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Wireless role in neutral ‘Net at front, center

The debate over net neutrality has moved full force into the wireless space.
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,” Wu wrote in a paper released by the New America Foundation.
Wu said features and services wireless carriers have blocked or degraded include cellphone call timers, Wi-Fi, Bluetooth, GPS, advanced SMS, Internet browsers, easy photo and sound file transfer capabilities, e-mail clients and SIM card mobility.
Wu said the cellular carriers’ excessive control over what devices can be used on the public airwaves is reminiscent of behavior by the old AT&T monopoly of the 1950s.
“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.”
Wu said that while the Bell telephone and cable TV giants apparently have not leveraged duopoly market power to engage in Internet content discrimination, the mobile-phone industry’s practice of doing so is well established.
“The level of innovation you see in the Web world and in the PC world are dramatic, powerful, impressive. We look at the cellphone world, which is unsupervised and unregulated, and we see what should be jungle is a wasteland,” said Wu at a Federal Trade Commission workshop on broadband connectivity competition policy.
Cellphone operators are regulated by the Federal Communications Commission, with limited oversight reserved to states.
Citing robust competition among cellphone carriers and MVNOs as well as their diverse service offerings and business models, Michael Altschul, general counsel of cellphone association CTIA, told the FTC conference “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 & Freedom Foundation, largely agreed. Wallsten rejected the AT&T analogy, explaining the competitive wireless industry bears no resemblance to the once-mighty monopoly. 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.”
Up to now, the net neutrality debate has been dominated by Internet giants like Google Inc., Amazon.com, Yahoo and eBay Inc. arguing with Bell telephone and cable TV companies.
Net neutrality took center stage in last year’s congressional debate on telecom reform, but didn’t fare well in the then-GOP controlled Congress. Key Republican-controlled regulatory agencies like the FTC and FCC oppose net neutrality, favoring market forces over regulation to address an alleged problem in the wired Internet space that critics contend doesn’t exist and can be dealt with if problems arise.
It is unclear whether the Democrats’ push for net neutrality legislation will expand to include wireless carriers. One early indication of whether Congress has any interest in wireless net neutrality could come when the five FCC commissioners testify before House Commerce subcommittee on telecom and the Internet. The panel is chaired by Rep. Edward Markey (D-Mass.), a major net neutrality backer. A hearing set for Feb. 15 was postponed to enable lawmakers to attend the funeral of Rep. Charlie Norwood (R-Ga.).

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