Our Take: Open Networks Still Have A Lot To Prove

The guiding principle for more "open" rules for some of the highly coveted 700-MHz spectrum, explicitly cited by FCC Chairman Kevin Martin, is the commission's 1968 Carterfone decision, which ended the Bell System's monopoly on phone devices. That decision had a profound impact on telephony devices, but also on the data modem market and, later, the Internet access market. The FCC suggests that breaking the link between mobile devices and service providers will unleash competitive forces and serve the interests of consumers.

However, it's far from clear how such a model of wireless network device neutrality will work. Suggesting that these new open networks will let consumers use any device they want to access any application they want may sound good as a platitude, but in the real world of bits and hertz, it's largely meaningless.

Wireless networks are built around standards, and devices will need to conform to those standards. It's true, as Martin states, that users in other countries face fewer constraints in migrating devices between carriers, but that's largely the result of carriers employing the same standards in those countries.

WHAT'S DRIVING THE DEBATE
Because U.S. carriers use device exclusivity as a core competitive marketing mechanism--witness AT&T and the iPhone--it's very difficult for them to support device independence. But service providers have instigated these new rules by frustrating consumers with dropped calls, poor service, high termination and switching fees, and overly restrictive usage policies, especially for data.

Consumers are accustomed to wired broadband networks, at work and home. These fat and relatively cheap pipes deliver an array of content and unlimited global Internet access and are extremely reliable. Why shouldn't consumers apply the same service criteria to wireless services?

The short answer is that comparing wireless and wired data services is like comparing your backyard swimming pool to the Atlantic Ocean. No matter how much you try to expand the pool to match the ocean's capacity, you'll quickly run out of space.

Wireless service providers face similar challenges. Although the new 700-MHz auction opens up valuable network capacity, demand for service is likely to exceed supply. Technical breakthroughs will help by increasing spectral efficiency, but fundamental laws of physics place constraints on innovation.

Besides wireless providers and consumers, there's been another surprising force in the debate: Google, and all it represents. Google has demonstrated significant political acumen and resolve not normally associated with emerging companies. Google didn't get all it asked for from the FCC, but by promising to meet the spectrum minimum bid, it certainly helped to shape the policy debate.

Since the FCC decided not to require wholesaling of wireless services, a key element of Google's proposal, it's not clear whether Google will even bid on this new spectrum. But it's certainly made it clear that content providers will have a powerful say in the next generation of wireless Internet services.

Return to the story:
FCC's Open Access Rules Fall Short Of A Wireless Revolution