Full opinion text
AMENDED OPINION AND ORDER COTE, District Judge. On February 25, 2005, the defendants in this action, the five largest carriers of wireless telephone services in the U.S. market, moved for summary judgment on plaintiffs’ claim that each defendant’s practice of requiring customers to purchase an approved handset in order to subscribe to the defendant’s wireless telephone services constitutes an unlawful tying arrangement in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Specifically, defendants collectively move for summary judgment on three grounds: 1) that none of them has sufficient economic power in the market for wireless services to coerce the purchase of wireless handsets, 2) that the plaintiffs have offered no evidence of anti-competitive effects in the market for wireless handsets; and 3) that the plaintiffs have supplied no evidence of antitrust damages. Four of the defendants, Verizon Wireless, Cingular, T-Mobile, and Sprint, have also submitted separate supplemental briefs, asserting, inter alia, that they each are entitled to summary judgment on the ground that as a matter of law, none of them tie the sale of handsets to the sale of wireless service. Because the plaintiffs have not presented sufficient evidence to prove that any one defendant has the degree of market power necessary to sustain a tying claim or to show that any of the defendants’ alleged tying arrangements has an actual adverse effect on competition in the U.S. market for wireless handsets, defendants’ motion is granted. Facts The plaintiffs bring this action on behalf of themselves and other persons who have purchased cellular or Personal Communications Services (“PCS”) (collectively “wireless”) telephone services from the defendants from 1998 to the present. They allege that beginning in 1998, the defendants have unlawfully tied the sale of handsets to the sale of wireless services. None of the defendants manufactures handsets, but each of them purchases handsets for direct resale to consumers through their retail stores or for sale to their respective retail agents. This summary judgment motion requires an understanding of the evolution of the wireless telephone services industry. The facts recited here are either undisputed or as shown by the plaintiffs, unless otherwise identified. A brief description of the history of this litigation and the context for the summary judgment motions precedes the factual recitation. Procedural History The background and procedural history of this action have been set forth in several prior Opinions, which are incorporated by reference. Familiarity with these Opinions is assumed, and only the procedural history relevant to the instant motion is described here. On April 5, 2002, the plaintiffs in an action captioned Brook v. AT & T Cellular Servs. Inc., No. 02 Civ. 2637, filed suit in this District, alleging that several wireless services providers violated federal antitrust law. On November 19, 2002, a conference was held in the Brook action, at which it was agreed that the defendants’ motions to dismiss would be dismissed as moot and that plaintiffs could amend their complaint on the understanding that such amended pleading would essentially be the last. On January 9, 2003, the Brook plaintiffs filed an amended complaint, which alleged that each defendant individually ties the sale of handsets to the provision of wireless services and that each of the five defendants monopolizes the market for wireless handsets compatible with its wireless services. The defendants jointly moved to dismiss the amended complaint on February 21, 2003. Shortly thereafter, the Judicial Panel on Multidistriet Litigation (“JPMDL”) transferred four putative class actions raising similar claims as Brook to this Court. Through an August 11, 2003 Order, and with the agreement of the parties, the Brook action and the four transferred actions were consolidated for pretrial purposes. The August 11 Order noted that any action relating to the same subject matter as these five actions would be consolidated with them and provided that the amended complaint filed in the Brook litigation would serve as the Consolidated Amended Class Action Complaint for all actions “alleging antitrust claims against national wireless services carriers and assigned to the undersigned which is subsequently filed in or transferred to this Court.” Brook v. AT & T Cellular Servs., Inc., Nos. 02 Civ. 2637, 03 Civ. 1712(DLC), 03 Civ. 1713(DLC), 03 Civ. 1714(DLC), 03 Civ. 1715(DLC), 2003 WL 21911123, at *1 (S.D.N.Y. Aug. 11, 2003). The August 11 Order further provided that the consolidated actions would be collectively referred to as In re Wireless Telephone Services Antitrust Litigation. Id. An Opinion and Order issued the subsequent day, August 12, 2003, addressed the defendants’ joint motion to dismiss. In re Wireless, 2003 WL 21912603 (“Motion to Dismiss Opinion”). The Motion to Dismiss Opinion dismissed all of the plaintiffs’ monopolization claims on the ground that the plaintiffs failed to define properly the relevant market. Id. at *9-10. In declining to dismiss the tying claim, however, the Motion to Dismiss Opinion first observed that the plaintiffs had not alleged that the defendants “engaged in a conspiracy to tie or to raise handset prices, [ ] or that they have entered into any kind of an agreement with each other regarding bundling or handset pricing.” Id. at *6. Instead, the Opinion noted, “[e]ach Defendant is alleged to have independently violated the Sherman Act by virtue of the tying arrangement of its own services and handsets.” Id. Given that, the Motion to Dismiss Opinion concluded that the plaintiffs failed to state a per se tying claim as none of the defendants were alleged to “dominate the wireless service market.” Id., at *7. As the plaintiffs alleged that “each of the Defendants possesses sufficient market power such that its tying arrangement adversely affects competition in the tied market,” the Motion to Dismiss Opinion held, however, that plaintiffs had sufficiently stated a tying claim under the rule of reason doctrine. Id. The Motion to Dismiss Opinion further explained that “at trial, the plaintiffs will have the burden to show that each Defendant’s market power and tying arrangement had an anticompet-itive impact on the handset market.” Id. at *8. Plaintiffs never objected to this description of their claims, nor did they move for reconsideration of the Motion to Dismiss Opinion. Consequently, fact discovery proceeded on the basis that plaintiffs’ tying claim was separately pled against each defendant. On July 30, 2004, with the close of fact discovery just two months away, plaintiffs moved for leave to amend their amended complaint. Plaintiffs’ proposed second amended complaint included a tying claim, inter alia, which alleged that the defendants, both collectively and individually, have significant market power in the tying and tied product markets. Through an October 6, 2004 Opinion and Order, plaintiffs’ motion for leave to amend was denied. In re Wireless, 2004 WL 2244502, at *1. The October 6 Opinion explained that the plaintiffs’ proposed second amended complaint would “transform the lawsuit from one asserting five tying claims against each of the defendants individually to a lawsuit alleging collective action on the tying claim.” Id. at *6. The October 6 Opinion further noted that having included conspiracy allegations in its original complaint, which they then chose to drop, the plaintiffs’ decision to “reassert the conspiracy. allegations _ they initially abandoned” could not constitute, the good cause needed for “a substantial and untimely amendment” that would significantly delay the resolution of the litigation. Id. Fact discovery in this action closed on October 8, 2004, and expert discovery ended on January 21, 2005. The defendants jointly moved for summary judgment on February 28, 2005, and briefing was complete on this motion, including the related motions to strike certain declarations and expert testimony, on June 17, 2005. The parties have made extensive submissions in connection with this motion and the associated motions in limine and motions to strike. Because of the analysis that follows, it is only essential to set forth a small portion of the factual material presented through these motions. The essential facts as shown through the evidence presented with these motions include the following. The Evolution of Wireless Services in the U.S. Wireless telephone service was first introduced in the U.S. in the early 1980s. At that time, the Federal Communications Commission (“FCC”) allocated spectrum such that only two companies could provide service in any given market. Beginning in 1995, however, the FCC auctioned new spectrum for PCS, which ultimately consisted of more than twice the amount of spectrum previously allocated to wireless telephone service. The allocation of PCS spectrum enabled as many as eight competitors to operate within a single market. As PCS providers began operating their networks, the number of wireless subscribers rose from under 25 million in 1994 to 86 million in 1999. In 2003, over 160 million people subscribed to wireless service. The mid-1990s increase in the amount of spectrum allocated paralleled and enabled another significant change in the wireless industry: the switch from analog to digital technology. Although the FCC had maintained a specific technological standard for analog sendee, it decided not to do so for digital service. Consequently, multiple digital technologies were introduced in the mid-1990s, among them CDMA, which is used by Sprint and Verizon Wireless; and GSM, which is used by T-Mobile and to which Cingular and AT & T Wireless are in the process of converting their networks. The parties dispute the compatibility of these technologies. While the defendants assert that these technologies are mutually incompatible, the plaintiffs state that they are only incompatible to the extent that the carriers have manipulated them so as to inhibit a consumer’s ability to use her wireless telephone, or handset, with multiple carriers and to heighten the costs of switching from one carrier to another. While the defendants employ varying digital protocols, each defendant has captured similar benefits from the advent of digital service. Digital service not only expanded the types of services wireless carriers can provide, enabling, among other things, caller ID, text messaging, and email, but it also eradicated some of the security problems, such as service theft and eavesdropping, associated with analog service. Most importantly, however, digital service enabled wireless service providers to accommodate more users within any given amount of spectrum, thereby reducing their need to set up additional transmitters or cell sites. Digital technology has also wrought major changes in consumer use and the providers’ revenue. In 1994, the average monthly usage per subscriber was 119 minutes. This figure rose to 185 minutes in 1999 and skyrocketed to 507 minutes by 2003. During the same time frame, the providers’ average revenue per minute fell from 47 cents to 10 cents with a 66 percent drop alone from 1998 to 2003. The Development of Handsets and How They’ve Changed Because wireless service providers cannot implement more efficient service unless subscribers are using handsets that operate on their respective networks, handsets sold for use in the U.S. wireless services market are developed by manufacturers in collaboration with the wireless service providers. The quality of handsets available to subscribers is particularly important to the service providers because the use of “outmoded” handsets not only affects the quality of that subscriber’s service, but also diminishes the quality of service to other subscribers. As a result, at least two of the defendants, Verizon Wireless and AT & T Wireless, subject or have subjected handset models to an approval process involving testing and maintain a list of models approved for use with their respective services. It is undisputed that the handset manufacturers compete with one another to offer the highest quality, maximum spectral efficiency, and lowest prices to the wireless service providers who purchase their handsets. The parties dispute, however, whether certain companies have manufactured or currently do manufacture wireless telephones, and more importantly, whether the handset market has been “dynamic” since 1999. In addition, while the parties agree that certain companies, including Sony, Palm, Hewlett Packard, Danger, and RIM, have entered the U.S. handset market during the relevant time frame, the plaintiffs argue that these entrants collectively account for an insignificant portion of the U.S. handset market. In 1995, just three percent of handsets sold in the U.S. were digital. By contrast, by 2000, essentially all handsets sold in the U.S. were digital. Today’s digital handsets feature many improvements over their predecessors, such as enhanced battery life, smaller size and diminished weight, and a host of improved features, including automatic redial, speed dial, alarm clocks, address books, speakerphones, voice-activated dialing, and color screens. All of the defendants also currently sell handsets equipped with cameras as well as data services, such as text messaging, the downloading of ring tones, music, and games. Even as handsets have become increasingly more sophisticated, the cost of handsets has dropped. Just as the parties dispute the inherent compatibility of the various digital technologies with one another, they also dispute whether a handset designed to work on one digital network can function on another network. The plaintiff argues, for example, that certain handsets are designed to operate across multiple protocols, but that the defendants program the handsets used in conjunction with their respective service so as to prevent such usage. In addition, the parties dispute the extent to which consumers desire the innovations now featured on handsets and disagree as to whether handsets offered in the U.S. sufficiently incorporate other emerging technologies. The Distribution and Sale of Handsets in the U.S. It is undisputed that since the inception of wireless service in the U.S., wireless service providers have sold their respective service and handsets as a package, and that in doing so, the carriers have subsidized the cost of handsets to make initial entry into the wireless services market “more palatable.” Although wireless handsets have become much more affordable over the last fifteen years, wireless service providers continue to package service and handsets, subsidizing the latter, “to continue to open up markets and make it affordable” for consumers to obtain wireless service. The plaintiffs allege that in an effort to prevent customers from switching carriers, each of the defendants requires that handsets sold for use with its respective network are programmed, or “locked,” to prevent the use of such handsets with another carrier. The defendants deal with this assertion in varying ways. Verizon Wireless, for example, contends that it does not lock handsets on the ground that its “post-pay” handsets are set to a widely-known default equivalent to leaving a handset unlocked. By contrast, T-Mobile acknowledges that since the mid-1990s, the handsets sold for use on its network have featured locked SIM cards, hardware chips embedded in handsets that identify a particular user and allow her access to a specific network. T-Mobile contends that it employs handset locking to prevent retailers from selling and/or activating T-Mobile-subsidized handsets on other networks and to deter theft on the basis that it can deactivate the SIM card of a stolen handset. T-Mobile further asserts that it has a policy of unlocking any handset at a subscriber’s request. The parties also dispute the extent to which the defendants’ sales of wireless service are tied to that of handsets and whether aside from their direct handset sales, the defendants also dominate the purchase and distribution of handsets that are sold subsequently to consumers through other, non-carrier-owned retail channels. This Opinion does not reach the legal issue most closely associated with these disputes: whether as a condition of receiving wireless services from a particular defendant, consumers are required to purchase a handset from that defendant as well. Nevertheless, so as to provide a full picture of the wireless services industry, it is necessary to illustrate how the distribution and sale of handsets in the U.S. function. The following paragraph uses Verizon Wireless, which, as of 2003, possessed the largest market share among U.S. wireless service providers and among the defendants, as an example of how the defendants sell and/or distribute handsets. Like other carriers, Verizon Wireless not only operates its own retail stores, but it also maintains agreements with more than 2,000 sales agents, which are authorized to sell its service and which independently sell handsets as well. In acquiring the handsets they sell to consumers, Verizon’s sales agents “typically have the right to purchase either from Verizon Wireless or from third-party sources, provided that the handsets purchased are approved for operation on Verizon Wireless’s CDMA network.” Although large retailers, such as Radio Shack, often choose to purchase handsets directly from Verizon Wireless, retailers’ contracts with Verizon Wireless specifically empower them to purchase equipment through non-Verizon sources, notably manufacturers or distributors, so long as such equipment has been approved by Verizon and is prepared for use on Verizon’s network. These contracts also reflect that most covered retailers establish handset prices without Verizon’s involvement and that they have responsibility for the installation and maintenance, as well as warranties for, the handsets they sell. The Changing Structure of the Wireless Industry Since the late 1990s, the structure of the wireless services industry has fundamentally changed. Just as digital technology offers certain efficiencies, so too does having a nationwide network, which eliminates a provider’s need to pay roaming costs to other carriers. Whereas some carriers, such as AT & T Wireless, already had extensive geographic coverage by the late 1990s, other, more regionally-focused carriers began to join forces to achieve nationwide coverage. Verizon Wireless, Cin-gular, and T-Mobile, all of which now provide national coverage, each emerged from the combination of smaller carriers in 2000. More recently, AT & T Wireless and Cingular merged in 2004, and Sprint merged with Nextel, a non-party to this action, in 2005. Pursuant to congressional mandate, since 1995, the FCC has reported annually on competitive conditions in the wireless services industry. Such reports reveal the changing nature of the wireless services industry. According to the FCC, in 1998, none of the five largest service providers possessed more than 11 percent of the nationwide market, and together, they comprised only 47 percent of the market. Since 2000, however, Verizon Wireless has maintained a 24 percent market share, and in 2003, the five largest wireless service providers accounted for 70 percent of the market. The FCC reports that Verizon’s market share of 24 percent is the largest in the industry; that Cingular’s market share has fluctuated between 15 and 18 percent; that AT & T has held between 10 and 15 percent; that Sprint’s share has never exceeded 11 percent; and that T-Mobile has never held more than 8 percent. The FCC has also reported that as of 2004, 97 percent of the American population could choose from at least three providers that own their own network, and 87 percent of the population had a choice of at least five carriers. In the above-referenced reports, the FCC has not only assessed the carriers’ respective market shares but has also observed other indicia of competition, such as “the continued rollout of differentiated pricing plans” by different providers, which it has recognized since 2001. In 2003, for instance, the FCC described the wireless providers as exhibiting “independent pricing behavior, in the form of continued experimentation with varying pricing levels and structures, for varying service packages, with various available handsets and policies on handset pricing.” The FCC has also measured how many customers each wireless service provider typically loses per month, a figure known in the industry as “churn.” Since 2000, wireless service providers have lost 1.5 to 3 percent of their customers each a month, resulting in a loss, or “churn,” of between 18 and 36 percent of customers each year. On the basis of specific findings such as these, the FCC has repeatedly described the wireless services market as competitive. In 1999, for instance, the FCC observed “steady competitive progress” in the wireless services industry; in 2000, it found the industry continuing to benefit from “the effects of increased competition as evidenced by lower prices to consumers and increased diversity of service offerings;” in 2001 and 2002, it determined the industry featured “increased competition;” in 2003, it concluded that “effective competition” was present in the wireless services market; and in 2004, it wrote that “U.S. consumers continue to benefit greatly from robust competition in the marketplace.” In 2004, Cingular and AT & T Wireless merged, a transaction that required FCC approval and generated substantial analysis of the industry as a whole by the FCC. In approving this merger, the FCC noted that its approval of such mergers is conditioned on a finding that it is in the public interest, which entails honoring the Communications Act’s “deeply rooted preference for preserving and enhancing competition in relevant markets.” With this mandate in mind, the FCC concluded that “the nationwide firms are all relatively close substitutes for each other in the eyes of consumers and that the nationwide firms,” meaning Verizon Wireless, Sprint, T-Mobile, and Nextel, “have the incentive and ability to reposition in response to any attempted exercise of market power by the merged firm.” AT & T Wireless Order at ¶ 147. Discussion Summary judgment may be granted only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Rule 56(c), Fed.R.Civ.P.; see also Sec. Ins. Co. of Hartford, v. Old Dominion Freight Line, Inc., 391 F.3d 77, 82 (2d Cir.2004). “The burden of showing that no genuine factual dispute exists rests on the party seeking summary judgment, and in assessing the record to determine whether there is a genuine issue as to a material fact, the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.” Old Dominion Freight Line, 391 F.3d at 83 (citation omitted) (emphasis supplied). When the moving party has asserted facts showing that it is entitled to summary judgment, the opposing party must “set forth specific facts showing that there is a genuine issue for trial,” and cannot rest on the “mere allegations or denials” of the movant’s pleadings. Rule 56(e), Fed.R.Civ.P.; accord Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83, 91 (2d Cir.2002). If there is evidence, however, “from which a reasonable inference could be drawn in favor of the opposing party, summary judgment is improper.” Old Dominion Freight Line, 391 F.3d at 83 (citation omitted). In the realm of antitrust law, “summary judgment serves a vital function,” Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90, 95 (2d Cir.1998), by avoiding “[wjasteful trials and prolonged litigation that may have a chilling effect on procom-petitive market forces.” Virgin Atlantic Airways Ltd. v. British Airways PLC, 257 F.3d 256, 263 (2d Cir.2001) (citation omitted). “If the plaintiffs theory is economically senseless, no reasonable jury could find in its favor, and summary judgment should be granted.” Eastman Kodak Co. v. Image Tech. Serv., Inc., 504 U.S. 451, 468-69, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). Nevertheless, “[n]o special burden is imposed on a plaintiff opposing summary judgment in an antitrust case.” Virgin Atlantic, 257 F.3d at 262 (citation omitted). I. Legal Framework A. Elements of Tying Section 1 of the Sherman Act provides that “[ejvery contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. The Sherman Act exists “to protect competition, not individual competitors.” Virgin Atlantic, 257 F.3d at 265. Among the activities prohibited by Section 1 are restraints of trade in the form of “an agreement by a party to sell one, product but only on the condition that the buyer also purchase a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.” Eastman Kodak, 504 U.S. at 461, 112 S.Ct. 2072 (citation omitted); see also Edward M. Iacobucci, Tying as Quality Control: A Legal and Economic Analysis, 32 J. Legal Stud. 435, 435 (2003). Such agreements are known as tying arrangements. Courts have repeatedly emphasized that the essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product to force the buyer into the purchase of the tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. Hack v. President and Fellows of Yale College, 237 F.3d 81, 85 (2d Cir.2000) (citing Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984)). When a consumer is forced to purchase a tied product when the consumer would not do so in a competitive market, a tying arrangement is unlawful. See Jefferson Parish, 466 U.S. at 13-14, 104 S.Ct. 1551. In essence, a seller may not use its market power in one market “to impair competition on the merits in another market.” Id. at 14, 104 S.Ct. 1551. Competition in the tied market can be impaired by injuring existing businesses in the market or creating barriers to entering the market. Id. The consumer is injured when her freedom to select the best bargain is impaired by her need to purchase the tying product. Id. at 15, 104 S.Ct. 1551. She may also be injured when she is unable to evaluate the true cost of either product when they are only available as a package. Id. Both before and after the Supreme Court’s 1984 decision in Jefferson Parish, which is viewed as one of the Court’s most significant decisions on Sherman Act tying claims, the Second Circuit has required proof of five specific elements to state an unlawful tying claim: first, a tying and a tied product; second, evidence of actual coercion by the seller that forced the buyer to accept the tied product; third, sufficient economic power in the tying product market to coerce purchaser acceptance of the tied product; fourth, anticompetitive effects in the tied market; and fifth, the involvement of a ‘not insubstantial’ amount of interstate commerce in the tied market. Hack, 237 F.3d at 86; see also Dejesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir.1996); Gonzalez v. St. Margaret’s House Housing Dev. Fund Corp., 880 F.2d 1514, 1516-17 (2d Cir.1989); Yentsch v. Texaco, Inc., 630 F.2d 46, 56 (2d Cir.1980). B. The Per Se Rule of Tying As the Supreme Court has repeatedly held, “certain tying arrangements pose an unacceptable risk of stifling competition and therefore are unreasonable ‘per se. ’ ” Jefferson Parish, 466 U.S. at 9, 104 S.Ct. 1551. Analysis under the per se rule is, by definition, “without inquiry into actual market conditions.” Id. at 15, 104 S.Ct. 1551. Put another way, where a tying arrangement may be condemned as illegal per se, plaintiffs need not allege, let alone prove, facts addressed to the fourth element. In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 133 n. 5 (2d Cir.2001); In re Wireless, 2003 WL 21912603, at *4-5. If a plaintiff succeeds in establishing the existence of sufficient market power to create a per se violation, the plaintiff is also relieved of the burden of rebutting any justifications the defendant may offer for the tie. A tying arrangement may be condemned as illegal per se only “if the existence of forcing is probable” because there is a “substantial potential for impact on competition.” Jefferson Parish, 466 U.S. at 15-16, 104 S.Ct. 1551. While the Supreme Court has never defined how much market power is necessary to condemn a tying arrangement as illegal per se, the Jefferson Parish Court concluded that a thirty percent market share was “far from overwhelming” and did “not establish the kind of dominant market position” that entitles a plaintiff to a finding that the tying arrangement is per se illegal. Id. at 26-27, 104 S.Ct. 1551. C. The Rule of Reason Where the plaintiff has alleged a tying violation, and the showing of market power is insufficient to find a per se violation of antitrust law, courts apply a rule of reason analysis at the fact-finding stage through a burden-shifting scheme. In re Wireless Tel. Servs., 2003 WL 21912603, at **5, 7. Specifically, the plaintiffs “bear an initial burden to demonstrate the defendants’ challenged behavior had an actual adverse effect on competition as a whole in the [tied product] market.” Geneva Pharm. Tech. Corp. v. Barr Labs., Inc., 386 F.3d 485, 506-07 (2d Cir.2004) (citation omitted) (emphasis in original); see also In re Visa Check, 280 F.3d at 134 n. 5. “[W]hether an actual adverse effect has occurred is determined by examining factors like reduced output, increased prices and decreased quality.” Virgin Atlantic, 257 F.3d at 264. So too may a demonstration of “significant barriers to entry into [a particular] market” show an actual adverse effect on competition. CDC Techs., Inc. v. IDEXX Labs., Inc., 186 F.3d 74, 80 (2d Cir.1999). If the plaintiff fulfills this preliminary burden, however, “the burden shifts to the defendants to offer evidence of the pro-competitive effects of their agreement.” Geneva Pharm Tech. Corp., 386 F.3d at 507 (citation omitted). “Assuming defendants can provide such proof, the burden shifts back to the plaintiffs to prove that any legitimate competitive benefits offered by defendants could have been achieved through less restrictive means.” Id. (citation omitted). D. Market Power in a Rule of Reason Case The third element of a tying claim — market power in the tying product market — requires that the plaintiff prove that the defendant has “the power to force a purchaser to do something that he would not do in a competitive market,” which is often equated with “the ability of a single seller to raise price and restrict output.” Eastman Kodak, 504 U.S. at 464, 112 S.Ct. 2072 (citation omitted). A seller’s market power “ordinarily is inferred from [its] possession of a predominant share of the market.” Id. Nevertheless, market power may also exist in other circumstances, such as where “the government has granted the seller a patent or similar monopoly over a product,” Jefferson Parish, 466 U.S. at 16, 104 S.Ct. 1551, or “when the seller offers a unique product that competitors are not able to offer.” Id. at 17, 104 S.Ct. 1551. As noted above, the Second Circuit requires proof of market power in all tying cases. As the Court observed in Jefferson Parish, “[w]ithout evidence that [defendants] are using market power to force” consumers to purchase the product or service in the tied market, “there is no basis to view the arrangement as unreasonably restraining competition.” Jefferson Parish, 466 U.S. at 24 n. 40, 104 S.Ct. 1551. This is so, because “only if’ consumers “are forced to purchase” the tied product “as a result of [the defendants’] market power would the arrangement have anti-competitive consequences.” Id. at 25, 104 S.Ct. 1551. In her concurrence in Jefferson Parish, Justice O’Connor emphasized the centrality of a market power analysis for tying claims even as she argued that it was time to abandon the per se label for a class of tying claims. She recommended reducing all analysis of tying claims to a three-part inquiry, the first element of which would be an unqualified requirement that the seller have “power in the tying product market.” Id. at 35, 38, 104 S.Ct. 1551 (O’Connor, J., concurring). As the Honorable Frank H. Easterbrook has written in connection with his analysis of a tying claim, Antitrust law is based on the premise that when markets are competitive, the process of sellers’ rivalry and buyers’ choice produces the best results. Unless courts insist on a showing of market power, they run the risk of deleting one of the existing options and so reducing rather than enhancing the vigor of competition and the welfare of consumers. Will v. Comprehensive Accounting Corp., 776 F.2d 665, 673-74 (7th Cir.1985). Since Jefferson Parish, most Circuit Courts of Appeals have explicitly insisted on a showing of market power for a plaintiff to succeed on a tying claim. The Sixth and Seventh Circuits have adopted the three-step analysis proposed by Justice O’Connor, including the threshold requirement of a showing of market power for all tying claims. See PSI Repair Sews., Inc. v. Honeywell, Inc., 104 F.3d 811, 815 n. 2, 821 (6th Cir.1997) (affirming summary judgment for defendant for plaintiffs failure to show market power in tying product market); Hardy v. City Optical Inc., 39 F.3d 765, 767 (7th Cir.1994) (per curiam) (reinstating lawsuit with admonition that district court must find a 30 percent market share at a minimum); Hand v. Cent. Transport, Inc., 779 F.2d 8, 11 (6th Cir.1985) (reinstating lawsuit for failure to consider evidence of market power in a submarket); Will, 776 F.2d at 673-74 (reversing a jury verdict on a tying claim for a failure to prove defendant had market power). Thus, as the Honorable Richard A. Posner explained in Hardy, since “substantial market power is a threshold requirement of all rule of reason” cases in these Circuits, a tying arrangement is not illegal “unless the defendant has substantial market power in the tying product.” Hardy, 39 F.3d at 767. Other circuits have disclaimed the requirement of market power for a rule of reason tying claim, but have imported such a requirement through other means. The Third Circuit, for instance, has explained on one hand that Jefferson Parish has foreclosed it from requiring a plaintiff to prove the existence of market power in the tying market under a rule of reason analysis, Town Sound, 959 F.2d at 485, yet it imposes an equivalent burden on a plaintiff by requiring a showing of a “plausible theory of causation of injury of the type the antitrust laws were designed to prevent,” id. at 486 (citation omitted). The Third Circuit also observes that an antitrust tying claim “falls apart” where a defendant lacks sufficient power in the tying product market to leverage power in the tied product market. Id. But see Grappone, 858 F.2d at 798-99 (proceeding to analyze anti- and pro-competitive effects of the tie after finding that plaintiff had not shown existence of market power in the tying market). The law regarding what constitutes sufficient market power to create an illegal tie is still developing. Consistent with Jefferson Parish, both the Sixth and Seventh Circuits, however, have opined that thirty-percent serves as the minimum market share from which the market power in the tying product market can be inferred. Hardy, 39 F.3d at 767; PSI Repair Servs., 104 F.3d at 815 n. 2, 818. In Town Sound, the Third Circuit acknowledged the thirty percent threshold and found that Chrysler’s share of 10 to 12 percent of the United States car market did not create “any genuine issue of material fact” as to its “economic power” in that market. Town Sound, 959 F.2d at 481. II. Defendants’ Motion for Summary Judgment: Market Power Defendants move for summary judgment on the ground that the plaintiffs have not presented evidence raising a question of fact that any one of the defendants had sufficient power in the market for wireless service to “force” consumers, within the meaning of the federal antitrust laws, to purchase unwanted handsets. The defendants are correct. None of the defendants enjoys a market share that would, standing alone, permit an inference of market power to be drawn, and the plaintiffs have not shown that questions of fact exist with respect to any other issue which, when combined with a defendant’s market share, would allow a finding of market power. Between 1998 and 2003, no defendant has ever possessed more than twenty-four percent of the wireless services market. At the end of 1998, when plaintiffs allege that each of the defendants (or their predecessors) first tied their service to the purchase of handsets, the largest wireless service provider carried no more than eleven percent of subscribers. The defendants compete against each other in terms of service and price, and the high churn rate is striking evidence of their respective lack of control over the market and the impediments each of them faces to any effort to control price. The plaintiffs acknowledge that vigorous competition exists in the wireless services market and that to succeed on a tying claim that they must show that a defendant holds market power, but urge that they need make “only a minimal showing of market power,” citing Northern Pac. R. Co. v. United States, 356 U.S. 1, 6, 7-8, 11, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). Northern Pacific provides no comfort to the plaintiffs. In Northern Pacific, the Court upheld an injunction issued against the Northern Pacific Railway Company that barred it from enforcing or entering into preferential routing clauses. The railroad had received forty million acres of land in several northwestern states and territories to facilitate its construction of a railroad line, and had sold or leased most of this land. Most of the sales contracts and lease agreements contained a preferential routing clause that required the purchaser or lessee to ship all commodities produced or manufactured on that land over its railroad. For a large portion of these shipments there were two other major competing railroad systems. Id. at 517. The Court defined the illegality involved in tying as forcing buyers to forego their free choice. Id. at 518. It observed, “[o]f course where the seller has no control or dominance over the tying product so that it does not represent an effectual weapon to pressure buyers into taking the tied item any restraint of trade attributable to such tying arrangements would obviously be insignificant at most.” Id. at 519. It found that the railroad “possessed substantial economic power by virtue of its extensive land holdings which it used as leverage.” Id. Northern Pacific, which was written fifty years ago, is entirely consistent with the standards described earlier in this Opinion. As more cases have reached the appellate courts, the law regarding what constitutes “sufficient economic power to impose an appreciable restraint,” id. at 521, has become better defined. While the precise amount remains an open question, it has become clear that possession of a 30 percent market share is the minimum sufficient by itself to confer market power. Although Northern Pacific did not undertake to define the precise market affected by the railroad’s land holdings, or to compute the percentage of its holdings in that market, it nonetheless found the railroad to possess substantial power over a finite but infinitely valuable resource. The plaintiffs next contend that market shares of less than 30 percent have been found sufficient to create market power in tying cases, citing Rosebrough Monument Co. v. Memorial Park Cemetery Assn., 666 F.2d 1130, 1143 (8th Cir.1981), as finding that 22 percent was sufficient to invoke the per se rule against tying; Visa Check, 2003 WL 1712568, at *4-5, as finding that 26 to 28 percent was sufficient to raise a triable issue on market power for a per se tying claim; and United States v. Visa, 163 F.Supp.2d at 363, as finding that a 26 percent market share established market power. As Rosebrough Monument predates Jefferson Parish, its conclusion that the defendants’ combined 22 percent market share confers upon them a “unique economic advantage” has negligible force. Rosebrough Monument, 666 F.2d at 1143. In addition, neither Visa Check nor Visa suggests that a 30 percent market share should not be the presumptive line for inferring market power. The Visa Check case centered on a claim by several of the nation’s largest retailers that Visa and Mastercard “require[d] stores accepting [their] credit cards to also accept their debit cards.” In re Visa Check/Mastermoney Antitrust Litig., 192 F.R.D. 68, 71 (E.D.N.Y.2000). The Honorable John Gleeson denied the plaintiffs’ motion for summary judgment on their Section 1 per se tying claim. Visa Check, 2003 WL 1712568, at *6. In doing so, Judge Gleeson observed that the tying product market could be defined “at its broadest” as the market for “general purpose credit and charge card services.” Visa Check, 2003 WL 1712568, at *3. At the same time, however, Judge Gleeson observed that the relevant evidence suggested “an even narrower product market” consisting of “general purpose credit card services alone.” Id. Therefore, Judge Gleeson assessed MasterCard’s share of two alternative markets: the broader market, in which MasterCard’s share fluctuated between 26 to 28 percent over the relevant time period, and the more narrowly-defined market, in which it share “varied from between 38 to 36 percent.” Id. at *4. Judge Gleeson was asked solely to decide whether those figures were sufficient to impose per se liability, and found that he could not, at that stage of the proceeding, conclude as a matter of law that “MasterCard has sufficient economic power to warrant application of the per se rule.” Id. (citation omitted). The Visa case, which does not involve a tying claim, is no more availing for the plaintiffs. In that case, the Honorable Barbara S. Jones determined that Visa and MasterCard had market power primarily on the basis of direct evidence demonstrating their “power to control prices or exclude competition” and their “ability to price discriminate.” Visa, 163 F.Supp.2d at 340 (citation omitted). Specifically, Judge Jones noted plaintiffs’ evidentiary showing that they could not refuse to accept Visa and MasterCard “even in the face of significant price increases because the cards are such preferred payment methods that customers would choose not to shop at merchants who do not accept them.” Id. Judge Jones further recognized that both defendants had “raised interchange rates charged to merchants” several times “without losing a single customer” and that they were able to charge “substantially different prices” to different categories of merchants because of customers’ insistence on using their cards. Id. Moreover, with respect to the defendants’ market share, Judge Jones found that together Visa and MasterCard controlled over 73 percent of the relevant market in terms of transactions and 85 percent in terms of cards issued, with Visa responsible for 47 percent and MasterCard responsible for 26 percent. Id. at 341. Judge Jones found that market power could be presumed in the presence of these numbers because there were “significant enough barriers to entry or expansion that the defendant can charge supracompetitive prices without loss of so many customers that the pricing becomes unprofitable.” Id. The court did not assert that a 26 percent market share always equals market power but instead provided that market power may be presumed where, as in both Visa and MasterCard’s cases, the firm has a “large share in a highly concentrated market with significant barriers to entry.” Id. at 342. The plaintiffs next assert that the wireless market is an oligopoly with six nationwide carriers during most of the class period, and that individual businesses in an oligopoly “may” in some circumstances have market power. The plaintiffs identify the following special circumstances as creating market power here: product differentiation, meaning the creation of products understood by consumers to be “distinct commodities;” the need to obtain FCC spectrum licensing, which presents an “absolute” barrier to new entrants into the wireless service market; and each defendant’s control of its own retail handset network. The plaintiffs have not presented evidence to raise a question of fact as to whether any of these alleged factors has created market power for any one of the defendants. If by product differentiation, the plaintiffs are referring to the efforts that each defendant has made to brand its product, then the plaintiffs have not shown as either a matter of law or fact that the creation of a brand has conferred market power on a defendant. “A single branded product may, in rare cases, constitute its own relevant market.” U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 998 (11th Cir.1993) (citation omitted). “[E]n-trenched buyer preferences for established brands” can also create significant barriers to entry. Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1439 (9th Cir.1995). Yet the mere existence of a brand and brand identification in the marketplace are not synonymous with market power. See, e.g., Grappone, 858 F.2d at 797 (consumer preference for branded product alone cannot demonstrate market power). In general, where “interbrand competition exists ... it provides a significant check on the exploitation of interbrand market power because of the ability of consumers to substitute a different brand of the same product.” Cont’l T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 52 n. 19, 97 S.Ct. 2549, 53 L.Ed.2d 568. The plaintiffs have failed to offer any evidence that branding has created market power for any of the defendants. Instead, they merely cite the testimony of defendants’ expert, Jerry Hausman, who testified that products in the wireless services industry “are differentiated to some extent.” The enormous amount of churn in this industry eviscerates the suggestion that consumers do not view these brands and the services underlying them as essentially interchangeable. The FCC found, in approving the Cingular/AT & T Wireless merger in 2004, that the defendants, along with non-parties that offer nationwide coverage “are all relatively close substitutes for each other in the eyes of consumers.” AT & T/Cingular Order at ¶ 147. Holding an FCC license for a portion of the spectrum does not confer market power on any one of the defendants since each of them, as well as others not named here as defendants, have FCC licenses. Moreover, not only may licensees buy and sell spectrum with the FCC’s consent, but to compete with the defendants, a seller of wireless services does not even need an FCC spectrum license, as the growth of the mobile virtual network operator system has shown. As a result, no defendant is specially advantaged vis a vis its competitors in this industry because of spectrum licensing. To the extent that the plaintiffs analogize a spectrum license to a patent, that analogy is flawed. A patent confers advantages on one party vis a vis its competitors; here, each of the defendants has the same advantage of holding a spectrum license. The fact that each defendant has or had a network of retail distributors of its service and approved telephones is not evidence of market power within the relevant market of wireless service. Since each defendant sells its service to the public in this way, no one defendant has any special advantage or power by its use of a retail network. To the extent that the plaintiffs use this factor as evidence of the anti-competitive effects of the tying practice that they assert exist within the tied market of handsets, that will be discussed below. In sum, it is unnecessary to decide if the wireless service market can be properly labeled an oligopoly. The plaintiffs have not presented evidence to raise a question of fact that any of the features of this alleged oligopoly on which they place special emphasis has actually conferred market power on any one of the defendants. In a related argument, the plaintiffs contend that the structure of the wireless services market, in particular the defendants’ parallel actions, serves as evidence of their respective market power in the services market, citing Broadway Delivery Corp. v. United Parcel Serv. of Am., Inc., 651 F.2d 122, 129 (2d Cir.1981). Broadway Delivery addressed the issue of market power in the context of a monopoly claim, not a tying claim. The portion of Broadway Delivery on which plaintiffs rely deals with whether a jury should have been charged that a defendant’s share of less than fifty percent of a market automatically ruled out a finding of monopoly power under Section 2 of the Sherman Act. Id. at 127. Noting that market share data serves as “strong, perhaps presumptive, evidence of the presence or absence of market power,” id. at 128 (citation omitted), the Broadivay Delivery court nonetheless cautioned that “careful analysis” of market share, and the structure of the market, including the activities of the defendant and others within the market, was necessary to ascertain whether a defendant had monopoly power. Id. at 128-29. At no point did Broadway Delivery identify parallel actions of market participants as evidence that the defendant had market power. As already described, the structure of the wireless services market reflects intense competition with no single, dominant seller. Turning more directly to the plaintiffs argument about parallel conduct, although liability may be imposed on the basis of conscious parallelism in certain antitrust contexts, see, e.g., Todd v. Exxon Corp., 275 F.3d 191, 199 (2d Cir.2001) (horizontal price-fixing agreement), our Circuit’s tying case law lends no support for an inference of market power to be drawn from defendants’ parallel behavior. Indeed, unless the plaintiff has alleged a conspiracy, it is inappropriate to assess one defendant’s market power by measuring “the cumulative power of all defendants practicing tying.” 10 Philip E. Areeda & Herbert Ho-venkamp, Antitrust Law ¶ 1734e, at 49 (2d ed.2004) [hereinafter Antitrust Lato ]. As the Motion to Dismiss Opinion explained, having elected not to proceed on a theory of conspiracy in their Amended Complaint, the plaintiffs must demonstrate that each defendant individually has market power. In re Wireless, 2003 WL 21912603, at *8. While the plaintiffs had originally brought a conspiracy claim in this lawsuit, they dropped that claim from their Amended Complaint. In re Wireless, 2004 WL 2244502, at *6. The plaintiffs may not circumvent that history by framing defendants’ allegedly parallel actions as evidence of their respective market power. The plaintiffs next contend that market power exists because the defendants face a “downward sloping demand” curve, that is, that each of the defendants has the power to raise prices somewhat without losing all sales. The test for market power is not whether a defendant can raise its prices somewhat, but whether the defendant has the power to control prices or exclude competition. See Visa, 344 F.3d at 239; CDC Techs., 186 F.3d at 81 (defining market power as “the ability to raise price significantly above the competitive level without losing all of one’s business”). In a related argument, the plaintiffs assert that each of the defendants, even those with the smallest market share, has independent market power because each of them sets the price for its services above marginal cost. While the plaintiffs assume that an estimate of marginal cost, made by an expert for the defendants and based on operational and financial data provided by AIRtouch, applies to all defendants and at the same time overstates defendants’ current marginal costs, they have offered no actual data on any one of the defendants’ costs nor have they provided any expert analysis of the import of such costs to market power. In fact, the defendants’ expert, on whose estimate the plaintiffs rely for this argument, specifically testified that he did not undertake to determine the carriers’ marginal costs for the purposes of this case. In order to show market power from a defendant’s practice of selling its products above marginal cost, a plaintiff must accurately measure price and all appropriate costs. See Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661, 665 (7th Cir.2004) (rejecting plaintiffs claim that defendant consistently sold its product for more than marginal cost without evidence that the defendant obtained an unusually high return on capital). Moreover, the test for the existence of market power is the ability to control price or exclude competition, Visa, 344 F.3d at 239, not simply pricing a product above marginal cost when that price differential can be explained by the existence of economic realities entirely separate from the existence of market power, for instance, the presence of high fixed costs. See Eastman Kodak, 63 F.3d at 109 (“Certain deviations between marginal cost and price, such as those resulting from high fixed costs, are not evidence of market power.”) Here, it is undisputed that the defendants’ fixed costs include the transmission network, towers, and fiber optic cable. In such circumstances, marginal cost cannot serve as the “competitive benchmark;” rather, all market participants will price above marginal cost to cover fixed costs. The plaintiffs contend that the existence of market power can be inferred from the fact that each defendant imposes burdensome terms on consumers, specifically, term contracts with early termination and activation fees. A defendant’s use of such contracts does not create an inference supporting a finding of market power, since each of the defendants (as well as service providers who are not defendants) offer service through similar contracts. Therefore, the use of term contracts cannot be said to exclude competition. Nor have plaintiffs alleged, much less demonstrated, that any defendant’s use of term contracts, evidences an ability to control prices. Finally, the plaintiffs contend that it is fair to infer the existence of market power from the fact that competition has been harmed in the handset market. Some courts have stated that market power may be proven through “direct evidence of anti-competitive effects.” Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 937 (7th Cir.2000) (affirming FTC finding that company’s vertical restraints violated the rule of reason under 15 U.S.C. § 5). In Toys ‘R” Us, the company’s boycott succeeded in causing ten major toy manufacturers to reduce output of toys to warehouse clubs, which protected the company from having to lower its prices. Id. Even assuming that market power can be shown in a tying case through the inference created by providing direct evidence of anticompetitive effect, as will be discussed below, the plaintiffs have failed to provide any such direct evidence. Because the plaintiffs have been unable to show that any one of the defendants has market power in the wireless services industry, each of the defendants is entitled to summary judgment on the plaintiffs’ claim that each of the defendants violated the Sherman Act by forcing consumers to purchase handsets to receive service. III. Defendants’ Motion for Summary Judgment: Anticompetitive Effects Defendants have also moved for summary judgment on the alternative ground that the plaintiffs have not shown that each defendant’s alleged tying arrangements has an anticompetitive effect on the handset market. At the outset, the interrelationship between market power and anticompetitive effects merits some exposition. Given that market power and anticom-petitive effects serve as separate elements of a tying violation, courts are not always explicit about the interaction between these two concepts. Nevertheless, the Supreme Court has long recognized the interrelationship between market power and anticompetitive effects. Indeed, at the heart of the per se rule of tying is the intuition that where a seller has significant market power, one may “presum[e] unreasonableness without the necessity of any analysis of the market context in which the [alleged tying] arrangement may be found.” Jefferson Parish, 466 U.S. at 9, 104 S.Ct. 1551. As a consequence, where a defendant’s market power is sufficiently great that its tie qualifies as a per se violation, a plaintiff is relieved of the separate burden of showing an anticompetitive effect from the tying in the tied product market. Conversely, the tying case law also reflects the understanding that where market power is not present, an alleged tying violation cannot be a threat to competition in the tied product market. As Justice O’Connor observed in her concurrence in Jefferson Parish, a “seller must have power in the tying product market. Absent such power, tying cannot conceivably have any adverse impact in the tied product market and can only be pro-competitive in the tying product market.” Id. at 37, 104 S.Ct. 1551 (O’Connor, J., concurring). Even courts that have declined to demand expressly a showing of market power under the rule of reason understand the interplay between market power and anti-competitive effects. As the Third Circuit explained in Town Sound, in which the plaintiffs challenged the legality of tying autosound systems to the sale of Chrysler automobiles, [e]ven if we assumed that soon every automobile manufacturer will include an autosound system on every car, the most that we could conclude would be that a certain class of competitors (namely the autosound aftermarket dealers) might be doomed to competitive oblivion. But that would be no concern of the antitrust laws unless consumers were also hurt because of diminished competition. If the autosound aftermarket were to disappear, vigorous competition in the automobile market would remain. That competition would protect those consumers who care about autosound systems no less than it now protects consumers who care about other standard features, including the comfort of the front seats, the quality of the brakes, and the fuel efficiency of the engine. Town Sound, 959 F.2d at 494 n. 40 (citation omitted). Put another way, the Town Sound court understood that in a tying product market characterized by competition, even if all market participants engage in packaged sales, such conduct cannot have actual anticompetitive effects in the tied product market. Thus, having been unable to show that any of the defendants has market power, it is not surprising that plaintiffs are also unable to show that the tying practice in which each defendant is alleged to have engaged has resulted in any anticompetitive effects in the handset market. To demonstrate anticompetitive effects, a plaintiff must demonstrate that the tie “as it actually operates in the market” harmed competition in the tied product market. Jefferson Parish, 466 U.S. at 29, 104 S.Ct. 1551. For a tie to create an anticompetitive effect there must be “a substantial threat that the tying seller will acquire market power in the tied product market. No such threat exists if the tied product market is occupied by many stable sellers who are no