Call For 'Wireless Net Neutrality' Just A Little Off-Base
from the heart's-in-the-right-place dept
Wu's basic contention is that American mobile operators are hurting consumer welfare in several different ways, by influencing handset design and features, and limiting the devices consumers can use on a network. Additionally, he says operators are stifling innovation by making the environment for third-party application development so restrictive. He says that the FCC should make the Carterfone decision -- which decreed in 1968 that AT&T had to allow users to connect any device to their network, as long as it was safe -- apply to mobile operators, mandate net neutrality, and enforce proper disclosure of price plans' rates and conditions.
Wu does highlight several big problems in the industry, and probably the biggest of those is disclosure. We've reported several times how, for instance, Verizon Wireless markets its EV-DO data card service as "unlimited", when it's really anything but unlimited. That's really a problem with their advertising, and with service from other operators who don't have or enforce such restrictions readily available, it doesn't seem like there's really a need to come in with some neutrality regulations in this instance. He also rightly slates the mobile application development environment, which is beset by incompatibility among handsets and various other issues. He's not wrong, here, and while operators do set up some obstacles here, to lay the blame on them is way off-base. Plenty of standards exist in this area, but the problem is largely in how they're implemented by handset vendors. Part of the problem, too, is the wide variety of devices that are already in circulation that have significantly different functionality -- so any change that's going to happen on this one will be quite slow.
But Wu's argument falls short in some other areas. His call for the Carterfone decision to be foisted upon mobile operators is based upon some problematic thinking. For instance, he cites the fact that the Apple iPhone will only be available from Cingular as one example, but what he fails to mention are that certain features of the iPhone, such as Visual Voicemail, are network-dependent, meaning they require cooperation between the handset vendor and the network operator. In addition, on most operators (Verizon being a notable exception), customers are free to use the device of their choice, whether or not it was purchased from that operator. Wu blurs this issue a bit in his paper, directly comparing this point with operators' practice of "locking" phones to their own network, when they're two separate issues. Locking exists so that operators can subsidize handsets and keep their prices low -- something that most consumers would probably prefer to paying full, unsubsidized prices for their phone, just so Wu could switch operators and not have to get a new one. Plenty of outlets for unlocked phones already exist, selling devices at much higher prices than operators, and consumers are free to give them their business.
Wu's paper also contains many points that are simply wrong. For instance, he says that an AT&T/Cingular user who wants to get images they've taken with their cameraphone off of their device must pay for three separate services: '"MediaNet," "Text Messaging" and "Multi-Media Messaging"'. This simply isn't true. It's completely unclear why he thinks a user would need text messaging for this, and while they could use either MMS or a photo-upload application or email over the MediaNet data connection, on plenty of phones they could also use Bluetooth, or on some handsets, copy the photos from a memory card, for free. Some operators have crippled features like Bluetooth -- with Verizon Wireless again the most guilty party -- but on the whole, this has become a much smaller issue than it was a few years ago. He also cites the Nokia E62, a US variant of its E61, which is largely identical, except for WiFi support, as another example of crippling. What he also neglects to mention is the cost of including WiFi, and perhaps rather than having any fear of WiFi, Cingular simply wanted to bring the E61 to market at a low price point. Indeed, the "unrestricted" E61 is easy to find for purchase for anybody in the US that wants it.
Wu's net neutrality concerns and recommendations are also quite shaky. Walled gardens have, for the most part, disappeared from the landscape (once, again, Verizon proving the exception). If customers desire open net access on their mobile phone, they have multiple options available to get it. When nearly every other operator takes a different route than Verizon in this area, are regulations really necessary to bring it in line with its rivals?
Wu's calls for neutrality regulations are premature and unnecessary. The walled garden model isn't sustainable -- the web model he's so fond of has proven that. Part of the reason that it's been able to persist in mobile is that few people really care enough to make it an issue. Most people care about price and coverage -- everything else is incidental. This does have a bit of chicken-and-egg feel to it, since a stifled environment for innovation means there are a limited number of compelling applications and services to make the general public more interested in mobile data services. But, as subscriber growth slows and operators become more focused on increasing non-voice spending, they will need to fix this, and remove many of the barriers to innovation and new services that exist in the market. Walled gardens and locked-down devices won't cut it, as the competitive market -- and yes, it really is pretty competitive, all things considered -- simply won't allow it. The move towards operators fully embracing openness is happening -- slowly, but it's happening.
As far as Skype's petition to the FCC, the less said about this blatant publicity stunt, the better. It's not really clear why this is so important to Skype: a Windows Mobile version of its client software has been available for a long time, and is pretty much open to US mobile users with compatible Windows Mobile devices. It's got little room to expand outside that niche, since its CEO says the company can't seem to get the hang of mobile development. Also, it's a little ironic that Skype's demanding openness and use of standards, when it's eschewed so many standards in the VoIP space, like SIP, in favor of proprietary technologies and systems it refuses to open up.
All in all, mobile operators do plenty of things that deserve scorn from consumers, but with fear of sounding like an apologist for them, much of the criticism here is a little bit misguided. Wu, a person we have a lot of respect for, has written a paper that makes for some interesting reading, and his observations and suggestions on pricing and service disclosure and the poor development environment are largely on point. But this concept of "wireless net neutrality" is one that's built on a very shaky foundation. The market will solve most of these issues, particularly given that so many of them seem to sprout from a single operator. The market is competitive, and any net neutrality or device attachment regulations simply aren't necessary at this point.