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FCC Chairman's Open-Access Plan

An upcoming sale of a chunk of the wireless spectrum -- the kind of thing that ordinarily excites few people besides venture capitalists and telecom lawyers -- just might upend the wireless-phone business.

This is a bigger sale than most. It will dispose of the spectrum now used by many analog TV channels, which broadcasters will give back to the government as part of the transition from analog to digital TV. (Remember, analog TV broadcasts will end on Feb. 17, 2009, which is why you shouldn't buy a TV without a digital tuner.)

This spectrum is valuable because, like television, it can only travel so far and through so many obstacles. Selling it off should earn the Feds a tidy chunk of change, but the big deal here is about the conditions that might be attached to the sale.

This time around, Federal Communications Commission chairman Kevin Martin is advocating "open access" requirements that would oblige the winning bidders to offer wireless service without controlling the hardware or software their customers would use.

How would this new business model work? In a phone interview late Thursday afternoon, Martin explained his ideas.

"If you're a consumer, you could walk into a store run by the network provider," he said. "You could bring that phone and say I want to purchase a service contract."

This is exactly how wireless service works in Europe, where people can choose between buying their phone from their wireless service (usually at a lower cost subsidized through subscription fees) or getting the phone of their choice elsewhere.

So instead of customers of Acme Wireless being limited to buying phones or wireless cards certified or made by Acme, they could buy any device compatible with Acme's network, even if it included features that Acme didn't like or think necessary. You would no longer be stuck buying cameraphones that, for instance, wouldn't offer any easy way to transfer photos to a computer.

Ending carriers' control over hardware -- what the FCC did almost 40 years ago in the "Carterphone" decision that allowed Bell System customers to use any compatible device with their landline phone line -- has been on the wish lists of many wireless users (myself included).

Existing services from AT&T, Sprint, T-Mobile, Verizon and others would not be affected by a new open-access plan. Martin, however, feels that their customers would still benefit from open access rules elsewhere in the wireless spectrum; the incumbent carriers would have to respond to the greater choice available with other services. He suggested the incumbents might even benefit directly by getting some free product testing -- they could see how new hardware or software worked in the field before offering it themselves.

Most of the incumbent wireless carriers have been less than thrilled about this proposition. But the largest among them, AT&T, now says it can live with Martin's definition of open access. This is an amazing thing to hear from the company that's profiting so handsomely by having a lock on U.S. sales of the iPhone.

Other companies with deep pockets strongly favor this idea. Google, for example, says it will commit at least $4.6 billion to this auction if it's carried out under these open-access provisions. Google, however, also wants winning bidders to be required to resell their bandwidth on a wholesale basis to other firms, which not all open-access proponents support.)

None of this, however, means you'd be able to use hardware that would compromise anybody's network. "I certainly think that the people who are investing in the networks need to be able to manage their networks," Martin said. He also poured some cold water on Google's open-resale requirement: "This issue we're talking about of separating devices from the network is very different from the kind of wholesale obligations that some people are talking about."

It's been interesting to see Martin's position develop on this--it fits into the things I've heard him say on the subject of hardware choice in TV devices. The chairman concurred: "There's a lot of benefit in being able to have innovation by having a more open and standardized platform," he said. "We're trying to create a similar environment" for wireless service.

After so many years of wireless service provided in only one way, I think it's about time we tried something new. But in this case, we'd actually be going back to the earliest rules for cellphone service: Back in the early 1980s, the FCC said customers should be able to buy phones and use them with any service they wanted:

the Commission found that a single technology -- analog -- should be mandated to accomplish two goals: 1) to enable subscribers of one cellular system to be able to use their existing terminal equipment (i.e. mobile handset) in a cellular market in a different part of the country (roaming); and 2) to facilitate competition by eliminating the need for cellular consumers to acquire different handset equipment in order to switch between the two competing carriers within the consumers' home market.

Let's give that principle a shot again. Even the incumbents might find that their life is easier if they no longer have to spend so much time tinkering with other companies' phone hardware. Just how long do they want to take a stance that boils down to "You can't possibly let us focus on just the one job we're good at, running a wireless network! How dare you make us leave the hardware to the people who know it best?"

How important is open access to you? Would you be willing to pay extra for the ability to use the hardware and software of your choice on a wireless network? Let me know in the comments!

By Rob Pegoraro  |  July 23, 2007; 12:19 PM ET
Categories:  Telecom  
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