The Federal Communications Commission has begun looking into cell phone handset exclusivity deals – those ubiquitous agreements between cell phone makers and wireless service providers that chain up consumers.

Consumers don’t benefit from these arranged marriages between cell phone makers and wireless service providers. The deals thwart competition, discourage competition and invariably lead to higher overall prices. When teamed up with the ridiculous early termination penalties that are standard operating procedure in the U.S. wireless market, the exclusive deals make it next to impossible for consumers to switch between different phones and service providers without paying hundreds or thousands of dollars.

Want an iPhone? You have to sign a two-year service contract with telecom giant AT&T in order to get one. That’s because Apple, the maker of the ultra-popular iPhone, has a multi-year, exclusive deal with AT&T in the U.S. market. Want one of those nifty new Palm Pre smartphones everyone seems to be talking about these days? Sprint will have to be your wireless carrier.

In fact, eight of the ten most popular handsets in the U.S. market in 2008 were shackled to a single wireless service provider such as AT&T or Verizon through exclusive deals. Think about that. Consumers who want to get virtually any of the most popular cell phones must first agree to use a certain wireless service provider.

And there’s more. The companies literally “lock” the handsets so they will only operate on the designated carrier’s network.

Again, think about that. What if Safeway had such a deal with Pepsi. You could only buy Pepsi at Safeway and you would have to sign a long-term deal with Safeway agreeing to only shop for Pepsi there. You would have to pay a steep penalty to Safeway should you decide you want to buy your Pepsi somewhere else. But then again you wouldn’t be able to buy Pepsi anywhere else because of its exclusive deal with Safeway.

Unfortunately for American cell phone users, this unfair and anti-consumer system of exclusive deals completely dominates the U.S. wireless market. Only about five percent of the cell phones sold in the U.S. each year are unlocked and available from multiple carriers. In contrast, about 80 percent of the cell phones sold in Asia are unlocked and available independent of a wireless carrier. The number is 70 percent in Europe and more 50 percent worldwide.

Acting FCC Chairman announced last month instructed agency staff to determine whether handset exclusivity arrangements adversely restrict consumer choice or harm the development of innovative devices. New FCC Chairman Julius Genachowski, who was sworn in last week, has already said he wants to continue that effort.

Consumers Union, the publisher of this blog, believes it is long past time for these exclusivity deals to be outlawed. The only clear beneficiary are the big four U.S. wireless carriers – AT&T, Verizon, Sprint and T-Mobile – which already control more than 90 percent of the market.

There will undoubtedly be huge pressure exerted on the FCC by the powerful wireless industry and the army of lobbyists it employs. We hope basic fairness and the FCC’s obligation to protect consumers will convince the agency to do everything it can to eliminate these unfair and anti-competitive deals.