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The Complex, Multi-faceted Net Neutrality Debate

A little more than a week ago, l met with CTIA. This time around, the subject was net neutrality and how it should apply to mobile network operators. The operators have significantly more challenges to work through than wireline operators. While, in my mind, these unique challenges do not completely give the wireless operators a pass, the rules–assuming the FCC decides to apply them to the wireless operators–do need to take into account the special challenges wireless operators face.

Capacity

Wireline Internet providers can capacity plan their network fairly easily. They know, with a fair degree of certitude, how many customers that could potentially use their service at any given time. All they have to do is count the number of houses they can potentially serve at a DSLAM or cable headend and supply the appropriate amount of bandwidth. Done.

Wireless is a different story. Sure, they can make educated guesses based on the number of people in a given area, and get the appropriate towers and backhaul set up, but the reality is: that can change at a moment’s notice. Consider what happens to AT&T’s network during any high-tech trade show at Moscone Center, or worse, when a large number of people congregate in a rural area where the mobile phone networks aren’t set up to handle that many people.

In the case of Moscone Center, you’d think, given how often problems occur there, not only would AT&T have microcells throughout Moscone, but fiber backhaul to serve it. However, getting more bandwidth out to the sticks to an area that doesn’t usually see a lot of traffic is difficult to damn-near impossible.

The iPhone presents a unique challenge in all this. It uses the network like no other phone did before it. It’s as if each iPhone represents a half dozen (or more) users of conventional mobile phones in terms of usage. You get a bunch of people on iPhones showing up in one location on any one network, it will become a steaming pile of fail. We blame AT&T today–the “exclusive” carrier of the iPhone in the US–but if Verizon, Sprint, or T-Mobile get the iPhone, their network will become a steaming pile of fail, too. Mark my words on this, folks.

The fact is, wireless carriers have limited bandwidth and can’t sufficiently estimate the usage–especially with high-usage devices like the iPhone. While more spectrum and more backhaul are clearly needed, these things won’t come quickly. As a result, the mobile network operators have to do some level of network management. The FCC principles aren’t against this, but they do want providers to be very transparent about how they manage their networks.

Handsets, Applications, and Net Neutrality

The other thing that gets dragged under the “net neutrality” debate is what happens on handsets in terms of applications. One could say the FCC overstepped its bounds when it called Apple and AT&T to the carpet over the Google Voice app rejection. The other thing that gets dragged in is the concept of handset exclusivity and what handset makers want to allow (or not) on their handsets.

For me, it’s really simple: the network operators should not be allowed to dictate to end users anything beyond the technical specifications needed to connect to (and not harm) the network. Applications are not part of this specification. It’s Carterfone, but for wireless handsets and totally within the jurisdiction of the FCC to enforce.

In terms of what handset makers choose to do on their handsets, including (dis)allowing applications or certain types of uses, that’s the handset makers domain and, in my opinion, completely outside the FCC’s jurisdiction. There are two exceptions to that: the radios within mobile phones (which are FCC territory) and the locking a handset to a specific carrier (an extension of Carterfone principles). In fact, it should be illegal to lock a handset to a specific network.

Handset Exclusivity

Handset exclusivity is a non-issue for me. If a carrier wants to make an exclusive arrangement to sell a particular handset (with optional handset subsidy) or a handset maker wants to make a deal with a particular carrier to be the exclusive operator, that’s fine by me. The only exception to that rule I would make is that the handset must also be available at an unsubsidized price and not locked to a specific operator.

What is interesting, however, is that Apple is finding by dropping the “exclusive” arrangements with mobile phone operators, they are actually increasing their overall market share. This makes a ton of sense for an iconic device like the iPhone. By tying it to a specific network, they are reducing the number of potential customers who will by iPhones. Once there are multiple choices for carriers, more people will buy them.

While there are some who will choose to go with a specific network to get a specific device, say AT&T for the iPhone, the fact is, most people won’t make that jump. In some cases, they can’t because, say, AT&T doesn’t offer service in their area, or because they know that Sprint has absolutely garbage coverage where they need it most. It still comes down to the network.

Conclusions

More spectrum and bandwidth are needed. The amounts are debatable, but clearly more is needed. Anything that can be done to normalize the spectrum we’re using with the EU would be awesome!

The FCC cannot dictate to handset makers what kinds of restrictions they can put on their application software. This issue is outside the FCC’s regulatory domain and should be left to the handset makers, or at the very least to the FTC, which does have jurisdiction over this area. However, handsets being locked to specific carriers should be illegal.

Handset exclusivity? Sure, as long as I can buy it unlocked for full price and take it elsewhere.

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