Thursday, July 23, 2009

The Urgent Need to Foster Mobile Competition...

The fastest growing segment of telecommunications these days is the mobile internet. How people access the Web using their cell phones, PDAs and other mobile devices is increasingly an important issue, and the companies who control such access have tremendous power with far-reaching consequences.

As the New York Times wrote yesterday, the FCC is now turning its attention to ensuring that there is adequate market competition in the mobile telecom space. This development is sorely needed and long-overdue.

The central issue is exclusivity contracts. Basically, exclusivity means that, unless you are willing to be a hacker, you can use the iPhone only on AT&T’s network, the BlackBerry Storm on Verizon’s and the Palm Pre on Sprint’s. It also allows the cell phone companies to lock us in to new multi-year service contracts every time we need to buy a new phone.

This stinks, and we all know it. What's even worse is that in many areas of the country, the Big Four - AT&T, Verizon, Sprint, and T-Mobile (who collectively hold a virtual monopoly with 90% market share) - aren't even interested in providing any service at all. As a result, people in these areas have only one wireless provider, and the Government Accountability Office (GAO) has already found numerous cases of "scant competition, high prices and onerous contracts".

As wireless providers increasingly earn their revenues from data plans (a.k.a. - internet access), the goal of fostering competition warrants a new sense of urgency. If only one company can control internet access for entire regions of people, and can implement their own private rules for what people can and can't do on the Web, then the potential for abuse of power is frightening.

For example, consider how some web applications (that are perfectly legal) have already been banned on these companies networks, such as the decision to block the Skype application on the iPhone from working on AT&T’s 3G network. If this is a precedent, then it's only a matter of time before these companies start banning access to and censoring whichever websites they choose. This is clearly not the internet experience most of us want, however, without strong competition, we may ultimately be stuck with it.

The Times is absolutely right in praising the FCC for turning its attention to the wireless telecom market. As these telecoms become the future gatekeepers of the mobile internet, we all share an interest in making sure that we, as consumers, have choices.


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