* Smaller companies say a few wireless companies dominate
* AT&T says competition "white hot"
* Senator Kerry says panel needs to study competition
WASHINGTON, June 17 Amid complaints by smaller
competitors that exclusive agreements by dominant wireless
phone companies and handset makers hurt competition, AT&T said
on Wednesday that competition in the industry is robust and it
will increase over time.
The issue of exclusive agreements among some of the biggest
companies like Apple Inc's (AAPL.O) iPhone and service provider
AT&T Inc (T.N) is at the center of some lawmakers' concerns
about whether such practices hinder competition and
"Competition in the wireless marketplace is white hot," Paul
Roth, president of retail sales and services at AT&T, said in
testimony before a Senate Commerce Committee hearing to examine
the wireless market.
AT&T, along with Verizon Wireless (VZ.N), Sprint Nextel Corp
(S.N) and T-Mobile, a unit of Deutsche Telekom (DTEGn.DE), were
the targets of criticism at the hearing by smaller competitors who
accused them of failing to provide services in rural areas and
focusing instead on more profitable densely populated cities.
The smaller competitors argue that exclusivity agreements
prevent other carriers from acquiring these devices, hurting
competition for wireless customers.
Victor Meena, president of Mississippi-based Cellular South
Inc, said that AT&T Wireless, Verizon Wireless, Sprint Nextel and
T-Mobile dominate 90 percent of the U.S. wireless market.
"The largest carriers use their market power to prevent
competitors from having access to devices and roaming," Meena
said. "If this trend continues, and I believe it will without
intervention from Congress, then there will once again be a
duopoly in the wireless industry."
John Rooney, president of Chicago-based U.S. Cellular Corp,
which provides services in regional pockets throughout the
United States, urged the committee to act to allow customers
the ability to chose both the handset and the network.
Senator Amy Klobuchar, a Minnesota Democrat, said consumers
should be free to choose the plan and phone that best fits their
"We need to make sure consumers are getting a fair deal," she
said. "Right now, some consumers have severe limitations in
wireless options and are subject to confusing and anti-competitive
business practices like early termination fees and other
AT&T's Roth said the wireless industry is investing several
billions of dollars and competing "fiercely" to offer customers
an array of services to access the Internet, listen to music,
send emails, among other things.
"The wireless industry is just beginning to tap these
possibilities," Roth said. "Seemingly every month a new and
innovative wireless device bursts onto the scene."
Roth said Palm Inc's PALM.O new smart phone called the
Pre, whose service is provided by Sprint, has resulted in a
lower price for the iPhone.
He added that companies will compete even harder in the
Timothy Karr, campaign director of Free Press, a consumer
group, said wireless companies make a lot of promises through the
exclusive deals but fall short of those promises.
"Wireless companies have stifled innovation, crippled
applications, and stuck users with the bill," Karr said.
More than 270 million Americans subscribe to wireless phone
services, compared with 3.5 million consumers in 1989,
according to the Governmental Accountability Office. About 35
percent of U.S. households use wireless phones as their primary
or only means of telephone service, the GAO said.
As the number of subscribers increase, several U.S.
senators have urged the Federal Communications Commission to
review the exclusive arrangements and how they affect
competition and choice in the marketplace.
They want the FCC to act expeditiously if agency officials
find that exclusivity agreements unfairly restrict consumer choice
or hurt competition in the commercial wireless marketplace.
"I think the Commerce Committee should consider how the
wireless industry is functioning and whether current practices
are in the best interest of competition and the consumer," said
Massachusetts Democrat John Kerry, a committee member.
(Reporting by John Poirier; Editing by Phil Berlowitz)