Some doubt whether DOJ has case to reform exclusive phone deals

carriers were harmed.

"There have been a few voices shouting for openness and creating more competition, especially around the iPhone, but in the overall scheme of things, I don't think this is a big enough issue right now to have the government take up valuable [time] when so much else is on their plate," said Jack Gold, an analyst at J. Gold Associates.

Gold said it will take many more complaints, especially by cellphone customers rather than smaller carriers, before government agencies will do anything.

"This is a very competitive marketplace," added Jeff Kagan, an independent analyst based in Atlanta. Kagan said that the only thing customers are being deprived of is "early access" to a device like the iPhone on the carrier they prefer.

Still Kagan said with all the federal government involvement in the bailouts of the financial and auto industries, it seems more likely that the DOJ would move forward to take some kind of action on exclusive deals.

While Gold said it seems unlikely an anticompetitive case could be made against exclusive deals, he agreed that doing so would likely have short-term and long-term implications on carriers and customers.

Among those implications: First, phone subsidies that bring down the cost of smartphone hardware would be reduced or eliminated over a period of time, Gold said. Second, monthly voice and data fees would go up initially, but would come down eventually since the carriers would have to compete without the benefit of a lock-in of users for two years.

Third, without the carriers' subsidy, users would be paying more for their smartphones and would hold on to them longer. Fourth, smaller competitors to major carriers would have a level playing field and offer no-name service at a good price, much like a no-name gas station, Gold said.

Fifth, carriers would be more likely to compete to sell applications in online app stores to generate revenues. They would even cross-sell their applications to phones on other networks.

Finally, device makers wouldn't get any money from carriers for exclusive deals, and would need to resort to being more consumer-oriented, selling smartphones like PCs are sold today with extra features and rebates. As a result, carriers would have much less influence with makers on specific features and functions, since manufacturers would try to make universal devices for all of the carriers.

An AT&T spokeswoman said the carrier was unaware of any formal DOJ investigation, adding AT&T had not been asked to provide any information. She also defended the wireless industry in general. "The U.S. wireless industry is highly competitive, and, as a result, delivers terrific innovation, many choices, and attractive pricing for all customer segments," she said.