Why DoJ Won't Get You a Verizon iPhone

News that the Justice Dept. has launched an antitrust investigation into wireless phone carriers probing, among other things, whether handset exclusivity arrangements violate antitrust laws, has again raised hope that AT&T’s exclusive grip on the iPhone may soon be broken. It’s not going to happen, nor will T-Mobile have to share the Android G1 and myTouch handsets or Sprint the Palm Pre.

I’ve written before about the problem of technological exclusivity, which can make contractual exclusives largely irrelevant. Pressure, or a suit, from Justice might force the mega-carriers to play more nicely with an assortment of small rural carriers who get frozen out by exclusivity deals, but it’s not going to do much to affect relations among the majors, unless the government plans to take the dubious and unlikely step of getting into the business of engineering handsets.

The problem is that the four big U.S. carriers use two incompatible technologies on a hodgepodge of frequencies. For a phone to work on a given networks, three conditions all have to be met: The phone must be authenticated on the network, it must have the right kind of radios, and the radios must operate at the right frequencies. Sprint and Verizon use both 2G and 3G versions of the CDMA2000 technology developed by Qualcomm. AT&T and T-Mobile use GSM standards developed by the 3rd Generation Partnership Program (3GPP) and the European Telecommunications Standards Institute. And no two carriers using the same technology share all of the same frequencies.

The bottom line is that 3G handsets made for AT&T, inlcuding the iPhone, will generally work in 2G mode on the T-Mobile network but not in 3G, and vice-versa, because of the frequency differences. Most European handsets will also have difficulty using 3G in the U.S. For example, the U.S. version of Nokia's E71 smartphone, the E71x is designed for the AT&T network and has 850 and 1900 MHz 3G radios. The European version is designed for 3G at the European standard of 2100 MHz. The iPhone does 3G at 850 and 1900 MHz for AT&T and 2100 for the rest of the world.

Things are a bit better in CDMA-land. Verizon phones will generally work--from a purely technical point of view--on the Sprint network. 1900 MHz-only Sprint phones will work on the Verizon network, but may get poor coverage in some places where a Verizon handset will do fine. The Palm Pre is an exclusive on Sprint but there's no technical reason why it won't work on Verizon--it has both 1900 Mhz and 800 MHz 3G radios.

In general, it's much easier to re-engineer a phone to run on different frequencies than it is to make it work on a different technology. A version of the iPhone that would work on Verizon or Sprint does not seem likely any time soon, no matter what Justice does. But Palm is making a GSM version of the Pre that will show up in Europe by the endof the year, and could come to the U.S. on AT&T or T-Mobile, more likely the former.

There are a handful of phones that offer both CDMA and GSM technology, most notably the BlackBerry Storm (Verizon), 8830 Global (Verizon and Sprint), and the forthcoming Tour (Verizon and Sprint). But the dual technology adds significant cost and also requires complicated business arrangments for roaming. I expect these dual-mode phones will continue to be niche products aimed primarily at corporate buyers.