors have suggested the network is already pushing hard for an extension. It's not hard to see why, either: The iPhone has brought millions of customers into AT&T's arms and given it plenty of attention. Having the iPhone available on another network -- particularly one with an arguably stronger network -- would without question hurt AT&T.

By how much, though? A lot, according to one firm's calculations. "We estimate that nearly a third of AT&T's post-paid customers are being retained by AT&T primarily because of the iPhone exclusivity," Pali Research tells All Things Digital.

"As the iPhone exclusivity period rolls off between AT&T Wireless and Apple, a material number of AT&T customers will flock to Verizon's superior network," the company goes on to predict.

The iPhone, of course, is far from the only popular device currently tied down with an operator-specific agreement. Even if and when it does make its way onto another network, the broader problem of nonconsumer-centric exclusivity deals still exists.

Snubbing out sneaky fees.

The Better Business Bureau received more complaints about the wireless industry than any other business sector in 2008 (and that wasn't the first time, either). Last year, the BBB logged more than 35,600 carrier-related complaints -- nearly 9,000 more than were received for the next highest-ranked industry. With all the sneaky fees on cell phone bills, it's no surprise.

How about some consumer protection from these kinds of hidden costs? You know, the activation fees and all the mysterious charges that pop up on your monthly bills ("Regulatory Cost Recovery Charge," anyone?). Lawmakers in Quebec have recently taken up legislation to protect consumers from being caught off-guard by those unmentioned little additions. Let's follow their lead.

Address text messaging inflation.

While the four big carriers have doubled their text messaging fees over the past few years, the actual cost of sending an SMS is next to nothing. An analysis published by The New York Times late last year stated that texts cost carriers "very, very, very little to transmit" and that the "profit margins are concealed by a heavy curtain."

The carriers, of course, say you should sign up for a monthly plan to avoid getting screwed. With numerous class-action lawsuits filed with claims of text message price-fixing, though, one has to wonder whether a more consumer-friendly solution could be found.

Consider the consumers -- just generally.

The list goes on: There are those always-fun binding contracts to contend with and countless other carrier-related annoyances. The truth, of course, is that the wireless companies are just that -- companies, looking to turn profits. Verizon may be making a grand gesture with its exclusivity compromise this week, but the broader issues that affect more of us remain unaddressed.

The best thing you can do, then, is fight for yourself as much as possible: Go through your bill with a fine-toothed comb, question any questionable charges, and study all the nuances of a new plan or commitment before signing the dotted line. At the very least, you'll know what you're getting into and won't be caught off-guard by hidden fees or limiting terms. If the carriers aren't going to watch out for your interests, the least you can do is watch out for them yourself.

Connect with JR Raphael on Twitter (@jr_raphael) or via his Web site,

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JR Raphael

PC World (US online)
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