Regulators in Washington - That Phrase Always Worries Me

I'll start with a snippet from this article. Then give my opinion based on years of working in the Cellular Industry.

by Troy Wolverton
Mercury News
7/6/2009
Regulators in Washington appear to be drawing a bead on one of the more frustrating features of the cell-phone business: The exclusive deals that tie certain cell phone models to a particular carrier, such as the one that makes Apple's iPhone available only through AT&T.

The Federal Communications Commission has said it will explore the issue, and a congressional committee held hearings on it last month. On Monday, The Wall Street Journal reported that the U.S. Justice Department has opened an initial review of the telecom industry that could explore whether those exclusive deals violate antitrust laws.

But barring such deals would not necessarily guarantee that consumers will be able use the phone they want on the network of their choice. Consumers will still face technical incompatibilities between networks that make it impossible to use certain phones with particular carriers. Click Here To Read More

My thoughts:
As you read this story further, it is very scary. The government wants to punish businesses for being successful and being competitive. They are worried that Verizon and ATT are too big and that they stifle competition. The exclusivity agreements is a major part of the issue, the iPhone is what they are targeting. I believe the government is again about to overstep it's authority. You cannot tell a business that they are not allowed to make agreements with other businesses.

An example would Granny Smith bakes the best cookies in town and sells them from her front porch. There are 3 stores in town that want to sell her cookies. Granny chooses Harry's Grocery Store and they sell her cookies everyday with many people going to that store to buy her cookies. It is a very successful business agreement.

North End Groceries and George's Grocery Store are mad because Granny Smith and Harry's Grocery Store made that deal. They complain to the government that Harry's has a monopoly on Granny Smith's Cookies. " It isn't fair," they say, "every store should have Granny's Cookies and we are losing market share by this unfair business agreement."

The answer is the free market and creativity. Those other stores should get creative to generate business and customer flow into their stores. It is Un-American for a business to complain about such instances. It is also Un-American for the government to stick it's nose in the private sector and decide what business agreements are fair and which are not. Antitrust laws in my opinion are holding back businesses and it stifles competiton. I believe the private sector is over regulated and 99.9% of Government Regulators should be relieved of their duties to join the private sector.

What is ridiculous about this whole exclusivity issue is that every Cellular Provider has exclusive agreements. T-Mobile has exclusivity agreements with HTC on the G-1 Google Phone and the Sidekick. ATT has exclusivity on the iPhone. Verizon has exclusivity on the Blackberry Storm, LG Env line, LG Dare, and few others. Sprint has exclusivity on Palm Pre, Sanyo Katana, and Samsung Rant.

Each has something different with their plans. ATT has Rollover Minutes, Verizon has Friends and Families, T-Mobile has My Faves, and Sprint starts their nights at 7pm. Each company has carved out their own niche and people mostly choose a cell phone plan based what network their friends and family use. Some do go with companies that are little more credit lenient such as Sprint and T-Mobile.

Part of the focus may also venture into the pre-paid cell phone market where Verizon is king. There are currently limtations on Verizon with their pre-paid. Unlike ATT and T-Mobile you can't buy a pre-paid phone to use immediatley on Post-Paid Verizon or Sprint account because they use cdma technology. ATT & T-Mobile you can swap the sim cards with their pre-paid phones. Also, Verizon has a restriction on their pre-paid phones, the ESN (serial number) of a pre-paid phone must be active on a pre-paid account for six months before it can used on a post-paid account.

All of this is quickly bringing to light an agenda that is inch by inch exerting tyranical authority of government over the private sector. Our Government has reached it's hands too far into the private sector, not to mention what it is doing in the lives of individuals. People who have never worked in or owned a business are now making major policy decisions on issues they know nothing about.

I believe if the Founding Father's were fumed about King George and his policies, imagine if they were here today and saw the mess that their sacrifice has become. I often think of the anecdotal story of Ben Franklin leaving Constitution Hall in September of 1787, when a lady asked him this:
“Well, Doctor, what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it,” Ben replied.

I wonder if we will be able to keep it.