Net Neutrality Goes Wireless

Posted by Sam Churchill on

The debate over net neutrality has moved full force into the wireless space, says RCR News and Ars Technica.

A new paper by Columbia University law professor, Timothy Wu claims mobile-phone carriers’ iron-clad control of networks is retarding innovation and hurting consumers.

“The wireless industry, over the last decade, has succeeded in bringing wireless telephony at competitive prices to the American public. Yet at the same time, we also find the wireless carriers aggressively controlling product design and innovation in the equipment and application markets, to the detriment of consumers. In the wired world, their policies would, in some cases, be considered simply misguided, and in other cases be considered outrageous and perhaps illegal,” said Wu in a paper released by the New America Foundation (pdf).

Wu is expected to present his views today at a Federal Trade Commission workshop on broadband connectivity competition policy.

“By controlling entry, carriers are in a position to exercise strong control over the design of mobile equipment,” said Wu. “They have used that power to force equipment developers to omit or cripple many consumer-friendly features.

Carriers have also forced manufacturers to include technologies, like ‘walled garden’ Internet access, that neither equipment developers nor consumers want. Finally, through under-disclosed ‘phone-locking,’ the U.S. carriers disable the ability of phones to work on more than one network.”

Michael Altschul, general counsel of cellphone association CTIA, told the FTC conference that “wireless should not be subject to any net neutrality rules. Policy-makers should allow the market to continue to work and regulate only in the event of a market failure.”

Scott Wallsten, a senior fellow and director of communications policy studies for The Progress and Freedom Foundation, largely agreed. However, he conceded some of Wu’s observations may have merit.

“Overall … the wireless industry is robustly competitive and exhibits scant evidence of a market failure. Consumers consistently benefit from increasingly lower prices and more features,” Wallsten stated. “This competition shows no signs of letting up. To ensure that competition and innovation continues in this market, the FCC should continue to move spectrum into the market quickly and make its use flexible and allow it to be traded.”

According to Wu, Verizon Wireless, which prominently advertises “unlimited” data services, imposes both bandwidth limits, and contractual limits that bar routine uses of the internet, including bans on downloading music from legitimate sites like iTunes, the use of Voice over IP, and on the use of sites like YouTube.

FCC Chairman Kevin Martin wants a new rule to classify wireless broadband as an “information service”. That would make wireless largely unregulated.

Wireless operators say limitations and constraints are necessary. Unlike land line providers, wireless ISPs have only have a limited amount of shared bandwidth. Bandwidth hogs can negatively impact shared access for everyone.

Federal Trade Commission Chairman Deborah Platt Majoras and Commissioner Jon Leibowitz both said they needed to break through the rhetoric on both sides of the net neutrality issue net before making any policy decisions, reports C/Net. “Frankly I was a little surprised by the lack of constructive public debate,” Majoras said. “What I found were too many sound bites, too much talking past each other.”

Critics say the FTC has not been a bastion of “neutrality” themselves. Deborah Platt Majoras, the FTC’s Republican chairman, said extensive Net neutrality legislation currently pending in the U.S. Senate is unnecessary and formed an “Internet Access Task Force” to examine Net neutrality. But the report appeared to have little grasp on the terminology.

In other news, the FCC has raised the idea of reducing the ballooning costs of the Universal Service Fund through “reverse auctions“, where companies bid for subsidies.

In such an auction, the firm that bids to provide service for the smallest subsidy, all else equal, would be chosen as the service provider. This approach, it is hoped, will reveal the true cost of providing service in high-cost areas and reduce the growth in universal service expenditures. The NCTA has been dubious, but the Coalition to Keep America Connected, with support of many small telephone companies, likes the concept.

Posted by Sam Churchill on Wednesday, February 14th, 2007 at 2:31 pm .

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