Verizon First to Cave With Exclusivity Agreements

By  |  Monday, July 20, 2009 at 11:29 am

verizonmainlogoResponding to pressure on government regulators, Verizon Wireless has announced it would limit the length of its exclusivity agreements with wireless manufacturers to six months. However, for carriers to pick up a Verizon-exclusive phone after that period, it would need to have less than 500,000 customers.

Verizon’s move seems aimed at quelling complaints by small regional carriers, while at the same time keeping its edge over its more similarly-sized rivals. It’s concession came as part of a July 17 letter sent to lawmakers. Washington is looking into exclusivity arrangements, and these agreements have become a focus of their inquiries.

“Exclusivity arrangements promote competition and innovation in device development and design. When we procure exclusive handsets from our vendors, we typically buy hundreds of thousands or even millions of each device,” the company argued. “Otherwise manufacturers may be reluctant to make the investments of time, money and production capacity to support a particular device.”

I think its all but a given that Verizon’s pander will do little to change lawmaker’s minds. While I do see the need for some type of competitive advantage, the iPhone showed us how an exclusivity agreement can go wrong.

Consumers that want an iPhone aren’t the only ones affected. Think about AT&T’s network. People who don’t even want the phone are affected by the strain that the device has put on the carrier. That is certainly a concern.

Add to this that this concession in the end would benefit such a small portion of the industry — analysts say that less than five percent of wireless customers are with carriers smaller than the 500,000 threshold, and it may be more of an half-hearted attempt to protect themselves than an honest effort to put the interest of the consumer in mind.

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