U.S. wireless providers debate about competition

WASHINGTON (Reuters) - Amid complaints by smaller competitors that exclusive agreements by dominant wireless phone companies and handset makers hurt competition, AT&T said on Wednesday that competition in the industry is robust and it will increase over time.

The issue of exclusive agreements among some of the biggest companies like Apple Inc's (AAPL.O) iPhone and service provider AT&T Inc (T.N) is at the center of some lawmakers' concerns about whether such practices hinder competition and innovation.

"Competition in the wireless marketplace is white hot," Paul Roth, president of retail sales and services at AT&T, said in testimony before a Senate Commerce Committee hearing to examine the wireless market.

AT&T, along with Verizon Wireless (VZ.N), Sprint Nextel Corp (S.N) and T-Mobile, a unit of Deutsche Telekom (DTEGn.DE), were the targets of criticism at the hearing by smaller competitors who accused them of failing to provide services in rural areas and focusing instead on more profitable densely populated cities.

The smaller competitors argue that exclusivity agreements prevent other carriers from acquiring these devices, hurting competition for wireless customers.

Victor Meena, president of Mississippi-based Cellular South Inc, said that AT&T Wireless, Verizon Wireless, Sprint Nextel and T-Mobile dominate 90 percent of the U.S. wireless market.

"The largest carriers use their market power to prevent competitors from having access to devices and roaming," Meena said. "If this trend continues, and I believe it will without intervention from Congress, then there will once again be a duopoly in the wireless industry."

John Rooney, president of Chicago-based U.S. Cellular Corp, which provides services in regional pockets throughout the United States, urged the committee to act to allow customers the ability to chose both the handset and the network.

Senator Amy Klobuchar, a Minnesota Democrat, said consumers should be free to choose the plan and phone that best fits their needs.