DOJ Wimps Out On Wireless Sector eSIM Antitrust Investigation

from the what-collusion? dept

Last year, the DOJ announced it had launched an investigation into whether AT&T, Verizon and a telecommunications standards organization had conspired to make it harder for consumers to switch mobile carriers. At the heart of the controversy was eSIM, a technology that's supposed to make it easier than ever to switch carriers without consumers needing to buy and install a new SIM card. With eSIM, user identification technology of a traditional SIM card is instead transferred to the device's processor or modem itself. Ideally, that could let a consumer switch carriers within just a few seconds.

But given AT&T and Verizon had already been losing subscribers hand over fist to smaller competitors like T-Mobile, they had a vested interest in ensuring this technology never fully materialized. As a result, they leveraged their influence over the GSM Association (GSMA) -- a trade association for mobile network operators -- to hamstring the technology's rise. By and large this was done by ensuring the inclusion of bizarre and arbitrary restrictions and bureaucracies the DOJ found served no technical purpose outside of slowing the actual implementation of the tech and locking users to one carrier.

Just before Thanksgiving the DOJ quietly did a news dump announcing the completion of its two year investigation into the sector collusion, and it's not particularly impressive. According to the DOJ announcement, the investigation has ended with no punishment or penalty of any kind. Why? The industry effectively pinky swore to the DOJ that it would try to do better in the future:

"The Antitrust Division’s investigation revealed that, in recent years, the GSMA used its industry influence to steer the design of eSIMs technology in mobile devices. In response to the investigation, the GSMA has drafted new standard-setting procedures that will incorporate more input from non-operator members of the mobile communications industry. The new standard-setting process will have a greater likelihood of creating procompetitive benefits for consumers of mobile devices; it will also curb the ability of mobile network operators to use the GSMA standard as a way to avoid new forms of disruptive competition that the embedded SIMs (eSIMs) technology may unleash."

Granted, just because the industry organization created voluntary standards doesn't mean anybody will actually adhere to them. But that was enough for the Trump DOJ, which will end the inquiry without actually doing much of anything to, you know, actually stop the behavior or punish sector giants for past misdeeds. Did I mention that the DOJ is now run by a former Verizon lawyer?

Recall, the antitrust investigation began because Apple and one wireless carrier (likely T-Mobile or Sprint) filed formal complaints with the Justice Department, saying AT&T and Verizon were abusing the standards process to hamstring competition and innovation. Apple was excited about eSIM because the elimination of a physical SIM card would free up design space for additional features and improve the customer experience. Smaller carriers like it because it would technically make it a snap to change carriers. AT&T and Verizon did everything in their power to hamper the effort.

Ultimately the GSMA, AT&T and Verizon pinky swore they'd play nice going forward, which is effectively a worthless promise. While a big deal, this is just one of countless offenses AT&T and Verizon have engaged in over the years to ensure that the industry remains less competitive than advertised, leading to US wireless prices being some of the highest in the developed world. And just like those past offenses, the US government is, by and large, generally ok with that.

Filed Under: antitrust, competition, doj, esim, mobile carriers
Companies: apple, at&t, verizon

DOJ Investigating AT&T, Verizon for Making It Harder To Switch Wireless Carriers

from the ill-communication dept

AT&T and Verizon have enjoyed a stranglehold over fixed and mobile residential broadband for years. They also enjoy a relative monopoly over broadband business data services, a market that services everything from cellular tower backhaul to ATMs. Given that both companies have a rich, deep history of engaging in all manner of dubious behavior to keep these markets as uncompetitive as possible, there would be absolutely no shortage of ammunition for regulators seeking to punish them on antitrust grounds.

Given that both companies are politically powerful campaign contributors, that generally doesn't happen, regardless of the party in power.

Which is why it's arguably entertaining to see the same Trump administration that has made it easier than ever for these companies to behave anti-competitively (net neutrality, privacy) conducting an investigation into whether AT&T and Verizon colluded to making switching carriers more difficult than it needs to be:

"The Justice Department has opened an antitrust investigation into potential coordination by AT&T, Verizon and a telecommunications standards organization to hinder consumers from easily switching wireless carriers, according to six people with knowledge of the inquiry."

At the heart of the controversy is eSIM, a technology that's supposed to make it easier than ever to switch carriers without consumers needing to buy and install a new SIM card. With eSIM, user identification technology of a traditional SIM card is instead transferred to the device's processor or modem itself. Ideally, that could let a consumer switch carriers within just a few seconds. Given that AT&T and Verizon have increasingly been losing customers to T-Mobile, they apparently worked with an industry standards group to try and defeat one of the central advantages of the technology:

"The technology lets people remotely switch wireless providers without having to insert a new SIM card into a device. AT&T and Verizon face accusations that they colluded with the G.S.M.A. to try to establish standards that would allow them to lock a device to their network even if it had eSIM technology."

Ironically this is probably among the least egregious offenses these companies have engaged in during their thirty year anti-competitive dominance, but it's an interesting paradigm shift all the same. And it's an indication that Trump DOJ antitrust head Makan Delrahim isn't the same sort of blind corporatist ideologue we've seen stumbling around elsewhere in the administration (FCC boss Ajit Pai comes quickly to mind). Delrahim's the same guy spearheading the Trump administration's opposition to AT&T's latest megamerger, a move some wondered might have been motivated by cronyism, not consumer welfare.

But with this move there's indications that Delrahim might genuinely be concerned about consumer welfare, a notable standout for an administration that's been tripping over itself to make life easier than ever for companies trying to behave anti-competitively on the broadcast and telecom fronts, whether that's the gutting of media consolidation rules to Sinclair's specific benefit, to gutting net neutrality just so regional telecom monopolies can distort a level playing field and further cash in on a lack of last-mile broadband competition.

Granted American history suggests it's more than likely this inquiry goes nowhere (Verizon says it's just a "difference of opinion,") but it's still interesting to see at least one member of the Trump administration not actively making media consolidation and monopoly power problems worse.

Filed Under: antitrust, collusion, doj, esim, switching carriers
Companies: at&t, verizon