• Will the FCC Divorce AT&T from Apple?

    Image via iPhoneBuzz.com

    AT&T can't have it both ways.

    On Friday, AT&T sent a letter to the FCC accusing Google of violating the U.S. Federal Communications Commission's net neutrality rules. But AT&T doesn't see its one-way relationship with Apple's iPhone as a violation of the same.

    FCC Chairman Julius Genachowski, however, is dropping hints that he does.

    From the SFC this weekend:
    In his "network neutrality" speech this week, Genachowski did not talk explicitly about exclusive deals between handset makers and carriers. But what he did say could lay the foundation for unprecedented and, for a group of market-oriented scholars, unneeded FCC regulation of wireless vendor contracts.
    The obvious implications of such rules would likely impact future "exclusive arrangements" in the mobile world. But many are speculating that this could be the straw that breaks the camel's back. And by "camel's back," I mean the cozy partnership between Apple and AT&T for the iPhone.

    The comprehensive article from the SFC raises a host of questions about the plausibility of regulatory policy restricting exclusive contracts. Andrew Jay Schwartzman, president of Media Access Project, responded to the FCC chief's speech by telling Bloomberg News that "The iPhone can't be exclusive under a true net neutrality regime."

    On the other hand, Ryan Radia, an information policy analyst with the Competitive Enterprise Institute (CEI), is quoted in the SFC piece saying that exclusivity can't be ruled out, especially if the agreement "doesn't carry provisions that would conflict with whatever the final network neutrality rules might be."

    "[Deals may be legal] so long as the deals do not prevent a consumer from accessing the content of their choice," he says. But, if Apple and AT&T allowed access to only a subset of applications or services, such a practice would likely be illegal.
    Although it is entirely too early to speculate if yet-to-be formulated rules and regulations will ultimately make deals like that between Apple and AT&T a thing of the past, it's far more likely that the open access requirement of a growing number of networks (like Verizon's LTE 4G network) will do more to open this highly competitive market than any rules and regs ultimately can... or should in a free market.
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