In his first open meeting last week, the newly appointed FCC under Chairman Julius Genachowski took up a number of issues surrounding the wireless market. All of this comes on the heels of a week of point-counterpoint between Apple and AT&T Wireless regarding who killed Google Voice on the iPhone. The commission signaled that it would be willing to expand the scope of its scrutiny and bring a more analytical focus to its work.The FCC voted to initiate notices of inquiry in three areas. The first deals with how to promote innovation in the wireless industry, the second on how to analyze competition in the industry, and the third on how best to provide consumers with information about their mobile service plans. All three initiatives were adopted unanimously by the five-member commission.
In an indication that the new FCC may be taking a more activist role, the chairman said, "We are at a pivotal moment at the history of this industry.... Sometimes this will require changes in commission rules. Sometimes it won't. But it will always require a relentless focus on policies that promote investment, competition and consumers."
To be sure, a lot of this is technical, looking into what metrics and data the FCC should be focusing on as it works to increase innovation. The probe will also focus on the role the commission should play in repurposing radio spectrum and how to use that spectrum more efficiently. They are also seeking comment on what developments have been made in the move toward IP architectures and the increased use of smartphones and location-based services.
The Google Voice Flap All of this is set in the context of Apple's recent refusal to approve a Google Voice application for the iPhone. In response to inquiries from the FCC Apple and AT&T asserted, "Who, me?"
Apple clarified the matter by saying that it hasn't actually rejected the application, it just hasn't approved it. In a more detailed explanation they state: "The application has not been approved because, as submitted for review, it appears to alter the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface, for telephone calls, text messaging, and voicemail." Apple further acknowledged that the same concern lay behind their rejection of of GVDialer, GV Mobile and VoiceCentral. Now that's classic Apple: my way or the highway. I guess user choice doesn't enter into that equation.
AT&T's response came in the form of a 16-page letter to the FCC whose logic would have done the old Soviet Union proud. The long and the short of it is that their agreement with Apple doesn't preclude VoIP applications that operate over Wi-Fi, only those that would use the 2G/3G data capability. Specifically it states that "AT&T and Apple agreed that Apple would not take affirmative steps to enable an iPhone to use AT&T's wireless service (including 2G, 3G and Wi-Fi) to make VoIP calls without first obtaining AT&T's consent."
The capper was classic however: "The parties' (that's AT&T and Apple, not the customers) concurrence on this provision was particularly important in light of the risks the parties assumed in bringing the iPhone to market." Risks!!! Anyone with one eye and two active brain cells could figure out the iPhone was going to be the hottest thing to hit the wireless market since the antenna. This smells a lot more like where can we pound out the best deal to protect our interests with what is clearly going to be a consumer blockbuster.
The conclusion went: "AT&T regularly reviews its policies regarding features and capabilities available through the devices we offer in order to provide an attractive range of options for our customers. Consistent with this approach, we plan to take a fresh look at possibly authorizing VoIP capabilities on the iPhone for use on AT&T's 3G network." The long-term weather forecast from Hell indicates that an early freeze is not anticipated.
Quick, Call the Lobbyists! Every totalitarian needs a good propaganda director, so the CTIA (The Wireless Association), better known as "the mouthpiece for the mobile operators," was quick to respond. Christopher Guttman-McCabe, vice president of regulatory affairs weighed in, "The wireless industry in the U.S. has the coolest handsets, the applications are more robust, and the networks have the highest speeds with the lowest pricing.... Can things get better? Yes. But things will get better."
One of their favored fun facts is that there are over 100,000 wireless applications are now being sold in at least six major application stores. Yeah, but those applications are broken down by operating systems, and getting the ones you want means selecting particular handsets that are tied to specific carriers. The developers' goal is to build the best product and sell the most copies, but in the current arrangement they have become dupes in a more sophisticated "walled garden" than we had at the start of the wireless data market.
Bottom line, networks are networks and phones are phones. Free the market and let the economic forces determine winners and losers. If cellular carriers want to offer handset discounts tied to service contracts, fine; there's a good chance that many users will still opt for that package. However, saying that you can only have this handset with that carrier, that's crossing the line.
Conclusion: It's the Bell System All Over Again For those of us who lived and worked through Divestiture, the fundamental reorganization of the wired telephone industry, several generations of technical advances, and the ascendance of the Internet, this is like watching a rerun. Monopolists (or more correctly "oligopolists") have but one agenda: don't rock the boat. In this case that can be rephrased, don't kill the goose that lays the golden eggs. Change is scary, but the FCC has to look after the interests of consumers as well as the providers.
The old Bell System fought tooth and nail to maintain the status quo and in the face of challenges, used its considerable influence to shape the game in a way that would put its potential competitors at a considerable disadvantage. Does anyone remember "data access arrangements?" Those were essentially inductance coils you had to rent from the phone company to attach a non-Bell modem to the telephone network. They had little practical value, but the rental fee helped increase the user's cost in using a non-Bell modem. In one case AT&T tried to argue that putting a cover on a telephone book would cause "irreparable harm to the public telephone network." In reality, they wanted to sell the back cover to advertisers, and a phone book cover could potentially screw up the plan.
I would caution the FCC to move judiciously while discounting by 95% any of the CTIA's self-serving arguments. We saw plenty of needless, government mandated waste brought about by Divestiture, but when the dust settled users had more choices, prices were far lower, and technologies that would have languished for decades in Bell Labs were delivering benefits to millions. So good luck Mr. Genachowski, and please exercise good sense. Our economy desperately needs a boost, and wireless is one market that is poised to leap to another level.
