Exclusivity Agreements for Cellphones: Support Free Markets

Parade.com had an article in this past Sunday’s magazine discussing exclusivity agreements between cell phone manufacturers  and cell network providers.

Some lawmakers and industry experts say such arrangements limit consumer choice, stifle competition, and keep rates artificially high. “Consumers should be allowed to access any network with whatever device they choose, just as they do with their televisions and computers,” says Rob Frieden, a law professor at Penn State University.

It is ridiculous to compare cellphone networks, which are built and maintained by the network provider, to over-the-air television signals and the internet. Companies use the exclusivity agreements to provide better service at a lower price to consumers. For example, Apple gets some payment from AT&T for each iPhone customer they get, and AT&T gets a good set of customers and a better economy of scale. Consumers get an iPhone and plan at a lower rate than they otherwise could get. And if they are not happy, sonsumers get get another cellphone from a different provider. It even quotes Sen. Kerry (who served in Viet Nam, as Rush says):

The Federal Communications Commission is investigating whether exclusivity agreements “restrict consumer choice or harm the development of innovative devices.” Sen. John Kerry (D., Mass.) is considering legislation to ban such agreements.

The poll on the page was at 87-13 against the free markets, and for government regulation. Please go to the Parade article and tell them your opinion. Ignore the comments; they are quite predictable in content.

Thinking about this further, perhaps John Kerry would support getting rid of all exclusivity agreements. Erick spoke about one such agreement yesterday. Unions restrict the choice for consumers of labor, those, of course, being businesses who hire people to do things. These restrictions cause increased costs, and thus must also be on Sen. Kerry’s hit list.