Posted by: Stephen Wildstrom on April 4, 2008
Robert M. Frieden is a professor at the Penn State law school, a frequent commentator on network neutrality issues, and author of the New America Foundation’s white paper “Wireless Carterfone. He wiegfhs in with a critique of the Federal communications Commission’s refusal to force more open access to wireless networks:.
Federal Communications Commission Chairman Kevin Martin has announced his opposition to a proposal that would require wireless carriers to allow subscribers the opportunity to use any compatible handset for accessing any application, content or software. Subscribers of wired telephone service have enjoyed this option for forty years and despite carriers’ doomsday prophesies no employee or network has suffered harm. Consumers take for granted the right to attach any telephone.
The FCC has never gotten around to declaring the same consumer freedom for wireless subscribers, and now Chairman Martin appears to disinclined to do so. Apparently he has confidence that the marketplace solutions obviate any necessary FCC intervention. Such optimism must derive in part from the apparently newfound willingness of one major wireless carrier, Verizon, to support aspects of open access. Perhaps Chairman Martin’s confidence in the marketplace results from the less than magnanimous offer of most wireless carriers to pro-rate their early termination penalties by $5 a month.
But here’s the rub: there is a big difference between a carrier making the decision of what constitutes compatibility and network harmlessness and the neutral criteria driven decisions of a third party. The variety of handset options that attached to wired networks attests to a robust marketplace structured by a rule that simply requires a third party lab certification that the handset will not cause technical harm to the any wired network. But for wireless handset access the carrier—and not a third party--can serve as judge, jury and executioner.
Wireless carriers have invested greatly in networks that they own and operate. But these network operators have agreed to take on the responsibilities of common carriers in exchange for major, financially quantifiable benefits. It works both ways, but the wireless carriers never seem to have to acknowledge the benefits for which they qualify including access to government owned rights of ways at bargain rates. Wireless carriers may not have gotten free access to land, which their wired carrier counterparts got, but the right to install towers adjoining the interstate highways and on other public lands does not cost anything near the price of access to private land.
Economists who ought to know better, have attempted to make the concept of market failure an oxymoron. Call it what you will, but with a market as concentrated as wireless is in the United States with generally the same terms and conditions available to subscribers, it does not appear to be a market upon which we can rely on the carriers to self-regulate. If the market were so robust, would not at least one carrier consider an alternative to bundling a subsidized handset with higher monthly rates to recoup the handset subsidy? For subscribers content to continue using an existing handset, no carrier offers a lower rate reflecting the fact that they do not have to subsidize a handset.
I guess one can infer that Chairman Martin seems to think open wireless access would impose more unnecessary regulations. But that simply is not the case. When the FCC ordered wire-based carriers to allow subscribers to own and attach telephone, the FCC established game rules about what constitutes fair play in terms of what subscribers can do with the handsets that they own. Curiously Chairman Martin has endorse applying similar open access equipment principles to the cable industry by requiring operators to support the CableCard option in lieu of allowing carriers to tie cable television service with a compulsory lease of a set top box.
But when it comes to wireless handsets—even one that you think you own—Chairman Martin thinks it just fine for those market-driven wireless carriers to limit subscribers’ freedoms well beyond any legitimate concerns about network harm.