In 2018, AT&T, Verizon, and the G.S.M.A. (a group that sets mobile industry standards) were investigated by the Justice Department for collusion. Recently, a technology had been developed called eSIM which allowed users to easily switch phone carriers without switching their SIM card. It was found that these companies had been working to thwart the development of this technology.
If this new eSIM technology became widespread, it could mean consumers could much more easily switch to new carriers who offered more competitive prices than Verizon and AT&T who at the time, controlled ~70% of the wireless subscriptions in the United States. By locking a customers SIM card to their company, it would mean that customer would most likely stay a long time customer of that company, which in turn would most likely lead Verizon and AT&T to control an even larger amount of the market.
However, by not allowing customers to switch to another provider even if they had better prices, it would mean competition in the market would die out. “The actions would limit choice for consumers and harm competition,” said Ferras Vinh, a policy expert for the Center for Democracy and Technology. In in oligopoly, companies can sometimes subconsciously agree on a situation that would benefit them both, however in this instance, it was clear collusion. It would result in efficiency for both companies, but also be anticompetative, hurting consumers and other producers.
Nowadays, although SIM cards are still locked to certain carriers, eSIMs are becoming widespread in phones such as the Google Pixels, Apple iPhones and Watches, and Microsoft Surfaces.
Sources:
https://www.nytimes.com/2018/04/20/technology/att-verizon-investigate-esim.html
https://www.zdnet.com/article/doj-probing-at-t-verizon-and-regulatory-body-for-esim-collusion/
This is interesting because the smartphone industry uses these same tactics for other aspects of the phone. For example: Phone companies constantly change their charging connections and charging speeds. When people change phones or change their phone company they are forced to buy different charging ports. This is a lucrative plan for the phone companies so that they can make a larger profit. It is almost like they collude to make sure they have different connection ports.
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