The U.S. Justice Department is investigating AT&T Inc. T and Verizon Communications Inc. VZ for allegedly obstructing consumers from changing wireless carriers, according to The New York Times.
The DOJ suspects possible collusion with a telecommunication standards group to lock clients into their respective networks by thwarting eSIM technology, which allows the remote switch of wireless providers without SIM-card transfers.
An AT&T spokesperson told Benzinga in a statement that the company is aware of the investigation.
"Along with other GSMA members, we have provided information to the government in response to their requests and will continue to work proactively within GSMA, including with those who might disagree with the proposed standards, to move this issue forward."
Verizon issued a statement over the weekend, saying, “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.”
Why It’s Important
The investigation, which has been ongoing for the last five months, does not help AT&T as it resists an antitrust suit to close an $85.4-billion Time Warner Inc TWX acquisition.
Shares plunged on the Friday afternoon report, with Verizon down 1.6 percent and AT&T 1 percent at one point. Time Warner and Sprint Corp S also fell. T-Mobile Us Inc TMUS moved on the news as well.
What’s Next
If the DOJ finds evidence of antitrust operations, it could file a lawsuit against the offending entities. The timeline and progress of its investigation is yet unknown.
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