Verizon to cut exclusive period on handsets

Verizon Wireless is dialing back on its exclusivity agreements with handset makers after pressure from US lawmakers and smaller carriers.

The biggest US mobile service said it will limit exclusivity periods with mobile-phone manufacturers to six months and then allow the country's smallest wireless service providers to sell the devices.

The move comes after reports that the US Department of Justice was taking a preliminary look into whether US operators had violated anti-trust laws by obtaining exclusive deals to sell specific phones.

Exclusivity deals are common among the biggest US carriers but have recently faced strong opposition from small, rural carriers, which said they lack the clout to make deals to carry the most popular advanced phones.

The iPhone has drawn such deals into the spotlight because AT&T, the second biggest US wireless service, has had exclusive US rights with Apple since 2007. In an apparent effort to pre-empt any regulatory changes, Verizon Wireless, a venture of Verizon Communications and Vodafone Group, sent a letter to major lawmakers on July 17 offering to limit exclusivity.

Verizon said the offer would apply to carriers with 500,000 or fewer subscribers. However, Verizon spokesman Jeffrey Nelson said it applies to all "small" operators, without giving a specific definition.

Cellular South, a vocal activist against phone exclusivity deals would be able to avail of the offer even though it has roughly 800,000 customers, he said. However, the offer will not extend to larger companies such as US Cellular Corp, which has about six million customers and has been a vocal opponent of the practice, said Nelson. US Cellular did not immediately comment.

"Effective immediately for small wireless carriers... any new exclusivity arrangement we enter with handset makers will last no longer than six months – for all manufacturers and all devices," said Verizon Wireless CEO Lowell McAdam in the letter.

He said 24 small wireless carriers had asked Verizon to eliminate its long-term exclusive handset agreements with LG and Samsung in February. The company was now expanding that idea to all handsets.

Stifel Nicolaus analyst Rebecca Arbogast described the letter as a "significant move to diffuse the heightening pressure for regulation to curtail" exclusive deals and said it would put pressure on other big carriers to follow suit.

"It will likely not be the end of the debate, in our view."

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