Skype Wants Carterfone Neutrality Rules Applied to Wireless
Skype asked the FCC to impose Carterfone requirements on wireless carriers, giving customers the right to attach any device of their choice to a wireless network. Skype asked the FCC for a rulemaking to evaluate wireless carriers’ practices in light of the Carterfone ruling.
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“If the Commission gets this right we will create conditions for innovation and price competition in the wireless industry from software services like Skype,” said Chris Libertelli, Skype senior dir.-govt. & regulatory affairs: “We often hear that wireless is competitive. We say we can do better and we can give consumers more options.” Libertelli told us Skype plans to set up meetings at the FCC to make its case. “The one thing you won’t find is a reference to nondiscrimination,” he said. “This is different than net neutrality. It’s more modest than the net neutrality fight. It doesn’t require the Commission to police nondiscrimination.”
The FCC’s landmark 1968 decision said that subscribers should be able to attach a Carterfone, a 2-way mobile radio system, or other devices to the PSTN, provided they don’t have the capacity to damage the network. Skype said the ruling “led to an explosion of innovation in the market for customer premises equipment.” A paper released last week by Tim Wu of Columbia U. Law School made a similar argument (CD Feb 15 p3).
“In the wireless arena… carriers are using their considerable influence over handset design and usage to maintain an inextricable tying of applications to their transmission networks and are limiting subscribers’ rights to run applications of their choosing,” Skype said: “Carriers are doing so, moreover, in violation of the Commission’s Carterfone principle and the strictures of the Commission’s original order permitting the bundling of consumer equipment and wireless service.”
CTIA fired back. “Skype’s self-interested filing contains glaring legal flaws and a complete disregard for the vast consumer benefits provided by the competitive marketplace,” the group said: “Skype’s ‘recommendations’ will freeze the innovation and choice hundreds of millions of consumers enjoy today. The call for imposing monopoly era Carterfone rules to today’s vibrant market is unmistakably the wrong number.”
Skype cited the history of the Nokia E61, a high-end phone that has received good reviews in Europe and was seen as a competitor to the BlackBerry and Palm’s Treo. In the U.S., Cingular was the lone seller of the phone, recast as the E62, though here it was stripped of Wi-Fi connectivity. “Intentionally removing Wi-Fi functionality from the Nokia E62 interferes with a consumer’s ability to place Internet calls, thereby harming innovation and price competition,” Skype said. “The Nokia E61/E62 is only one example of a wireless carrier exercising control over the equipment market to disable handset features. Unfortunately, all carriers appear to engage in such restrictive practices to varying degrees.”
Similarly, Skype said, Verizon typically disables Bluetooth data transfer capability in handsets it sells, “to require customers to use the carrier’s paid services instead of utilizing Bluetooth to accomplish the same goals. Skype said carriers also typically lock handsets, which “acts as a barrier for consumers who may wish to switch carriers” and leads customers to buy equipment they may not want because they don’t know they can use their old handsets with new services.