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US to investigate AT&T and Verizon over wireless collusion claim

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WASHINGTON: The US has opened a probe into alleged coordination by AT&T Inc, Verizon Communications and a telecommunications standards organisation to hinder consumers from easily switching wireless carriers, a person briefed on the matter said on Friday.


Verizon and AT&T acknowledged the government probe and said they were working with regulators.


At issue is a technology that could make carriers’ business more volatile. Called eSIM, it allows consumers to switch wireless providers without having to insert a new physical SIM card, an identifying microchip. That makes it easier to compare wireless networks and easily select a new service when desired.


Verizon called the probe “much ado about nothing,” adding that it has been working with the Justice Department for several months “regarding the inquiry,” according to spokesman Rich Young.


The New York Times reported on Friday that the Justice Department had opened an investigation about five months ago after at least one device maker and one wireless carrier filed formal complaints with the Justice Department.


The Justice Department sent demands to AT&T, Verizon and the GSMA, an industry standards-setting group, on efforts to thwart eSIM.


Apple Inc and other equipment makers have complained to the Justice Department about wireless carrier practices related to eSIM technology, two sources familiar with the matter said. Apple declined to comment.


“The reality is that we have a difference of opinion with a couple of phone equipment manufacturers regarding the development of eSIM standards. Nothing more,” Verizon’s Young said.


An AT&T spokesman said in an email: “Along with other GSMA members, we have provided information to the government in response to their requests and will continue to work proactively within GSMA, including with those who might disagree with the proposed standards.”


News of the probe comes at a critical time for AT&T which is being sued by the Justice Department to stop its deal to buy media company Time Warner Inc.


The US government has argued in a trial that is nearing completion that the proposed deal would spur AT&T to charge its pay TV rivals more for Time Warner content.


However, Judge Richard Leon, who will decide if AT&T will be allowed to buy Time Warner, is unlikely to consider a report of potential wrongdoing by the wireless giant because it is irrelevant to the merger trial under way in Washington, said Seth Bloom, a veteran of the Justice Department’s Antitrust Division.


The Department of Justice and the GSMA, the telecommunications standard setting group, declined to comment on news of the investigation.


Shares of AT&T and Verizon dipped after the initial Times report, with AT&T closing down 0.4 per cent at $34.67, and Verizon ending off 1.1 per cent, at $47.90.


The person briefed on the matter said that other wireless operators potentially received inquiries from the government. — Reuters


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