Reassessing Tying Arrangements at the End of AT&T's iPhone Exclusivity

Abstract:     
Tying arrangements are common in the wireless telecommunications industry. Wireless networks compete for exclusive contracts to offer popular mobile devices. In January 2011, one of the most notorious exclusivity contracts ended when Apple announced that the iPhone would be available on the Verizon network, ending four years of iPhone exclusivity on AT&T. This long-anticipated move has been hailed as progress for consumer choice and competition in the industry. Such enthusiasm is rooted in the Supreme Court’s enduring stance against tying arrangements - a position that is based on unreasonable goals and illusory harms. This Article examines the Supreme Court’s tying jurisprudence in order to understand the harms that the Court seeks to combat. It then applies that understanding to a context-specific analysis of tying arrangements in the wireless telecommunications industry. In finding that AT&T’s iPhone exclusivity has had significant pro-competitive effects and has fostered innovation in the industry, the Article exposes the misguided basis of the Court’s tying doctrine and argues that it is time to reform the Court’s stance against tying.

Number of Pages in PDF File: 67

Keywords: tying arrangements, wireless telecommunications, antitrust

JEL Classification: K21

Accepted Paper Series