Broadband providers such as AT&T, Comcast, and Verizon Communications have opposed regulation or new laws that would dictate how they could run their networks. Up until this point, the Internet has been free of any regulation. And these companies would like to keep it that way.
“We are concerned, however, that the FCC appears ready to extend the entire array of Net neutrality requirements to what is perhaps the most competitive consumer market in America: wireless services,” he said.
In the second quarter of 2009, AT&T added 1.4 million new wireless subscribers, for a total of 79.6 million subscribers. Verizon Wireless also added 1.1 million new subscribers during the second quarter, for a total of 87.7 million subscribers. Meanwhile, smaller competitors such as Sprint Nextel lost subscribers.
Indeed, services such as Skype, which allows users to make free and low-cost phone calls over an Internet connection, and Google Voice, which allows users to use to a single phone that follows them, regardless of which voice network they use, have been blocked by certain carriers. The FCC is already investigating why Google’s voice service was rejected by Apple for the popular iPhone.
“Our customers want an open experience,” he said. “They want more choices, which is why we allow third-party developers and are providing developers complete access to our network. But our concern is that these new regulations, which apply regulation to the Internet for the first time, could have unintended consequences.”
“I recognize that if we were to create unduly detailed rules that attempted to address every possible assault on openness, such rules would become outdated quickly,” he said. “But saying nothing–and doing nothing–would impose its own form of unacceptable cost.”
“Clearwire applauds the chairman’s efforts to safeguard an open Internet and his desire to strike a balance between consumers’ need for open, rich access to the Internet and appropriate network management practices,” Mike Sievert, chief commercial officer for Clearwire, said in a statement. Clearwire’s 4G WiMax technology, business model, and operations embody openness for access, applications and devices.”
On Monday, FCC Chairman Julius Genachowski gave a speech at the Brookings Institute in Washington, D.C., outlining plans to turn the agency’s principles for open Internet access into official regulation.
During his speech, Genachowski addressed this issue.
“On a wireline broadband network, you know where your customer is,” he said. “So you can build capacity to handle the peak demands. But on a wireless network, you have a crowd converge on a site that suddenly has 10 times or 100 times the users competing for the same resources. “
But the regulation that Genachowski is proposing will not apply to just wireline broadband networks, such as DSL and cable modem service. It will also apply to wireless services. And this is where the major phone companies will likely focus their opposition to the FCC’s plans for new regulation.
The first would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. The second principle would ensure that Internet access providers are transparent about the network management practices they implement.
He argues that wireless networks differ from wireline broadband networks because bandwidth is more limited on a wireless network. And he said that imposing new rules on how carriers operate their wireless networks would stifle investment.
Verizon and AT&T, which operate the nation’s largest and second-largest cell phone networks, respectively, say the rules should not apply to wireless Internet access.
The wireless industry is gearing up to fight new Net neutrality rules that the Federal Communications Commission is formulating to keep the Internet open.
That said, the nation’s two biggest phone companies, AT&T and Verizon, have accepted the principles outlined by the FCC, when it comes to their wired broadband networks. Even though they don’t think additional regulation is needed, they have agreed in principle with keeping their broadband networks open.
This is a sentiment echoed by the CTIA, the wireless industry’s trade association. The group argues that the open network provision in the 700 MHz spectrum auction caused many operators to stay away from the auction. In the end, only two companies bid for the C Block licenses: Google and Verizon. And the group notes that these licenses “sold for significantly less” than other licenses in the auction.
But Cicconi went on to say that the principles and new legislation should not apply to the wireless market.
While it is true that Verizon has made its 3G network more open, it still requires device manufacturers to “certify” their products for the network, which means that Verizon still has the ability to accept or deny devices that run on its network. As for new applications, Verizon is still in the practice of disabling some features, such as Wi-Fi, on certain phones that operate on its nonopen traditional 3G wireless network.
Verizon, which ended up winning the C Block auction in that auction, also believes that regulation is unnecessary. The company’s vice president of regulatory affairs, David Young, said in a panel after Genachowski’s speech that these rules will be difficult to implement in the wireless market because of the capacity constraints on wireless networks.
But the FCC is already investigating the state of competition in the wireless market. Even though there are four major nationwide carriers–AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile USA–the majority of the market is controlled by two carriers. And their dominance is increasing.
Young said Verizon is committed to providing open access on its wireline broadband network, as well as its wireless network. He pointed to the fact that Verizon is now building a new 4G wireless network using the C Block spectrum it acquired in the 700 MHz auction. And as required by the FCC, it will allow users to attach any device and access any application on this new network. In effort to show Verizon’s commitment to open access, Young also highlighted Verizon’s efforts to open its 3G cellular network through its open development initiative.
“AT&T has long supported the principle of an open Internet and has conducted its business accordingly,” Jim Cicconi, AT&T’s senior vice president of external and legislative affairs, said in a statement. “We were also early supporters of the FCC’s current four broadband principles and their case-by-case application to wired networks.”
At the end of the day, Net neutrality supporters say regulation is needed to keep the Internet open because there is simply not enough competition in the market to ensure that service providers play fair.
” I’d like to give credit to Verizon,” Ben Scott, policy director for the consumer group Free Press, said during the panel discussion at the Brookings Institute event. “They have made a lot of positive steps toward openness. But that is not universally true of all carriers. Skype (and other applications) are still blocked on other carrier networks.”
But Net neutrality supporters say it is critical for the new regulation to apply to wireless, as well as to wireline, services because in the future, most people will access the Internet via wireless devices. And as wireless operators launch new 4G networks that increase capacity and network download speeds, even more mobile devices will become Internet-enabled.
“If your definition of a competitive market is based on what we see in the wireline market, where there are two competitors, then yes, wireless is a competitive market,” Scott said. “But if you look at the wireless market comprehensively, and you aren’t just counting providers, then you’ll see the market power is very concentrated.”
Still, consumer advocates applaud Verizon’s attempts at openness. But they point out that other wireless providers have not taken similar steps.
While many would agree that more competition is needed in the wireline broadband market, where most consumers have access to at most two broadband service options, many would disagree that competition does not exist in the wireless industry.
Julius Genachowski
In addition to making sure that network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, or attaching unharmful devices to the network, Genachowski wants to add two more rules.
(Credit:
LaunchBox Digital)
While incumbent wireless providers may oppose regulation on wireless Internet access, newer players support it. Clearwire, which is building a nationwide 4G wireless network, using spectrum from Sprint Nextel, and investment from Comcast, Time Warner Cable, Google, and Intel, fully supports the FCC’s efforts.
“Unlike the other platforms that would be subject to the rules, the wireless industry is extremely competitive, extremely innovative, and extremely personal,” Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the wireless industry’s trade association, said in a statement.
“If consumers had a wide choice of broadband service providers, preserving an open Internet might not be such a critical issue,” Vint Cerf, Google’s chief Internet evangelist, wrote in a blog post he published Monday. “Unfortunately, the vast majority of Americans have few (if any) choices in selecting a provider. As a result, these providers are in a position to influence whether and how consumers and producers can use the on-ramps to the Internet–and we’ve already seen several examples of discriminatory actions or threats that impair openness.”