Phone Congress takes on a whole new meaning

From the back halls of congress, a sudden interest in the democracy of phone ownership pits itself against a powerful coalition of wireless carriers in what some consider an unholy alliance of phone manufacturers and powerful telecom providers.              

Exclusive phone deals are under scrutiny in congress, which appears poised to once again continue its role of supreme business arbitrator.   Here’s what it boils down to.  You want a killer phone, but you have to think twice because along with that phone comes the carrier.  You want a Palm Pre you have to go with Sprint.  You think the iPhone is the greatest thing since a slice of Marie Antoinette’s cake?  You have to enter into a service contract with ATT despite their rather dubious record on telecommunications privacy.   

In an age where cell phones battle to be on the cutting edge, wireless providers see huge advantages in locking up subscribers who are eying the new phones with the sort of ravenous hunger usually reserved for blue sharks in the middle of a feeding frenzy.   It’s a bloodbath out there and Senator Kerry and a few co-sponsors are looking at dragging congress into the fray.  In typical Democratic share and share alike fashion, congressional committees are weighing the possibility of forcibly divorcing the phones from specific industry carriers.    They are responding to the complaints of smaller carriers whose operational regions cover remote areas of the sticks where they compete for the scraps left over from the urban strongholds of the big players.  There appears to be a sentiment, worthy of congressional scrutiny, that everyone is entitled to the most basic of freedoms the right to choose their own cellphone.  

For the industry it’s a high stakes battle.    The carriers can’t seem to differentiate themselves enough with their actual services so they need to jump into the hardware sector to ride the rush of the latest high profile phone launch.    It appears that most consumers are more loyal to their phones than who sells them the background technology that lets them field calls.    In a time where blatant wiretapping by some carriers is just dropping off the news pages and out of the public eye, each new phone launch serves as a bright shiny distraction to the types of issues that subscribers might otherwise be looking for in their wireless carriers. 

Its clearly a death match and the stakes are higher than ever.   The major carriers funnel development resources into up and coming phones that can be defining in market share.   Whoever gets the best phone is getting a huge piece of the action where the real money is, cell phone contracts.  

Consumer groups and coalitions or rural carriers who don’t have the resources to compete are concerned about the lack of access to technology that this divide creates.

Both sides have some good points.  The free market should benefit those who are best able to provide what the consumer wants.  By knowing that there is a payoff in delivering the best phone to market, development funds are channeled into promising technologies.   The other side of the argument is of course, that this process undermines the even distribution of what technology there is.    If you live outside of the coverage area, or prefer a provider with a more ethical track record, you are forced to live without the latest and greatest phone technology.  

The real question is, should exclusive deals be allowed that are likely to further entrench established companies and limit access to superior technology, or should people be able to choose ala carte, their dream phone and who carries the signal.   In a broader sense, the question again boils down to how much regulatory power should the government impose on industry and alliances both within the wireless carrier sector and beyond it.   How far should this regulation go, and what are the greater implications.   Taken to its logical extension, this could impact a wide range of industrial precepts that are part of American culture.   

On one side it can be said that this would be akin to forcing all Toshiba television owners to subscribe to Comcast, and all Sony owners to subscribe to Digital Satellite services.   How far should exclusive deals go, and is it in the interest of the people to have Congress regulate this part of business contractual agreements?    

The reverse analogy is also interesting.  By denying the validity of exclusive agreements, a car dealership would have the right to carry the latest Ford, Ferrari and Mitsubishi products.   It could be argued that this enhances consumer choice.   It can also be argued that this infringes on the obvious branding power that the manufacturers of these vehicles gain from exclusive dealerships. 

As a general rule, allowing the maximum range of consumer choice is a good thing.  It removes the tendency for mini-monopolies to arise and forces healthy price competition.   Whether this is the type of thing our esteemed Congress should be focusing on in the midst of a huge economic crisis is certainly open to debate.