My ( Frieden ) Take on Wireless Carterfone and Net Neutrality

[David Farber <dave () farber net>]

Begin forwarded message:

From: Rob Frieden <rmf5 () psu edu>
Date: October 26, 2007 11:04:54 AM EDT
To: dave () farber net
Cc: ip () v2 listbox com
Subject: My Take on Wireless Carterfone and Net Neutrality

Hello All:

        I recently completed a piece that examines the law and  
policy of applying Carterfone and broader net neutrality obligations  
to cellphone service.

        Here's the abstract:

        Wireless operators in most nations qualify for streamlined  
regulation when providing telecommunications services and even less  
government oversight when providing information services,  
entertainment and electronic publishing.  In the United States,  
Congressional legislation, real or perceived competition and  
regulator discomfort with ventures that provide both regulated and  
largely unregulated services contribute to the view that the Federal  
Communications Commission (“FCC”) has no significant regulatory  
mandate to safeguard the public interest.  Such a hands off approach  
made sense when cellular radiotelephone carriers primarily offered  
voice and text messaging services in a marketplace with six or more  
facilities-based competitors in most metropolitan areas.
However the wireless industry has become significantly more  
concentrated even as wireless networking increasingly serves as a key  
medium for accessing a broad array of information, communications and  
entertainment (“ICE”) services.  As wireless ventures plan and  
install next generation networks (“NGNs”), these carriers expect to  
offer a diverse array of ICE services, including Internet access,  
free from common carrier regulatory responsibilities that nominally  
still apply to telecommunications services.  Wireless carrier  
managers reject the need for governments to ensure consumers  
safeguards such as nondiscriminatory access and separating the sale  
of radiotelephone handsets from carrier services.  Indeed the  
carriers claim that any network neutrality responsibilities would  
create disincentives for NGN investment and have no place in a  
competitive marketplace.

        This article will examine the costs and benefits of  
government-imposed wireless network neutrality rules with an eye  
toward examining the lawfulness and need for such safeguards.  The  
paper will consider the difference between wireless network  
neutrality and an earlier debate about neutral Internet access via  
wired networks.  For example, wireless network neutrality includes  
consideration of separating Internet access equipment from Internet  
services, an unbundling principle established for wired networks  
decades ago.  Because wireless carriers package subsidized handset  
sales often with a blend of ICE services and consumers welcome the  
opportunity to use and replace increasingly sophisticated handsets,  
regulators have refrained from ordering handset unbundling.  But for  
other services, such as cable television, the FCC has pursued public  
safeguards that attempt to allow consumers the opportunity to access  
only desired content using least cost equipment options.

        The article also examines why wireless carriers could avoid  
becoming involved in a network neutrality debate for several years,  
despite the fact that their common carrier status, vis a vis voice  
services, provides a statutorily supported basis for imposing  
nondiscrimination responsibilities.  The article concludes that the  
rising importance of wireless networking for most ICE services and  
growing consumer disenchantment with carrier-imposed restrictions on  
handset versatility and wireless network access will trigger closer  
regulatory scrutiny of the public interest benefits accruing from  
wireless network neutrality.

        A draft of the paper is available at: http://papers.ssrn.com/ 
sol3/cf_dev/AbsByAuth.cfm?per_id=102928 and http:// 
www.personal.psu.edu/faculty/r/m/rmf5/

         Regards,

        Rob Frieden
Pioneers Chair and Professor of Telecommunications
Penn State University
102 Carnegie Building, University Park, PA  16802
office: (814) 863-7996; fax (814) 863-8161
Web page:        http://www.personal.psu.edu/faculty/r/m/rmf5/
Faculty profile: http://www.psu.edu/dept/comm/faculty/frieden.html
SSRN Papers Site: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm? 
per_id=102928

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