...users who choose to "upgrade" their handsets to support the Verizon Wireless music store are doing so at a tradeoff: you'll no longer be able to play MP3s on your phone.... [Microsoft] stipulated that if the Verizon Wireless music store was gonna fly at all, MS wanted to make sure that phones using it could only play back Microsoft's audio format.
I haven't verified this. But I've been warning about the unprecedented levarage that the DRM patent holders will be able to apply to content distribution channels such as the telecommunication networks. Having multiple incompatible DRM schemes out there is bad enough. All these devices that are incompatible with each other (some from the same manufacturer like Motorola)? Being forced to match devices to content sources on the basis of DRM compatibility? It's ridiculous. But disabling MP3? If it's true, this crosses the line. (note: the Engadget story says that customers who speak up can get a new phone that allows MP3s).
Update 1/10/06: Microsoft's Robert Scoble got to the bottom of this. It's not true.