We absolutely will offer MMS on iPhone 3G S in the late summer, once we complete some system upgrades that will ensure our customers have the best experience with MMS. These upgrades are unrelated to our 3G network. … We plan to offer a tethering plan but we don’t have anything to announce today.

– AT&T spokesperson Seth Bloom

Welcome news for folks who love the iPhone, but hate AT&T. The increasing prevalence of exclusivity agreements between wireless carriers and cellphone manufacturers, like the one between Apple (AAPL) and AT&T (T), is drawing some government scrutiny. Four U.S. senators are urging the Federal Communications Commission to review such deals with an eye toward determining whether they unfairly restrict consumer choice and hamper competition. In a letter, the four asked that the Commission specifically consider the following:

• Whether exclusivity agreements are becoming increasingly prevalent between dominant wireless carriers and handset manufacturers

 

• Whether exclusivity agreements are restricting consumer choice with respect to which handsets are available depending on a consumer’s geographic region, particularly for consumers living in rural America

 

• Whether exclusivity agreements place limitations on a consumer’s ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to “tether” a device to a computer for Internet use.

 

• Whether exclusivity agreements are manipulating the competitive marketplace between commercial wireless carriers. Specifically, whether the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete

 

• Whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace

An interesting list and one that seems to single out AT&T, though it doesn’t mention the carrier by name. Indeed, limiting “a consumer’s ability to take full advantage of handset technologies, such as the ability to send multimedia messages or the ability to ‘tether’ a device to a computer for Internet use” is exactly what AT&T will do later this week when the iPhone 3G S and iPhone OS 3.0 debut without the carrier’s support for their new tethering and MMS capabilities.

And then there’s this: The iPhone 3G S is compatible with high-speed packet access 7.2 technology, which offers theoretical peak download speeds of up to 7.2 Mbps. But AT&T doesn’t plan to begin deploying HSPA 7.2 until later this year and the company doesn’t expect to complete the rollout until 2011.

Finally, the company’s refusal to sell the iPhone in rural areas where it provides only roaming coverage certainly restricts “consumer choice with respect to which handsets are available depending on a consumer’s geographic region, particularly for consumers living in rural America.”

Clearly, if the senators responsible for this letter were looking for a case study for the problems with exclusive carrier-device agreements, they’ve got one ready-made in AT&T.

As of this writing, Apple (AAPL) continues to accept preorders through its online store with a promise of Friday delivery, though oddly, InformationWeek claims the company and its exclusive carrier partner, AT&T (T), have both already sold out of preorder units.

Palm (PALM) picked a hell of a day to launch the Pre. Two days before Apple’s World Wide Developers Conference. Two days before the unveiling of the iPhone 3G S, a new version of Apple’s (AAPL) iconic handset that runs twice as fast as its predecessor, shoots video with an improved three megapixel camera and boasts longer battery life and greater storage.

And worst of all, two days prior to the announcement of a new $99 price point for the iPhone 3G, a disruptive move that puts the device in reach of far more consumers and allows Apple to position last year’s iPhone as a competitor to this year’s Pre (and BlackBerry Storm too). And unlike this year’s Pre, last year’s iPhone comes with iTunes, a robust developer ecosystem, access to 50,000+ apps and soon iPhone OS 3.0.

And that may bode ill for a hard-to-come-by upstart handset that’ll set you back $199 after a $100 rebate.

Certainly, a $99 iPhone 3G is a very compelling proposition. Said CL King & Associates analyst Lawrence Harris, “Apple’s strategy appears to be designed to take advantage of the current limited availability of the Palm Pre. It is clear that Apple intends to maintain its leadership position in the smartphone market, given its decision to cut prices.” 

Clear too that Palm’s decision to roll out the Pre this past Saturday was folly and has not only left the company’s most important product release in years washed away in a deluge of Apple coverage, but allowed a powerful rival with a lot of market buzz to undercut the price of its bet-the-company handset within just days of its launch.

Sadly for Palm, it may be that the Pre’s best days are already behind it.

As a valued AT&T customer, AT&T can offer you an early iPhone upgrade with a new 2-yr commitment and an $18 upgrade fee. You may qualify for a standard iPhone upgrade on 12/29/2009.

$299.00*–8GB iPhone 3G (black)
$399.00*–16GB iPhone 3G S (black or white)
$499.00*–32GB iPhone 3G S (black or white)

…For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB).

– The ugly fine print for some existing AT&T (T) subscribers planning to purchase an Apple (AAPL) iPhone 3G S.