Carterfone for Wireless Endorsed by Public Interest Groups

Public interest groups want an FCC Carterfone mandate on wireless carriers, they said in comments supporting a Skype petition before the agency. But that makes little sense given wireless industry competitiveness and shifts since the FCC imposed the rules on AT&T nearly 40 years, the Phoenix Center said. CTIA and the wireless carriers also oppose the Skype petition. Comments were due late Mon. In 1968, the FCC decided a subscriber should be allowed to attach a Carterfone, a then-extant 2-way mobile radio system, or other device to the PSTN, if it didn’t damage the network. In Feb., Skype said similar rules should apply to wireless (CD Feb 22 p6).

Wireless carriers “should not be allowed to leverage exclusive government spectrum licenses to thwart competition and restrict consumer choice in the related and rapidly evolving markets for wireless devices, applications and content,” the public interest groups said. The comments were filed collectively by EDUCAUSE, Free Press, Media Access Project, New America Foundation, Public Knowledge and U.S. Public Interest Research Group.

“Wireless carriers actively interfere with consumer access to Internet content and services; therefore, the Commission, under its own reasoning in the 2005 Broadband Access Policy Statement, should prohibit wireless carriers from discriminating against consumer-chosen equipment, applications and content,” the groups said.

But the wireless industry is much more competitive than telecom was in 1968, the Phoenix Center said in a Mon. paper. “At the time of Carterfone, the Bell System had a virtual monopoly over the entire telephone network, stretching from telephone to telephone and everything in between,” the Phoenix Center said: “The firm was regulated at all levels… The only source of supply of telephone equipment was Western Electric, a wholly owned subsidiary of the Bell System.” Today, 98% of U.S. residents are in areas served by 3 or more wireless carriers, Phoenix said: “Thus, the potential for the sabotage of competing equipment manufacturers to protect an equipment affiliate is entirely absent in the wireless industry.”

Wireless sector has benefitted from “an environment of minimal regulatory intervention that has allowed licensees to manage their spectral environment and maximize innovation and efficiency both in the network and in handsets at network edges,” CTIA told the FCC. Minimal regulation is key to growth, it said.

“Skype’s request to apply Carterfone regulation to the wireless industry is completely misplaced,” CTIA said: “Unlike the Bell System at the time of the Carterfone decision, the wireless industry is not dominated by a rate- regulated monopoly provider, wireless carriers do not manufacture the handsets they sell, and the market for mobile wireless handsets is both competitive and innovative without regulatory intervention.”

Skype isn’t planning to file in this comment round, but Christopher Libertelli, Skype senior dir.-govt. & regulatory affairs, called CTIA’s stance “a missed opportunity for the industry to champion consumer interests over the status quo.” “Wireless carriers have done a terrific job building networks, but why is it necessary to further limit competition in wireless?” Libertelli said: “Shouldn’t consumers acting the market how much competition is enough? The wireless industry has yet to produce an alternative that allows consumers to take full advantage of the services they pay for -- particularly in the area of wireless Internet access.”