Report: Justice Investigating AT&T and Verizon for Collusion

The Justice Department is investigating potential collusion by AT&T, Verizon, and an industry standards group to thwart customers from easily switching wireless carriers, according to a New York Times story citing six people with knowledge of the inquiry.

Justice is investigating a potential plot to hinder a new technology called eSIM, short for embedded-SIM, the New York Times reported. The new chips would allow people to switch carriers by simply messaging their old and new carriers, with no need for having to insert a new SIM card into the device.

AT&T and Verizon face accusations that they worked with the industry group G.S.M.A. to create standards that would allow them to lock phones to their network despite having  the eSIM technology, according to the New York Times.

The investigation was opened after the Justice Department recieved formal complaints from at least one wireless carrier and one device maker.

Apple and Samsung have both been pushing the telecom industry to adopt eSIM technology. Some of Apple’s iPads already contain eSIM technology, according to industry sources. The Apple Watch 3 and Google’s Pixel 3 also have eSIMs installed.

By making it easier to switch carriers, eSIM technology could increase competition for customers. Carriers might be pushed to lower prices or improve services to prevent customers from switching over.

AT&T and Verizon are the giants of the U.S. wireless business, controlling about 70 percent of all wireless subscriptions.

A spokesman for Verizon downplayed the importance of the investigation.

In a statement to the website Verge, Verizon said:

The accusations regarding this issue are much ado about nothing. We are striving to provide a better experience for the consumer. The reality is that we have a difference of opinion with a couple of phone equipment manufacturers regarding the development of e-SIM standards. Nothing more. We’ve been proactively and constructively working with the Department of Justice for several months regarding this inquiry and we continue to do so. As we have from the outset, we will continue to work with Federal officials and others in the industry as we strive to find a mutually acceptable solution.

AT&T is already locked in a legal battle with the Justice Department over its plan to acquire Time Warner. The Justice Department says its merger will hurt competition and lead to higher prices for customers.