anothere call for 'Wireless Carterphone'

[David Farber <dave () farber net>]

________________________________________
From: Kurt Albershardt [kurt () nv net]
Sent: Thursday, January 24, 2008 3:00 PM
To: David Farber
Subject: anothere call for 'Wireless Carterphone'

<http://www.newamerica.net/publications/policy/wireless_cartefone>

Wireless Carterfone
A Long Overdue Policy Promoting Consumer Choice and Competition
Rob Frieden, Penn State University
New America Foundation | January 2008

Abstract

Wireless carriers in the United States operate as regulated common carriers when providing basic telecommunications 
services, such as voice telephone service, text messaging and speed dialing to services and content. Remarkably, 
stakeholders debate whether this clear cut regulatory status requires wireless carriers to provide service to any 
compatible handset, subject to a certification process to ensure that such use will not harm carrier networks.

Thirty-nine years ago the Federal Communications Commission (FCC) established its Carterfone policy establishing such a 
right for wireline subscribers. Consumers now take for granted the right to purchase their choice of telephones and 
other devices (e.g., computer modems, answering machines) and to attach them to wireline networks without 
carrier-imposed limitations. After announcing its Carterfone policy, the FCC identified ample consumer benefits and 
applied this fundamental right in several
instances so that consumers can freely use their handsets to access services, applications and content. This 
fundamental right has accrued unquestionable benefits to consumers and the national economy.

Wireless operators have vigorously opposed efforts to convince the FCC that it should establish a wireless Carterfone 
policy. Opponents claim that Carterfone offered an industry-specific remedy to a monopoly environment where the Bell 
System controlled both the manufacture and distribution of telephones and telephone service. They assert that the lack 
of such vertical integration and the existence of robust competition in the wireless marketplace obviate the need for 
rules requiring carriers to
unlock the handsets they sell and to open their networks for access by any compatible handset.

This paper explains why wireless Carterfone policy constitutes a long overdue policy response to carrier practices that 
often have nothing to do with protecting their networks from technical harm or other legitimate network management 
needs. For example, blocking the implementation of wireless Carterfone enables carriers to continue locking subscribers 
into two-year service contracts with substantial penalties for early termination. In exchange for the service 
commitment, consumers acquire a
carrier-subsidized handset, but they also consent to carrier-imposed restrictions on the use of the handset they 
bought, including the ability to access telecommunications and content services of competitors even after the carrier 
has recouped its subsidy.

This analysis explains how wireless carriers benefit financially by avoiding Carterfone obligations and refutes the 
rationales and justifications for this behavior. The paper also demonstrates that the FCC has ample statutory authority 
to apply wireless Carterfone policy based on the largely ignored fact that when wireless cellular telephone companies 
provide telecommunications service, they remain subject to most common carrier regulations regardless of the fact that 
they also may offer less
regulated information services. Finally, this report explains that wireless carriers must comply with public interest 
regulatory mandates even though they might conflict with carriers' preferred business plans. The Commission has 
undertaken a number of analogous initiatives to protect consumers from mandatory bundling arrangements, such as its 
2005 order mandating alternatives to cable set-top box leasing, which underscore the continued importance of Carterfone 
principles to protecting the
public interest.

Full paper <http://www.newamerica.net/files/Wireless_Carterfone_Frieden.pdf>




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