In a move that could potentially affect the way consumers buy their mobile phones, and might make phones much more expensive, and might make VoIP over wireless easier, Department Of Justice staffers have begun “an initial review” to determine whether large telecom companies “such as” AT&T (News - Alert) and Verizon have abused their market power.

 

The review might also lead to a review of terms and conditions whereby wholesale services are provided to non-facilities-based providers, though there is as of yet no indication how far the review might reach.

 

The Wall Street Journal says the review will include both landline and wireless services, but the focus seems to be wireless.

 

Staffers reportedly are going to take a look at exclusive handset deals, among other things. Smaller mobile providers have complained that exclusive deals such as AT&T has with Apple (News - Alert) to market the iPhone are anti-competitive.

 

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 (News - Alert) in the U.S. Big carriers say limiting exclusive deals would hurt innovation.

 

But some economists say any ban on device exclusivity or even handset subsidies would have the perverse effect of harming innovation and consumer benefit, as mobile providers would have reduced incentive to rapidly introduce new applications, services and devices if the profit motivation is tempered radically.

 

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 (News - Alert).

 

It isn't clear how well antitrust rules apply to the dynamics of the mobile market, nor is it clear what market impact might result if current rules are deemed anti-competitive. What might happen is carrier movement in a number of directions that make any formal proceedings unnecessary.

 

The latest move is just one more reminder of how powerfully “politics” affects the telecom industry’s core business models.