Earlier this year, the U.S. Department of Justice (DOJ) launched an investigation of four major telecom carriers and the Global System for Mobile Communication Association (GSMA), an international trade body that represents the interests of mobile network operators and sets industry standards, for suspected anti-competition collusion.
Officials requested information in February from AT&T (NYSE: T), Verizon (NYSE: VZ), T-Mobile (NYSE: TMUS), and Sprint (NYSE: S) after other telecom companies, like Apple (NYSE: AAPL), filed complaints. The companies stand accused of working with GSMA to stifle the development of eSIM technology by having the GSMA establish a standard that would lock devices to a specific carrier regardless of whether or not the device utilized an eSIM. The GSMA confirmed that it had developed such a standard, but had not implemented it, and will only consider doing so pending the results of the DOJ investigation.
eSIM, which would allow consumers to switch between wireless providers without having to purchase or insert a new SIM card into their device, would lead to a higher turnover rate and fewer subscriptions for major carriers like AT&T and Verizon-who currently control 70 percent of the wireless market-as consumers could more easily transition to cheaper plans with other carriers. These seamless switches between carriers would save consumers from potential unwanted fees, as well as the exorbitant roaming charges incurred when a consumer travels internationally. The DOJ believes that this collusion could be a violation of antitrust law, as it indicates an attempt to actively sabotage free-market competition. The department's antitrust chief, Makan Delrahim, stated that this investigation was part of a larger issue regarding intellectual property (IP) standards.
In a speech earlier this month, Delrahim reaffirmed the importance of cracking down on collusion in the industry to protect both the growth of the market as well as consumers: "In the context of antitrust and IP, we will be inclined to investigate and enforce when we see evidence of collusive conduct undertaken for the purpose of fixing prices, or excluding particular competitors or products. [Earlier cases] are particularly helpful in illuminating our concern about situations in which competitors either corrupt the standard setting process so that decisions are not made by a balanced group of IP holders and implementers, or where competitors reach anticompetitive agreements outside of the scope of a legitimate standard setting exercise, with a detrimental effect on competition."
The DOJ has been pursuing multiple antitrust cases with telecom carriers, filing another lawsuit against AT&T at the end of 2017 to block a merger with Time Warner. As with the current mobile carrier case, the DOJ claimed that the merger would ultimately harm consumers by increasing costs and reducing "new, emerging innovative options" by granting AT&T control over Time Warner's extensive library of programming and content which include, but are not limited to: HBO, CNN, Warner Bros., Hulu, and Turner Broadcasting Systems.
While neither case has been settled, both sides seem optimistic about their future prospects, with some analysts claiming that industry standard-setting organizations are clearly in the wrong while others believe the investigation will ultimately show that there was no collusion or ill intent.