Ending Handset Exclusivity Won't Mean a Phone That Can Roam

[qi:gigaom_icon_mobile] FCC acting chairman Michael Copps said yesterday afternoon that the agency would investigate exclusivity deals between carriers and handset makers, and “take action” if they were found to cause harm to consumers. While the largest cellular carriers are protesting the probe, consumer advocates are thrilled. However with two of the four largest U.S. carriers operating on a CDMA network and the other two operating on a GSM network, eliminating exclusivity would mean handset makers would have to build a minimum of two versions of each phone, not that the phones would be interchangeable on U.S. networks.

To have a phone that works on all four of the largest U.S. carrier networks would require a lot of radios tuned to operate in various different swaths of spectrum that carriers use to send data, as well as radios that work on both network types. It’s kind of like trying to get a cable modem to work with a DSL connection — they aren’t compatible. An open phone would need radios for the CDMA networks that Verizon (s vz) and Sprint (s s) run, as well as chips for the UMTS and HSPA networks that AT&T (s T) and T-Mobile operate. T-Mobile operates in the AWS spectrum band while other carriers are in the 1900Mhz, 850Mhz and other spectrum. That many radios would consume a lot of power and make for a more expensive phone.

So if exclusivity agreements do end up being eliminated, Apple (s aapl) could choose to make a version of the iPhone for a CDMA network, but it may choose not to if Verizon sets too many limits on how the iPhone uses the Verizon network. If it did choose to build out a CDMA-based iPhone, rather than be able to hop from carrier to carrier, that phone would only work on Verizon’s network. In that scenario, Verizon might regain some subscribers, Apple would have to take on the additional cost of building a CDMA phone and Qualcomm (s qcom) and Verizon customers who want iPhones would win.