19-1 GSM Association ("GSMA")

U.S. DEPARTMENT OF JUSTICE
Antitrust Division
MAKAN DELRAHIM
Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001
(202) 514-2401 / (202) 616-2645 (Fax)
November 27, 2019
Mr. Timothy Cornell, Esq.
Clifford Chance US LLP
2001 K Street NW
Washington, DC 20006-1001
Re: GSMA Business Review Letter Request
Dear Mr. Cornell:
This letter responds to your request on behalf of GSM Association (“GSMA”) for
a business review letter from the Department of Justice pursuant to the Department’s
Business Review Procedure, 28 C.F.R. § 50.6. You have asked for a statement of the
Department’s present enforcement intentions regarding GSMA’s proposal to adopt new
procedures for development and promulgation of industry specifications;
1
those
procedures are collectively referred to as AA.35 by GSMA.
2
Your request follows the Department’s extensive investigation into the process
GSMA used previously in the development of a specific standard, GSMA’s Remote SIM
Provisioning (“RSP”) Specification for embedded SIMs (“eSIMs”). As a result of that
investigation, the Department developed significant concerns that GSMA’s process was
deeply flawed and enabled competitors to coordinate anticompetitively. GSMA provided
its mobile network operator members (“operators”) certain privileges not available to
other members and participants, allowing that single interest group to exercise undue
influence in the standard-setting process.
As part of our investigation, the Department expressed to you concerns that this
standard-setting process could be considered an agreement among competitors to limit
options available in the market in such a way as to benefit the incumbent operator
1
While GSMA uses the term “Industry Specifications,” I will hereafter refer to these as standards except
when referring to a specific GSMA industry specification.
2
Letter from Timothy Cornell, Esq., Clifford Chance US LLP, to Makan Delrahim, Assistant Att’y Gen.,
U.S. Dep’t of Justice (July 25, 2019) [hereinafter Request Letter] and Request Letter Exhibit A [hereinafter
Proposed AA.35].

2
Mr. Timothy Cornell
members by reducing their competitive pressures. It is the Department’s understanding
that the GSMA responded to these concerns by considering ways to improve its standard-
setting process. The resulting set of procedures, AA.35, is meant to allay competition
concerns by yielding standards that limit the design of RSP and eSIMs only to the extent
it would be beneficial to the diverse group of interested parties in the mobile wireless
industry. It is the Department’s understanding that the GSMA will promulgate a new
version of the RSP Specification under these procedures, which standard will supersede
and replace the existing standard that it promulgated under the problematic procedures.
Based on the information and representations you provided, both pursuant to your
request and during the Department’s investigation into the development of the RSP
Specification, the Department has determined that it presently has no intention to
challenge AA.35, if it goes into effect. The Department also has no present intention to
challenge standards promulgated pursuant to that process, based solely on the process by
which such standards were adopted.
The Department’s task in the business review process is to advise the requesting
party of the Department’s present antitrust enforcement intentions regarding the proposed
conduct. It is not the Department’s role to assess whether AA.35 is the ideal process for
the development of standards nor should this letter be read to suggest that the Department
endorses any specific process as the correct approach to standards development. Indeed,
variation among procedures for standard-setting organizations (“SSOs”) could be
beneficial to the overall standard-setting process. Other organizations, therefore, may
decide to implement different procedures for the creation of standards.
Here, it remains to be seen whether AA.35 will, in effect, ensure that all interested
parties have the opportunity to participate meaningfully in developing standards at
GSMA that benefit consumers. The Department has concerns about potential abuses of
the standard-setting process—particularly when conducted within trade associations
controlled by a single constituency of competitors—to dampen the potential of new
technologies to disrupt the status quo and ultimately discourage companies from
competing through innovation.
For this reason, the Department will closely observe how AA.35 is applied and
whether it succeeds in promoting interoperability without marginalizing non-operators’
ability to represent their interests in preserving the maximum freedom to respond to
consumer demand for innovation. Furthermore, there is always a threat that members of a
standards-setting body may form agreements outside of the process, but which affect the
process, and such agreements are always subject to independent antitrust scrutiny.
In sum, the Department believes that AA.35 includes sufficient protections to
minimize the chances of anticompetitive self-dealing inside the GSMA if it is applied as
contemplated; however, the present intention not to challenge AA.35 cannot provide an
absolute safe harbor for all standards produced by the GSMA.

3
Mr. Timothy Cornell
I. Background
GSMA i
s a non-profit association with its headquarters in London, United
Kingdom, and additional offices throughout the world, including offices in Atlanta,
Georgia, and San Francisco, California. GSMA is a trade association representing mobile
operators worldwide, including more than 750 operators and over 350 companies in the
broader mobile ecosystem. GSMA’s membership encompasses all of the major mobile
network operators worldwide, including the major national carriers in the United States.
Only operators are eligible for full membership in the organization. GSMA rules limit
many key membership functions to its full members, including the ability to run for and
serve on GSMA’s Board of Directors and many of its committees, which drive GSMA’s
agenda and control its processes.
GSMA has been developing a technical standard for RSP, which enables eSIMs
on mobile devices. eSIMs are an innovation in how consumers obtain mobile service
from an operator. Instead of having to physically obtain and swap a SIM card to sign up
for or switch mobile service, consumers can download through the internet (i.e.,
“remotely”) an operator’s profile onto the eSIM to connect to the operator’s network.
Though nascent, eSIMs have already benefitted consumers. In particular,
consumers who travel frequently across operator coverage areas (i.e., internationally) can
switch to the optimal provider seamlessly. eSIMs also relieve some of the barriers faced
by innovative wireless service products that rely on switching between operator
profiles—these products have the potential to create a significant new choice for
consumers.
As GSMA and its members recognized,
3
eSIMs can benefit consumers through
increased competition among wireless service providers—by enabling disruptive new
entrants, by reducing the friction involved in comparing and switching wireless carriers,
and by making it easier to choose a wireless provider that does not have a nearby physical
location. eSIMs’ propensity to facilitate easier consumer switching would likely incent
operators to compete more aggressively to induce those customers to switch. Likewise,
when international travelers have greater access to local service by temporarily switching
to a local operator, the domestic operators are pushed to enhance their international
roaming offers.
a.

GSMA’s Existing Standard-Setting Activities
I
n 2011, as part of the RSP standards development process happening at a
standard setting organization, the European Telecommunications Standards Institute
(“ETSI”), GSMA began working on RSP. As the standard-setting process at ETSI stalled,
GSMA began work to create its own RSP standard, designed to create a standard to allow
3
Draft GSMA presentation for 2017 mobile conference, October 23, 2017, (GSMABRL-ATR-0001168 at
-174–176).

4
Mr. Timothy Cornell
eSIMs to download and manage mobile credentials remotely. These efforts culminated in
GSMA promulgating an RSP Specification, the most recent published version of which is
version two (“RSPv2”).
The RSP Specification was intended to be, and has indeed become, the dominant
standard for eSIMs.
4
Participants in the GSMA process report that they have no realistic
choice of developing a standard that would be accepted by the industry in an alternative
forum for standard setting.
By collaboratively setting the standard and promoting adherence to it, the
participants in the GSMA process avoided the costs of a “standards war,” but also
eliminated the benefits of competition among multiple, individually developed ways of
remotely provisioning an eSIM.
5
Without the disciplining effect of competition,
collaboratively set standards may serve the interests of the most powerful participants in
the process, to the detriment of consumers. The Department has long recognized that the
standard-setting process may risk anticompetitive outcomes, if proper safeguards are not
practiced by the standard setting organization to ensure that the participants represent the
market interests as a whole.
6
Prior to your client’s request for a business review letter, the Department’s
Antitrust Division had been investigating GSMA’s RSPv2 standard and the processes
used to promulgate that standard as well as its proposed successor, RSPv3. The
Department has significant concerns that GSMA and its operator members used an
unbalanced standard-setting process, with procedures that stacked the deck in their favor,
to promulgate an RSP Specification with self-dealing provisions designed to enhance or
maintain the incumbent operators’ competitive position by entrenching network locking
practices and otherwise deterring potentially disruptive competition. The resulting rule is
especially concerning because it appears designed to blunt the competitive impact of a
new technology—eSIM—that should facilitate easier consumer switching among
operators.
7
4
For instance, the Department understands that multiple incumbent operators in North America require
smartphones they sell to be compliant with GSMA’s RSP Specification, if the smartphone contains an
eSIM.
5
See U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights:
Promoting Innovation and Competition (2007) 33–35,
https://www.justice.gov/sites/default/files/atr/legacy/2007/07/11/222655.pdf
6
Id. at 34–35 & n.10 (courts recognize antitrust liability for “circumstances involving the manipulation of
the standard-setting process or the improper use of the resulting standard to gain competitive advantage
over rivals”).
7
The Department is aware that most major operators in the United States have voluntarily committed to the
CTIA’s Consumer Code of Conduct, and have agreed to unlock consumers’ smartphones upon request
under certain circumstances. Although the Department fully expects such commitments would apply to
eSIM features that allow an eSIM to be locked to a particular operator, these commitments are insufficient
to alleviate the Department’s concerns.

5
Mr. Timothy Cornell
Although GSMA permitted non-operators to participate in the RSP Specification
development process, at all times the process was controlled by, and ultimate decisions
were approved by, operator-only committees. In fact, in explaining to its operator
members “[w]hy eSIM included non-member voting,” GSMA assured its members that
“[t]he final approval stage for all GSMA technical specifications rests with the GSMA
Technology Group,” adding that “[t]he GSMA Technology Group comprises senior
operator technology executives only.”
8
The Department is concerned that the GSMA’s
operator-dominated process was used with the purpose and effect of altering what would
otherwise have been competitive negotiations between the operators and smartphone
manufacturers (“OEMs”) over the design and implementation of eSIMs.
Throughout the development of RSPv2, there was vigorous debate about certain
provisions, including provisions discussed below, during which GSMA acted—consistent
with its origins and board membership—as a defender of operator interests rather than a
neutral arbiter.
For example, when a GSMA executive understood a U.S. operator to be “worried
about OEMs playing the apparent role of consumer champion and driving tariffs,” he told
the operator that “[o]perators drive our position and we will always support members
first.”
9
Likewise, a senior GSMA executive assured a senior executive of a U.S. operator
that “we are merely the vehicle for you, our members to use.”
10
The same senior GSMA
executive received an email from the senior executive of a different U.S. operator stating,
“[i]f the OEMs ([a leading smartphone manufacturer] is the leader) do not accept this
requirement, we still expect GSMA and other operators to side with us.”
11
Repeatedly,
GSMA recognized that it was creating an “operator friendly” standard
12
that included
certain provisions desired by operators that do not appear technically necessary for a
common method of remote SIM provisioning but were instead “business benefits.”
13
A GSMA executive further illustrated what was meant by “operator friendly”:
In terms of whether RSP is an operator driven standard, there are very many
examples of constraints accepted by all OEMs that prove the point when
compared to what any available standards body would be able to permit.
Examples are: Single active profile, no export, repeated user consent requirements
in the user interface, notification to operators of the equivalent to throwing the
SIM in the bin, no automatic switching of operational profiles, requirements to
8
GSMA presentation for operator members, (GSMABRL-ATR-0002858 at -886).
9
Internal GSMA email communication, May 18, 2016 (GSMABRL-ATR-0001106).
10
GSMA email communication with North American operator, May 30, 2016 (GSMABRL-ATR-0001268
at -269).
11
GSMA email communication

with North American

operator, June 10, 2016 (GSMABRL-ATR-
0001253).

12
Draft

presentation

for GSMA Strategy

Group (composed exclusively of operator members) (GSMABRL-
ATR-0001336 at -338).

13
Internal GSMA email communication, February

6, 2018 (GSMABRL-ATR-0001217).

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Mr. Timothy Cornell
support SIM based NFC, and more. If this work was being done in any other
forum very few of these points would be agreed to.
14
This flawed process began with an operator-only committee that set the
requirements for the standard before a committee of manufacturers and other industry
participants were tasked with designing the technical standard to implement those
requirements. Although approval of both the requirements and the technical standard
rested with a combined plenary body of all participants, approval only required a simple
majority. Furthermore, a committee of operators supervised both committees and a
separate committee of operators, comprised of representatives from companies on
GSMA’s board, had to approve anything that came out of the plenary, again by a simple
majority.
It is clear that, using this process, the incumbent operators effectively controlled
GSMA’s process for creating the RSP standard at every step.
b. Version Two of GSMA’s Consumer RSP Specification Includes
Provisions that Potentially Limit Disruptive Competition
The Department is particularly concerned about three RSPv2 provisions which
were developed using GSMA’s flawed process, and which seem to give the incumbent
operator participants a reprieve from new forms of competition. Most problematic are the
profile policy rules (“PPRs”). PPRs are provisions that may restrict the procompetitive
potential of eSIMs without being necessary to achieve remote provisioning or to solve an
interoperability problem. PPR1 and PPR2, in effect, give an operator the capability to
lock a smartphone to its network. In RSPv2, both PPR1 and PPR2 are mandatory,
meaning that a smartphone with an eSIM must contain the capability for operator-
controlled locking in order to be considered compliant with the RSP Specification.
While working on version three (“RSPv3”) of the RSP Specification, under
GSMA’s flawed process, the North American operators also tried to implement an
additional policy rule, PPR4, that would facilitate a more durable network lock for
consumer devices sold in North America.
15
In fact, after losing a vote that took place as
part of GSMA’s normal process that involved industry participants from all regions, the
North American operators would not accept the outcome. Instead, the North American
operators used their regional GSMA group to start a separate process, which was
completely devoid of non-operator participation, to make the rule mandatory in North
America only.
As one GSMA executive wrote at the time, “[t]he Global Spec is going to be
written with the Policy Rule 4 implementation as optional within the specification. This is
14
GSMA email communication with foreign operator, April 17, 2016 (GSMABRL-ATR-0000900 at
900–901) (emphasis in original).
15
Internal GSMA email communication, September 29, 2017 (GSMABRL-ATR-0001327).

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Mr. Timothy Cornell
not what [a leading North American operator] and [a leading North American operator]
want.”
16
This tendency toward coordination among direct competitors, rather than
consensus-building across the industry, shows that the GSMA’s prior process was prone
to manipulation for the benefit of incumbent operators and to the detriment of
competition.
There are two other provisions that similarly appear to potentially restrict
disruptive competition.
First, RSPv2 requires consumer-users to express affirmatively their intent to
switch profiles each time the eSIM toggles between profiles or networks, thereby
preventing the eSIM from automatically switching (or optimizing) between profiles.
Dynamic or automatic switching is a potential competitive threat because it could lead to
a service where a device efficiently selects, on behalf of the user, which profile to use in
any given situation. For example, the eSIM could switch services if it detects stronger
network coverage or a lower cost network, providing consumers with better or less
expensive service. The prohibition on automatic switching would tend to prevent at least
one existing operator from offering a new innovative service using an eSIM. That is, in
order to offer the new service, the operator would have to convince smartphone
manufacturers to forego complying with the RSP Specification.
Second, RSPv2 prevents an eSIM from actively using profiles from multiple
carriers simultaneously. Multiple active profiles is a potential competitive threat because
it would allow a user to divide usage across operators. For instance, the user could
actively maintain two profiles on one device if he or she wanted to receive work-related
phone calls to one profile and personal phone calls to another profile, all while carrying
only one phone. The user could also actively operate profiles optimized for different
coverage areas or for international travel. Although there appear to be technical
challenges to allowing multiple active profiles at present, the single active profile
requirement in RSPv2 serves as a roadblock to additional disruptive innovation that could
solve these technical challenges.
Although device manufacturers compete with each other to offer features that
consumers want, they also have an interest in interoperability across networks.
Accordingly, the ordinary give and take of negotiations between operators and
manufacturers over smartphone functionality and features is critical to the overall
competitive process. In the United States, competition among operators over the
smartphones that they distribute and support on their network is particularly important
because operators account for the vast majority of smartphone sales to consumers. This
competition includes bilateral negotiation of distribution deals with manufacturers,
including the functionality and features of new smartphones.
16
Id.

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Mr. Timothy Cornell
GSMA and its operator members appear to have used the RSP Specification to
alter the course of these negotiations and to prohibit manufacturers from offering a
version of the eSIM experience that consumers may have preferred. One way that the
GSMA and its operator members ensured their RSP Specification would be the only
market-adopted standard is by testing compliance through the PTCRB. The PTCRB is an
operator-controlled testing and certification organization in the United States that, until
recently, required its operator members to agree to boycott the distribution of non-
certified smartphones.
17
When the PTCRB, with GSMA’s support, adopted the RSP
Specification as part of its compliance test, it was likely inevitable that the market would
tip to the RSP Specification.
Because operators distribute the overwhelming majority of smartphones sold in
the United States, obtaining certification of compliance from testing organizations like
PTCRB is critical for smartphone manufacturers. Moreover, all major operators in the
United States, along with other large global operators, were heavily involved in the
GSMA’s process to create the RSP Specification. In order to depart from the RSP
Specification, therefore, a manufacturer would have put its operator channel device sales
in jeopardy. In this way, agreement among the major operators in the United States on the
RSP Specification replaces competition on the merits.
The Department has long recognized that standard-setting activity that increases
interoperability, or facilitates some otherwise impossible feature, has significant benefits
for consumers and plays an important role in the wireless telecommunications industry.
The Antitrust Division’s Antitrust Guidelines for Collaborations Among Competitors
note that “[s]uch collaborations often are not only benign but procompetitive.”
18
It is equally axiomatic, however, that horizontal competitors involved in standard
setting have incentives to eliminate quality competition and can sometimes even use the
process to block or disadvantage competitors or potential competitors who do not have as
much influence. As the Supreme Court has observed, “[t]here is no doubt that the
members of [private standard-setting] associations often have economic incentives to
restrain competition and that the product standards set by such associations have a serious
potential for anticompetitive harm.” Allied Tube & Conduit Corp. v. Indian Head, 486
U.S. 492, 500 (1988). See also Am. Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S.
556, 571–72 (noting that “a standard-setting organization like ASME can be rife with
opportunities for anticompetitive activity” and criticizing the lack of “any meaningful
safeguards” to prevent it).
The coordinated elimination of competition that would otherwise exist is the core
concern of Section 1 of the Sherman Act. After a standard has been promulgated and
17
After the Division made PTCRB aware of its concerns with this provision, the PTCRB eliminated it from
the membership agreement.
18
U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for Collaborations Among
Competitors (2000), at 1, available at https://www.justice.gov/atr/page/file/1098461/download.

9
Mr. Timothy Cornell
adopted by the market, it displaces future competition.
19
It is therefore imperative that the
process to create that standard is designed with due process safeguards that promote
competition on the merits during the process of setting the standard. Safeguards prevent a
single interested group from hijacking the process, keeping the focus instead on goals that
benefit the industry and consumers overall. In short, due process safeguards can prevent
“mission creep” that unnecessarily restricts consumer choices. This also minimizes the
potential for standard setting to be used to reduce the competitive pressures on
incumbents who set the standard.
Particularly where a standard-setting process lacks adequate safeguards,
20
it is
imperative to prevent such standards from straying away from the legitimate goal of
promoting interoperability, innovation, or any other consumer benefit for which such
coordination is necessary. Standard setters are not allowed to create and leverage
unbalanced processes to adopt favorable self-regulation that constitute a competitive
advantage for the incumbent participants, to the detriment of consumer choice. “Indeed,
prohibitions against anticompetitive self-regulation by active market participants are an
axiom of federal antitrust policy.” N. Carolina State Bd. of Dental Examiners v. FTC,
574 U.S. 494, 135 S. Ct. 1101 (2015) (citing Allied Tube & Conduit Corp. v. Indian
Head, Inc., 486 U.S. 492, 501, 108 S.Ct. 1931, 100 L.Ed.2d 497 (1988); Hoover v.
Ronwin, 466 U.S. 558, 584 (1984) (Stevens, J., dissenting) (“The risk that private
regulation of market entry, prices, or output may be designed to confer monopoly profits
on members of an industry at the expense of the consuming public has been the central
concern of ... our antitrust jurisprudence.”); Elhauge, The Scope of Antitrust Process, 104
Harv. L. Rev. 667, 672 (1991)).
Competition law dictates that the fate of such self-dealing provisions in product
design be left to the ordinary competitive process—not collective standard setting
19
In Rambus Inc. v. FTC, 522 F.3d 456 (D.C. Cir. 2008), the D.C. Circuit observed that despite the
elimination of future competition, standard setting can be procompetitive when competition on the merits
occurs as part of the standard setting process itself. “Before an SSO adopts a standard, there is often
vigorous competition among different technologies for incorporation into that standard.” Id. at 459.
20
Office of Management and Budget Circular Number A–119, as revised February 10, 1998, defines the
key attributes of voluntary SSOs. These attributes are openness, balance of interest, due process, an appeals
process, and consensus. ANSI, the American National Standards Institute, has considered and published
guidance building on these attributes to develop principles designed to minimize the chance that an SSO’s
processes will raise antitrust concerns. These principles include openness to all interested parties, a balance
of interests, a lack of dominance, the adoption of written procedures, and a formalized and impartial
appeals process. These principles reduce the opportunity for anticompetitive behavior within an SSO,
although they may not eliminate it entirely. Where, as here, there is a single group of competitors that have
been afforded certain privileges not available to other members, and that single group has outsized voting
power on committees due to their numbers, the concept of a balancing of interests is particularly relevant.
Indeed, without balancing interests of different members there is little value in a group having openness,
due process, or an appeals process, as there would be no diversity of opinion that would leverage such
principles into reaching consensus.

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Mr. Timothy Cornell
designed to unify the market around one technical solution.
21
Moreover, when an
organization knows the anticompetitive goals of its members, and facilitates horizontal
competitors’ use of the organization’s process to promulgate a dominant standard that
promotes those goals, both the organization and its members can be liable under Section
1 of the Sherman Act, regardless of whether the conduct occurs under the umbrella of
standard-setting activity.
22
II.

Analysis of AA.35

T
he Department is encouraged that, in light of the concerns raised during the
investigation, GSMA will be adopting new procedures designed to remedy its operator-
dominated process for promulgating standards going forward. We applaud GSMA’s
efforts to ensure that its new process provides for an adequate balance of interests among
those involved in the process so that negotiations prior to the adoption of the standard
resemble the benefits of competition.
23
AA.35 has made some specific improvements that make it less likely that its
operator members can dominate the process as was done in promulgating the existing
RSP specification.
24
First, AA.35 creates a two-stage process, with an Industry
Specification Issuing Group (“ISIG”) that creates the standards
25
and an Industry
Specification Approving Group (“ISAG”) that approves the standards.
26
Second, it opens membership on the ISIG to all members, ensuring that there will
not be operator-exclusive committees driving the process.
27
Instead, these bodies will
have Chairs and Deputy Chairs, limiting operators to holding only one of these roles in
each group.
28
Third, AA.35 allows non-operators the opportunity to become members of the
ISAG, the new group that ultimately approves the standards.
29
This eliminates the
21
See U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights:
Promoting Innovation and Competition (2007) 33–35,
https://www.justice.gov/sites/default/files/atr/legacy/2007/07/11/222655.pdf.
22
E.g., Am. Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556, 574 (1982) (finding SSO liable for
actions of its agents acting with apparent authority to discourage customers from purchasing one
competitor’s water boiler safety device, stating that it did not comply with the SSO’s safety code, even
though it did). See also Osborn v. Visa Inc., 797 F.3d 1057, 1067 (D.C. Cir. 2015) (holding that a
complaint against the organization could go forward because the members allegedly “used the bankcard
associations to adopt and enforce a supracompetitive pricing regime”); Wilk v. Am. Med. Ass’n, 719 F. 2d
207 (7th Cir. 1983) (affirming judgment against trade association for rules imposed on the members).
23
See generally Request Letter, supra note 2, at 5–9.
24
Proposed AA.35, supra note 2, §§ 6–8.
25
Id. at § 6.
26
Id. at § 7.
27
Id. at § 6.1.1.
28
Id. at § 9.1.
29
Id. at § 7.3.

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Mr. Timothy Cornell
complete control that operators previously had and instead gives all parts of the industry
an opportunity to be represented.
Fourth, AA.35 fundamentally changes how standards are approved. At the ISIG
level, it requires the group to seek consensus and, when consensus cannot be achieved, it
requires a 71% threshold to approve the proposal.
30
At the ISAG level, it requires
approval of standards by separate majorities of the ISAG operator- and non-operator
members.
31
Both bodies require an explanation of negative votes, another improvement
that increases transparency and indicates meaningful attempts to reach consensus.
32
Fifth, AA.35 increases due process for affected members. AA.35 provides for
appeals,
33
which are to be heard by an independent panel.
34
Moreover, the appeals
process applies to any aspect of GSMA’s Industry Specification development process—
not just to the ultimate approval of the Industry Specification.
35
Finally, AA.35 has added safeguards to ensure that operators cannot bypass or
modify this process without the support of non-operator members. Instead, only the
ISAG, with its dual-majority voting structure, can modify this procedure once it is in
place.
36
III.

Conclusion
B
ased on GSMA’s representations regarding AA.35, the Department has no
present intention to take antitrust enforcement action against GSMA’s proposed conduct.
The Department’s view is that AA.35 has the potential to be a significant improvement
over the deeply flawed process that allowed GSMA’s operator members to control the
development of the current eSIMs standard. This letter expresses the Department’s
present enforcement intention and is predicated on the accuracy and completeness of the
information and assertions that you have made to the Department, as well as the
additional qualifications set forth in this letter. In accordance with its normal practices,
the Department reserves the right to bring an enforcement action in the future if, among
other things, the actual operation of the proposed conduct proves to be anticompetitive in
purpose or effect.
The Department will be monitoring AA.35’s practical operation and, in particular,
whether AA.35 ensures that operators do not overwhelm the interests of non-operators in
GSMA’s standard development activities. The Department will take a special interest in
whether RSPv3 includes provisions that are motivated only by the incumbent operators’
30
Id. at § 8.7.7.
31
Id. at § 8.8.
32
Id. at § 8.5.
33
Id. at § 10.
34
Id. at § 10.7.
35
Id. at § 10.1.
36
Id. at § 7.1.

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Mr. Timothy Cornell
interest in gaining a competitive advantage or stifling new sources
of competition.
Although RSPv2, which governs the design
of eSIMs in the market today, was passed
under the operator-controlled process, GSMA represents that RSPv3 will supersede
RSPv2, and with RSPv3
we expect that GSMA will reconsider several key features that
have restricted the disruptive potential
of eSIMs to date. Specifically, we will take a close
look at whether the existing and proposed Profile Policy Rules are included as mandatory
features
ofRSPv3, as well as whether provisions that restrict the number of active
profiles on an eSIM or impede the user's ability to consent to dynamic profile switching
are included
as mandatory provisions.
This statement
is made in accordance with the Department's Business Review
Procedure, 28 C.F.R.
§ 50.6. Pursuant to its terms, your business review request and this
letter will be made publicly available immediately, and any supporting data you
submitted will be made publicly available within 30 days
ofthe date ofthis letter, unless
you request that part
ofthe material be withheld in accordance with paragraph 10( c) of
the Business Review Procedure.
Makan Delrahim