Feds set to launch investigation into telco abuse of market power

Sweetheart handset deals and heavy-handed control of broadband networks may have landed Big Telecom-specifically Verizon and AT&T-in the sights of the Department of Justice, reports The Wall Street Journal. A WSJ story today says the Obama administration may be looking to use the Sherman Antitrust Act to regain control of an industry that had free reign during the Bush years.

While AT&T's exclusive deal with Apple for the iPhone may be the headline, the deeper intent of any probe might be to determine if AT&T and Verizon have too much control over the infrastructure in an ever-consolidating telecom market.  

The Journal reports the two companies claim 60 percent of the nation's wireless customers, have 90 million landlines between them and control a large portion of the Internet backbone. Their assets make them formidable and, critics posit, give them an unfair advantage in the market that they use abusively. Thus, the antitrust chatter.

Even so, some observers feel proving any telecom companies participate in anti-competitive actions will be a tough row to hoe.

"It would be a very hard case to make," Donald Russell, a one-time DOJ antitrust attorney familiar with the telecom industry, told the Journal. "You don't have any firm that's in a dominant position. Usually, you need to show a firm has real market power."

For more:
- See this Wall Street Journal article

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