The Department of Justice will have a hard time unearthing damaging evidence that mobile carriers in the U.S., including AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ), abused their power in recent years, according to several lawmakers and regulators.
An article in BusinessWeek today dives into rumors reported by the WSJ on Monday that say the Department of Justice is looking into whether mobile operators have harmed consumers through common practices, such creating exclusives with handset makers, like the well-known and long-standing one between AT&T and Apple (NSDQ: AAPL). The conclusion is that a case of the kind will be very challenging. “There’s no obvious antitrust case to me,” says Donald Russell, an attorney who was chief of the telecommunications task force at the Justice Dept. until 2001.
What may make things difficult is that exclusives, like the AT&T and the iPhone or Sprint (NYSE: S) Nextel’s hold on the Palm (NSDQ: PALM) Pre, are fairly rare. For instance, in June, about 600 handsets were available through all U.S. carriers, but only 14 were exclusive to a given carrier. And, while AT&T has undeniably benefited from the iPhone exclusive, there’s little evidence that Verizon Wireless, the largest U.S. carrier, has suffered because of it. Both added more than 1 million subscribers in the first quarter.
Even if this case becomes hard to prove, it does appear the telecom industry will be subject to more regulation and scrutiny during President Obama’s tenure. In fact, the justice department has hired two experts recently who favor increased telecom regulation. Law professor Philip Weiser, argued in 2005 congressional testimony that “today’s regulatory regime