DOJ Wimps Out On Wireless Sector eSIM Antitrust Investigation

Failures

from the what-collusion? dept

Last year, the DOJ announced it had launched an investigation into whether AT&T, Verizon and a telecommunications standards organization had conspired to make it harder for consumers to switch mobile carriers. At the heart of the controversy was eSIM, a technology that’s supposed to make it easier than ever to switch carriers without consumers needing to buy and install a new SIM card. With eSIM, user identification technology of a traditional SIM card is instead transferred to the device’s processor or modem itself. Ideally, that could let a consumer switch carriers within just a few seconds.

But given AT&T and Verizon had already been losing subscribers hand over fist to smaller competitors like T-Mobile, they had a vested interest in ensuring this technology never fully materialized. As a result, they leveraged their influence over the GSM Association (GSMA) — a trade association for mobile network operators — to hamstring the technology’s rise. By and large this was done by ensuring the inclusion of bizarre and arbitrary restrictions and bureaucracies the DOJ found served no technical purpose outside of slowing the actual implementation of the tech and locking users to one carrier.

Just before Thanksgiving the DOJ quietly did a news dump announcing the completion of its two year investigation into the sector collusion, and it’s not particularly impressive. According to the DOJ announcement, the investigation has ended with no punishment or penalty of any kind. Why? The industry effectively pinky swore to the DOJ that it would try to do better in the future:

“The Antitrust Division?s investigation revealed that, in recent years, the GSMA used its industry influence to steer the design of eSIMs technology in mobile devices. In response to the investigation, the GSMA has drafted new standard-setting procedures that will incorporate more input from non-operator members of the mobile communications industry. The new standard-setting process will have a greater likelihood of creating procompetitive benefits for consumers of mobile devices; it will also curb the ability of mobile network operators to use the GSMA standard as a way to avoid new forms of disruptive competition that the embedded SIMs (eSIMs) technology may unleash.”

Granted, just because the industry organization created voluntary standards doesn’t mean anybody will actually adhere to them. But that was enough for the Trump DOJ, which will end the inquiry without actually doing much of anything to, you know, actually stop the behavior or punish sector giants for past misdeeds. Did I mention that the DOJ is now run by a former Verizon lawyer?

Recall, the antitrust investigation began because Apple and one wireless carrier (likely T-Mobile or Sprint) filed formal complaints with the Justice Department, saying AT&T and Verizon were abusing the standards process to hamstring competition and innovation. Apple was excited about eSIM because the elimination of a physical SIM card would free up design space for additional features and improve the customer experience. Smaller carriers like it because it would technically make it a snap to change carriers. AT&T and Verizon did everything in their power to hamper the effort.

Ultimately the GSMA, AT&T and Verizon pinky swore they’d play nice going forward, which is effectively a worthless promise. While a big deal, this is just one of countless offenses AT&T and Verizon have engaged in over the years to ensure that the industry remains less competitive than advertised, leading to US wireless prices being some of the highest in the developed world. And just like those past offenses, the US government is, by and large, generally ok with that.

Filed Under: antitrust, competition, doj, esim, mobile carriers
Companies: apple, at&t, verizon