Verizon offers small carriers a deal on handset exclusivity

Verizon Wireless will give small wireless carriers--those with 500,000 or fewer subscribers--access to all of its exclusive devices from all of its handset partners six months after Verizon launches the phones, according to a letter Verizon Wireless CEO Lowell McAdam sent to Congress.

The letter is the latest twist in Verizon's tussle with smaller carriers, most notably Cellular South, over handset exclusivity deals, and comes as the FCC and the Department of Justice both promise to look into the market implications of the deals.

In the letter, which is addressed to Rep. Rick Boucher (D-Va.), the chairman of the communications subcommittee on the House Energy and Commerce Committee, McAdam said that the expanded offer is "fair to all sides."

"Moreover, we have no objection to small carriers having full access to any manufacturer's portfolio of prototypes and products in development, without being informed which may have been selected by Verizon Wireless," McAdam said in the letter. "Obviously our pre-launch product selections are proprietary and must remain confidential between us and our vendors."

"We believe that this letter proves what we have claimed all along, that the largest wireless carriers have the market the power and exert that market power to get the manufacturers to do their bidding," Eric Graham of Cellular South told FierceWireless. "This goes to prove that Verizon largely gets to determine who gets what devices in the CDMA world."

He noted that Verizon's offer left out many smaller carriers that have more than 500,000 subscribers, including U.S. Cellular and Cellular South, which both recently testified about handset exclusivity issues before the Senate.

However, a few hours later Graham softened his stance: "We are encouraged by the reports of Verizon's offer, and we are interested in seeing the details."

In February, Verizon agreed to allow the Associated Carrier Group--which represents 25 CDMA carriers that have a combined 2.6 million subscribers--access to LG and Samsung phones six months after Verizon launched the devices.

Critics of the carrier also weighed in with the opinions. Free Press said the deal as an attempt to discourage federal investigations into wireless competition practices.

"Verizon's new terms for exclusive handset deals do not go far enough to create meaningful consumer choice and competition," Chris Riley, policy counsel for Free Press, said in a statement. "Why is the limit six months, and why is it limited only to the smallest carriers and not any of Verizon's major competitors? This proposal does nothing to address the anti-competitive issues posed by handset exclusivity deals."

For more:
- see the Verizon letter here

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Article updated July 17 to include additional comments from Cellular South.