Telcos quizzed over exclusive phone deals

The US Senate is looking into deals that lock certain devices into a single provider

The US Senate is looking into the exclusive deals many handset makers have signed with service providers.

The Senate Committee on Commerce, Science and Transportation has asked executives from several major handset makers and telecoms firms to testify about the deals, which lock certain devices into a single provider.

The Committee is looking into whether consumers are being unfairly forced to sign into certain devices, and whether the deals are hampering service upgrades in rural and sparsely populated markets.

"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 Senator John Kerry.

"At the heart of this issue is this question: is it better or worse for competition, for innovation, and for the American consumer if the carrier controls the decision over what devices can and cannot operate on their network? "

The hearing could lead Congress to take action against locking devices to a single carrier, a practice which critics claim violates consumer rights and harms innovation.

The practice is less widespread in Europe, but telcos have recently signed exclusive deals for products such as the Apple iPhone, prompting several countries to take action and force the sale of unlocked devices.

Operators, however, say that the exclusive deals actually help competition and drive carriers to improve their networks.

"They increase a carrier's incentives to make purchase commitments, and to invest in promotions, network improvements and special training of sales staff, " argued Paul Roth, president of retail sales and services for AT&T.

"They lower manufacturer entry barriers and serve as a key tool to maintain brand value. And, as an important form of competition, they encourage other carriers and manufacturers to do better, by improving their own handset portfolios, or the prices, features and other characteristics of their existing offerings."