October 20, 2018

U.S. Investigating AT&T and Verizon Over Wireless Collusion Claim

An ATT spokesman said the company was “aware of the investigation,” had provided information to the government and was working “to move this issue forward.”

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The investigation may also include major American carriers other than ATT and Verizon, a person with knowledge of the inquiry said. Credit Brandon Thibodeaux for The New York Times

G.S.M.A. confirmed that it had developed an eSIM standard that would allow a carrier to lock a device to its network but put the standard on hold pending the Justice Department’s investigation. Under the pending standard, the G.S.M.A. said, a wireless carrier would need permission from a consumer to lock a device.

“The G.S.M.A. is cooperating fully with the Department of Justice in this matter,” the organization said in a statement.

At the heart of the investigation is whether the nation’s biggest wireless carriers, working with the G.S.M.A., secretly tried to influence mobile technology to unfairly maintain their dominance, in a way that hurt competition and consumers and hindered innovation in the wider mobile industry.

ATT and Verizon together control about 70 percent of all wireless subscriptions in the United States. A technology that made it easy to switch carriers could lead to more turnover and fewer subscribers for them.

The investigation highlights a push by the Justice Department’s antitrust chief, Makan Delrahim, to crack down on the opaque world of intellectual property, or I.P., standards. He has said the Justice Department will scrutinize potential coordination in standards-setting organizations that can hurt competition.

“In the context of antitrust and I.P., we will be inclined to investigate and enforce when we see evidence of collusive conduct undertaken for the purpose of fixing prices, or excluding particular competitors or products,” Mr. Delrahim said in a speech this month at a conference in Washington. He previously warned of the potential for “cartel-like behavior” by competitors that got together with standards-setting organizations.

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At the same time, the Justice Department is suing ATT to block its $85.4 billion merger with Time Warner. Mr. Delrahim has said the deal will hurt competition and lead to higher prices for cable customers. ATT and Time Warner have strongly disputed the claims in a federal trial that is expected to end this month.

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The Justice Department’s antitrust chief, Makan Delrahim, has vowed to scrutinize industry standards that he believes could hurt competition. Credit Stephen Voss for The New York Times

Currently, most mobile phones use SIM cards, which contain unique identifying information about a user and are inserted into the devices so the phones can function. People typically have to buy a new SIM card when changing carriers.

The eSIM technology, which was introduced in early 2016, is embedded in mobile phones and other devices so that people do not need SIM cards anymore.

The eSIM technology is supported by gadget makers including Apple, Google and Microsoft, as well as several wireless carriers globally and in the United States. The Apple Watch 3, Google Pixel 2 smartphone and Microsoft Surface all have eSIM abilities, for example. For companies like Apple, eSIM technology would free up storage space in devices to use for other technologies like bigger processors and batteries. It would also make it easier for people to use their devices while traveling for business.

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The push by the major carriers to restrict the flexibility of eSIM runs counter to a movement in which consumers were gaining more flexibility to move from carrier to carrier. In late 2013, under pressure by the Federal Communications Commission, the wireless industry agreed to let people take devices off any particular network without penalty once the devices were fully paid for.

After the formal complaints against ATT and Verizon were filed, several device makers and other wireless companies voiced similar concerns to the agency about the carriers’ actions around eSIM, four people familiar with the investigation said. The investigation may also include other major American carriers, another person said.

“The actions would limit choice for consumers and harm competition,” said Ferras Vinh, a policy expert at the Center for Democracy and Technology.

In a private meeting of a task force called G.S.M.A. North America this year, ATT and Verizon pushed for the ability to lock phones to their networks, bypassing the purpose of eSIM technology, said Harold Feld, a senior vice president of Public Knowledge, a nonprofit consumer group, who was briefed on the meeting. Verizon has said it needed to be able to lock down phones to prevent theft and fraud.

“There is a constant problem with industry standards-setting organizations that on the one hand allow the industry to come together for the purpose of efficiency but can be very anticompetitive and operate in secrecy,” Mr. Feld said.

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Article source: https://www.nytimes.com/2018/04/20/technology/att-verizon-investigate-esim.html?partner=rss&emc=rss

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