The Federal Communictions Commission says it wants to examine exclusive wireless carrier deals with handset makers because it may be "anti-competitive. But Bernstein analyst Craig Moffett says "it’s laughable" assertion.
Moffett argues that the Federal Communications Commission and the Department of Justice are wasting their time reviewing the wireless market. Wireless providers don't have market power, handset manufacturers increasingly do.
Apple has taken any power that AT&T has had, Bernstein argues.
Wireless prices are falling as carriers compete, handset makers are gaining more power in the ecosystem and the wireless game is about apps, a game carriers cannot control.
"The argument that handset exclusivity is anticompetitive also comes at a curious time," says Moffat.
"Indeed, a case can be made that handset makers – well, Apple, actually – have played one carrier off against the other in virtuoso fashion, and are on the brink of stealing the wireless business from the wireless carriers," says Bernstein.
Moffett says iTunes provides a better analogy.
"Apple’s direct-to-consumer end run around the wireless industry is in many ways simply a repeat of its brilliant negotiation with the music industry at the dawn of iTunes back in 2001," Moffat says. "Less than a decade later, Apple has managed to capture considerable value from the music industry as it sells ever more iPods."
Customer loyalty is to Apple, not AT&T.
"Something more profound than just short term economics is afoot," he says. "Apple has radically tilted the strategic playing field away from the network operator in favor of the device manufacturer"
"Remarkably, Apple has so thoroughly stolen the customer relationship – who would argue that Apple iPhone customers’ first affinity is to the device rather than to the network – that the network is not only irrelevant, it is rather a source of derision," says Moffat.
The iPhone seems to be doing just fine at "wrecking" the wireless business without the government’s help.
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