The U.S. Department of Justice has started a review of whether the largest U.S. telecommunications companies are engaged in anti-competitive practices, the Wall Street Journal reported Monday, citing people familiar with the matter. The reported noted that the review, while not yet a formal investigation, is expected to cover all areas from land-line voice and broadband service to wireless, including the exclusive arrangements that limit popular handsets to particular wireless carriers.
The WSJ report noted that a possible area that could be explored by the Justice department's antitrust division is whether big wireless carriers are hurting smaller companies by locking up popular phones through exclusive deals with handset makers. Consolidation in the U.S. wireless industry has left four operators accounting for more than 90% of the country's wireless subscribers, giving them the market power to carve out exclusive long-term deals with makers of popular handsets.
Questions have been raised by lawmakers and regulators about the deal by AT&T Inc. (T) to provide service for Apple Inc.'s (AAPL) iPhone in the U.S. The Federal Communications Commission has said it will explore the issue and a congressional committee held hearings on it in June. AT&T continues to be the only U.S. carrier to sell iPhones more than two years after its launch in the U.S. AT&T is reportedly in talks with Apple to extend its exclusive deal to sell the iPhone in the U.S. until 2011.
Also, Research In Motion Ltd.'s (RIMM) BlackBerry Storm touch-screen phone is available only on Verizon's (VZ) network, while Palm Inc.'s (PALM) new Pre is exclusive to Sprint Nextel Corp. (S) until early next year.
Major carriers have argued that exclusivity deals actually enhance competition. According to them, when one carrier has exclusive rights to a particular phone, competing carriers and manufacturers are encouraged to offer other phones with equal or greater capabilities. However, such deals limit the ability of manufacturers such as Palm, Apple and HTC Corp. to distribute their devices widely, although they benefit by getting a significant share of a carrier's marketing and sales resources.
The Justice Department may also review whether telecom carriers are unduly restricting the types of services that could be offered by other companies on their networks, the WSJ reported, citing one person familiar with the situation. Public-interest groups have complained when carriers limit access to Internet calling services such as Skype.
In the past, antitrust regulations have played a significant role in shaping the telecom sector. A landmark antitrust case against AT&T resulted in the breakup of the "Ma Bell" telephone monopoly into regional carriers in 1984. T closed Monday's regular trading session at $24.80, up $0.21 or 0.85% on a volume of 25.57 million shares, while VZ closed trading at $30.36, up $0.18 or 0.60% on a volume of 13.08 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.