Feeling left out

When news surfaced in late August that a New Jersey teenager had rigged his iPhone to work with T-Mobile's network, a message may have been sent to big wireless carriers clinging to handset exclusivity. For attorney Carri Bennet, it just made her laugh.

“It was bound to happen,” said Bennet, founding partner of Bennet & Bennet PLLC of Bethesda, Md. “I think it definitely highlights this idea to stop tying these things to the carriers and their networks.”

And that could be good for rural providers. “Honestly, I think it would be great to be able to go to Radio Shack and buy a handset and then go hook it up to your local carrier's service or to be able to buy handsets from anybody,” Bennet said. “That's what's missing for them right now.”

Access to popular handsets is a problem for rural carriers, Bennet said. They generally must wait a year or so after a handset's introduction before they can get it. Handsets are often initially available to a single carrier for a set period of time. For example, the Treo was exclusive to Sprint when it debuted, and the iPhone is tied to AT&T through 2009.

“When you only have 3000 or 4000 customers, you don't have that buying power or that ability to get things like the iPhone made for you,” she said.

Furthermore, advertising by big carriers has spilled over into rural markets, Bennet said. Customers may drive many miles away to a mall to get a fancy new handset unavailable locally — and with it, a big carrier's phone plan.

Rural telcos know this pain well, but there are recent examples of things changing to their benefit. In late July, the FCC announced guidelines for a slice of the 700 MHz spectrum up for auction next year. The winner of that spectrum — which Bennet called “really good beachfront property spectrum, especially for rural carriers” — will be required to make that frequency device- and application-neutral.

“That could be really good for rural companies because they could compete better against nationwide carriers in their market by being able to offer those kind of handsets,” she said.

Bennet believes it was AT&T's deal with the iPhone that pushed FCC Chairman Kevin Martin to support a neutrality requirement. Big application makers such as Google have been pushing for open access for wireless, too, and this development gives them a little of what they want.

“I think we are going to see a push to break the stranglehold that large wireless carriers have with the handset manufacturers and those special deals,” she said.