Net neutrality debate spills into wireless

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,” said Wu in a paper released by the New America Foundation.
Wu is expected to present his views today at a Federal Trade Commission workshop on broadband connectivity competition policy.
Wu said cellphone operators exercise excessive control over which devices can be used on the public airwaves, comparing the behavior to the old monopoly AT&T 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.”
Citing robust competition among mobile-phone 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 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. 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 had pit Internet giants like Google Inc., Amazon.com, Yahoo Inc. and eBay Inc. against Bell telephone companies and cable TV operators that dominate the broadband market. Net neutrality took center stage in last year’s congressional debate on telecom reform. With Democrats controlling both chambers of Congress and generally supportive of net neutrality, the issue is expected to overshadow other telecom issues in the 110th Congress. It is unclear whether the Democrats’ push for net neutrality legislation will expand to include mobile-phone carriers.
The issue of wireless net neutrality is gaining steam at a time when Federal Communications Commission Chairman Kevin Martin wants a new rule to classify wireless broadband as a largely unregulated “information service.”