Exclusive deals that lock cool handsets to a single carrier will soon get scrutiny from federal regulators, the acting head of the FCC announced Thursday.

Theannouncement (.pdf) comes just a day after a Senate subcommittee heard competing arguments over whether deals like Sprint's six-month lock on the Palm Pre and AT&T's long-running U.S. monopoly on the iPhone stifle competition and hurt consumers. Earlier this week, three Senate Democrats Amy Klobuchar (Minn.), John Kerry (Mass.), Byron Dorgan (North Dakota), along with Roger Wicker (R-Miss.) sent a letter to Copps urging the agency to take a close look at the deals' competitive impact.

Federal Communications Commission Acting Chairman Michael Copps said today (.pdf) that the FCC will open a formal proceeding to "determine whether some of these arrangements adversely restrict consumer choice or harm the development of innovative devices ...."

In a Senate hearing yesterday, Penn State professor Robert M. Frieden said 9 of the 10 top selling phones were under exclusive deals with one or more of the nation's big four carriers, save for the most popular phone the Blackberry Curve.

Frieden said that arrangements for how Americans buy cellphones – the so-called "third screen" – was nothing like how people bought computers and televisions, where service and devices are purchased separately.

Jack Rooney, the CEO of the nation's fifth largest carrier, US Cellular, said exclusives harmed smaller companies like his own and rural Americans.

"Wireless carriers have hijacked consumers' access to handsets," Rooney said. "These arrangements deny consumers the right to buy the device of their choosing and use it on the network of thier choosing."

Paul Roth, AT&T's president of retail sales, defended the practice to lawmakers, saying that the deals drive innovation by guaranteeing device makers that enough will be purchased to make innovation worthwhile.

"Since the iPhone was launched, we have seen the greatest pace of innovoation that we have ever seen in this industry," Roth said. "In order to compete, other companies had to partner [...] because AT&T has an exclusive."

"I think consumers are really benefiting. We are the envy of the world now."

But Frieden said that model of exclusive, subsidized phones encourages carriers to cripple their phones and lock them down.

"When you [...] limit the versatility of a device primarily to recover the subsidy, innovation suffers," Frieden said.

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