The FCC, TWC, Skype, and the Cellular Industry

On March 1, 2007, the FCC ruled in favor of a petition brought by Time Warner Communications, stating that local exchanges cannot deny access to wholesale telecommunication carriers (TWC) to provide services and exchange traffic, including voice over Internet protocol (VoIP).

The decision overturned rulings in South Carolina and Nebraska that allowed local rural exchanges to deny access to wholesale carriers, arguing that the wholesale providers were not true telecommunications providers, as they do not offer services directly to the public.

The FCC disagreed stating: "denying wholesale telecommunications service providers the right to interconnect with incumbent LECs are inconsistent with the Act and Commission precedent and would frustrate the development of competition and broadband deployment.'

In another somewhat related petition, VoIP provider Skype has asked the FCC to apply the Carterphone decision of 1968 to the cellular phone industry, effectively forcing the cellcos to allow outside devices and applications to connect to their network.

The Carterphone ruling determined at the time that AT&T's telephone network stopped at the phone jack, ending a monopoly on user hardware, and spurring a massive influx of new devices and technological innovations in the market.

The Skype petition opens up a whole new can of worms for the US cell phone industry, bringing them to the forefront of the grass roots Net Neutrality debate. In his paper Wireless Net Neutrality, Dr. Tim Wu details the techniques used by the cellcos Verizon, Sprint, AT&T, and T-Mobile, to limit consumer access to devices and applications such as WiFi, VoIP, Internet browsing and more.

Cell phone companies in the US not only control the public airwaves they have been entrusted with, they also sell the equipment that is used to connect to their networks, much like AT&T did before the Carterphone ruling. They control access to their networks by either disabling the SIM chip on the phones they sell, effectively locking it to the network, or by requiring cell phones be registered with the carrier network through their electronic serial number (ESN).

Strict control of services allowed on the American cellular networks has stifled developers and impeded the development useful applications, severely limiting competition and consumer choice. VoIP over WiFi connections, advanced GPS features, Bluetooth wireless capabilities, and the development of advanced SMS applications are just some of the technology that has at one time or another been hindered by the US cellular industry.

By ruling in favor of Time Warner, the FCC sided with the big boys, and rightly so. Consumers should be able to choose from a wide variety of applications, including VoIP, if it is technologically feasible. For a service provider to deny them that, simply because it doesn't benefit the carrier, is not only non competitive, but somehow, just un-American.

Skype has also asked the FCC in its petition to consider a method to create transparent and neutral standards in the cellular industry, perhaps something like the IEEE standards committee that has worked so well for wireless networking. Sounds great! Developers and device manufacturers could work together to foster competition and technological innovation, ultimately with enormous benefit to the consumer.

Obviously, this is not something that the US cellular industry would want, and would undoubtedly marshal all of their considerable resources in opposition. A project of this magnitude would also be an enormous undertaking for the FCC, and could conceivably lead to yet another level of bureaucracy.

If it is truly the mission of the FCC to foster competition, new technology, and to protect consumer rights as the TWC decision implies, then there is a golden opportunity for them to do just that in the petition from the little guy, Skype. As guardian of the people's communication systems and the public airwaves, to apply the Carterphone principals equally to all the players in the telecommunications industry would seem to be a no brainer.