FCC Chairman Julius Genachowski laid out his plans to implement net neutrality and open Internet regulations against telcom companies--both wireless and wireline--although he provided few specific details as to how the stipulations would take into account the spectrum, capacity and bandwidth limitations inherent in the design of wireless networks.
Nonetheless, the action portends major repercussions for a wireless industry that could be required to connect consumers with all kinds of applications and services, regardless of the competitive impact. Among those offerings often cited in the net neutrality discussion for wireless are Skype's VoIP service--which transmits voice calls over the Internet far more cheaply than standard calling services--and Sling Media's Slingbox Mobile video offering--which broadcasts a user's home TV service to cell phones. Both services, which are supported to varying degrees by the nation's wireless operators, represent dramatic changes to wireless business models traditionally tuned to charging for specific services rather than simply voice and data access.
Following reports late Friday that Genachowski would propose net neutrality rules, the chairman in his speech this morning laid out his argument for such a move, and provided some general guidelines for the proceeding. To be clear, though, the speech represents a first tentative step toward imposing net neutrality regulations on wireless carriers and other service providers, and likely will be followed by months of debate and public comment on the subject before the FCC votes to on whether to actually implement the guidelines. Thus, players on both sides of the debate will have ample opportunity to voice their position on the matter and try to weight the outcome in their favor.
Genachowski said the FCC should vote to enshrine the agency's four pre-existing policies on net neutrality, which stipulate that network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network. Genachowski also said the agency should add two additional principles to the lineup: nondiscrimination (providing access to all services and applications without playing favorites) and transparency (outlining network management practices).
While Genachowski noted at several points during his speech the differences between wireless and wireline network requirements, he said net neutrality should apply to both equally.
"Even though each form of Internet access has unique technical characteristics, they are all different roads to the same place," he said. "It is essential that the Internet itself remain open, however users reach it. The principles I've been speaking about apply to the Internet however accessed, and I will ask my fellow commissioners at the FCC to join me in confirming this."
Interestingly, though, Genachowski made a nod to some of the wireless industry's recent activities on the front: "I note a trend toward openness among several participants in the mobile marketplace," he said, without providing details or specifics.
Genachowski warned that the FCC should intervene in the regulation of access to the Internet to prevent carriers from blocking access to legal content in order to further their own business interests.
"There are inevitable tensions built into our system," he said, adding: "The great majority of companies that operate our nation's broadband pipes rely on revenue from selling phone service, cable TV subscriptions or both. These services increasingly compete with voice and video products provided over the Internet. The net result is that broadband providers' rational, bottom-line interest may diverge from the broad interest of consumers, competition and choice."
Led by trade group CTIA, the wireless industry has widely resisted the imposition of open Internet guidelines to their carefully tended networks. "As we have said before, we are concerned about the unintended consequences Internet regulation would have on consumers considering that competition within the industry has spurred innovation, investment and growth for the U.S. economy," said Chris Guttman-McCabe, VP of regulatory affairs for CTIA, in response to the chairman's speech. "How do the rules apply to the single-purpose Amazon Kindle? How does it apply to Google's efforts to cache content to provide a better consumer experience? How about the efforts from Apple and Android, Blackberry and Nokia, Firefly and others to differentiate the products and services they develop for consumers? Should all product and service offerings be the same?"
Guttman-McCabe also highlighted the implications of the action on the recent 700 MHz spectrum auction. "Regarding spectrum investment, the commission need only look at the results of the 700 MHz auction to understand the impact on investment. The C Block rules, which included an open requirement, had only two bidders, and sold for significantly less. The other licenses, which sold for significantly more, were sold with the promise that the spectrum would not be subject to the open rules. Now the commission is considering changing the rules after the auction--impacting companies' confidence in the auction process--just as carriers are facing a brewing spectrum crisis."
Verizon Wireless won the C Block spectrum, and is using it to build out its LTE network.
Representatives from Verizon Wireless and AT&T Mobility did not immediately respond to requests for comments, while T-Mobile USA referred to CTIA's statement. Sprint Nextel said "Sprint wants customers to be able access the applications and the Internet sites they want, when they want to."
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