Wireless Industry Sounds Off About FCC’s Net Neutrality Plans

The organization representing the wireless industry — CTIA – The Wireless Association — is fighting to head off a possible expansion of the Federal Communication Commission’s (FCC) Net neutrality proposals.

CTIA on Thursday filed comments in response to recent proposals made by the FCC. Among other arguments, CTIA contends that Net neutrality is unnecessary for wireless consumers, that it will lead to unintended and unwanted consequences, and that wireless network technology is different from other broadband technologies.

Meanwhile, two of the largest wireless carries in the United States, Verizon and AT&T, are reportedly planning to introduce some form of tiered pricing to ensure customers who use more mobile bandwidth pay more for their usage.

CTIA’s Arguments

The concept of Net neutrality holds that all lawful Web-based content, applications and services should be treated equally by all service providers. In a Net neutral system, no restrictions are placed on content, sites or platforms, or on the kinds of equipment that may be attached to networks. The FCC has indicated it favors Net neutrality principles, and it’s currently working to draft firm rules to ensure Net neutrality. It’s also called for providers to disclose information concerning network management and other practices as is reasonably required for users and providers of applications, content and service to enjoy the protections offered in its rules.

“We believe these rules are inappropriate for wireless broadband networks and unnecessary to ensure that wireless consumers continue to enjoy the open Internet,” CTIA president and CEO Steve Largent said. The wireless industry is investing billions of dollars every year to deliver wireless Internet nationwide as Americans continue to adopt mobile broadband, he pointed out.

One of CTIA’s arguments was that Net neutrality rules will lead to unintended consequences through regulatory uncertainty. These will harm the market, it contended. Another was that the FCC can’t apply Net neutrality to the wireless market because there have not been any failures that would justify the proposed rules. In addition, CTIA pointed to European markets, which are more heavily regulated. Regulators there have decided not to apply the type of prescriptive regulation proposed by the FCC, it argued.

Further, wireless networks are constrained by their technology — one strand of fiber optic cable has more capacity than the entire electromagnetic spectrum, CTIA noted. Also, wireless devices have to be licensed, which makes wireless broadband incompatible with the FCC’s rules.

Finally, CTIA called on the FCC to monitor the market and correct failures instead of regulating non-existent harms. It pointed to a recent U.S. Department of Justice paper that stated the broad goals of bringing consumers the best possible service and choice are best served by promoting competition.

Heading Them Off at the Pass?

The FCC’s current proposals focus on landline broadband carriers and do not mention wireless providers at all. So why is the wireless industry getting so excited?

“U.S. carriers want to protect the millions of dollars they invested in building and upgrading their networks,” pointed out Julien Blin, principal analyst and president of JBB Research. “Allowing any apps — especially wireless voice apps such as Google Voice and Skype — on their networks could negatively impact their earnings,” he told the E-Commerce Times. “It could also open the door to more inappropriate content such as adult content, which could hurt their reputations.

“The wireless industry is trying to get ahead of the curve,” Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times. “Once you set a rule on the wired side, it wouldn’t be hard to bring it over to cover the wireless side, and most of the world is expected to go wireless,” Enderle explained.

The FCC’s proposal for non-discriminatory treatment of content and sites worries wireless carriers. “What happens if someone’s using data-intensive apps and using a lot of bandwidth while someone else is trying to use their mobile device to make a call?” asked CTIA spokesperson Amy Storey. “We have to be able to manage our networks so that one user doesn’t impact others.”

It’s All About Control

AT&T has been hit particularly hard by bandwidth hogs. The iPhones, for which it is the exclusive carrier in the U.S., continues to suck up a lot of its bandwidth, leading to poor services and angry users.

Things got so bad that Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets said in December that the carrier needs to educate customers about their bandwidth usage. Only 3 percent of AT&T’s users account for 40 percent of total data usage, mainly audio and video, de la Vega said. They consist mainly of iPhone owners.

AT&T is thinking of tiered pricing in the long run, de la Vega hinted. It is reportedly working on such a system. “The wireless industry wants to move to some form of tiered pricing,” Enderle said.

That’s because carriers don’t want to end up being “dumb pipes,” where they just provide the network backbone and bandwidth while others make money off additional services such as apps. The iPhone, for example, relegates AT&T’s network to something like the role of a dumb pipe — users surf the Web directly with the device’s Safari browser and buy ringtones, music and apps from the iTune App Store instead from AT&T.

“U.S carriers want to remain in control of their networks,” JBB Research’s Blin explained. “They still are, but for how long?”