Do wireless tubes need to be neutral too?

by on February 14, 2007 · 6 comments

I’ve got a write-up of Tim Wu’s paper over at Ars. Most of it’s a summary of Wu’s paper, but I do a bit of policy analysis near the end:

Surprisingly, Wu does not mention one reform that could alleviate what he identifies as the biggest barrier to entry in the wireless market: the high cost of spectrum. Various scholars have proposed that more spectrum be auctioned off to private firms for use in next-generation wireless services. That would make it feasible for more firms to enter the wireless marketplace, providing much-needed competition. Wu himself notes that the smallest of the national carriers, T-Mobile, also has the least restrictive policies. It is likely that if enough spectrum were made available to allow additional carriers to build nationwide networks, those carriers would tend to follow T-Mobile’s lead and build more open networks than the largest incumbents.

Wu also does not spend much time considering the feasibility of enforcing open access rules on wireless carriers. Although Carterfone is widely regarded as a success, some more recent attempts by the FCC to force incumbents to open their networks to competition have not been so successful. The FCC unsuccessfully attempted to force the Baby Bells to share their DSL lines with competitors during the Clinton administration, sparking nearly a decade of litigation that only concluded with Supreme Court’s 2005 Brand X decision. And the cable industry is fiercely resisting the FCC’s attempts to open up the market for cable boxes, a process that has has been raging for close to a decade with no end in sight. It is likely that the wireless industry would be equally resistent to any effort to forcibly open its network to new entrants.

With the debate over network neutrality regulations of wireline broadband providers sucking all the oxygen out of the room, it’s unlikely that Wu’s proposals will have an impact on the telecom debate during this session of Congress. But as wireless technologies become ever more ubiquitous, questions about whether and how to regulate the wireless industry will only become more frequent and more contentious.

I think the CableCard analogy would be particularly worth exploring in more detail. Wu actually cites it as a possible model for interoperability done right, but my reading of the situation is that so far, at least, it’s been less than a raging success. The first generation CableCard spec had an extremely limited feature set, and even more limited consumer interest. Approximately zero cable customers have actually requested CableCards from their cable companies. The FCC’s “integration ban” goes into effect this summer, which could enlarge the market for third-party CableCARD devices, but the jury is definitely still out, and it’s rather premature to be hailing it as a success. And remember that Congress first ordered the FCC to open up the set-top box market a decade ago.

  • http://www.freedom-to-tinker.com Ed Felten

    For what it’s worth, I’m a reasonably happy CableCard customer. Over the holidays we switched from the universally hated Motorola settop DVR box to the vastly superior Generation 3 Tivo. The Tivo uses two CableCards (one for each of its two tuners), and they have worked flawlessly so far.

  • http://www.freedom-to-tinker.com Ed Felten

    For what it’s worth, I’m a reasonably happy CableCard customer. Over the holidays we switched from the universally hated Motorola settop DVR box to the vastly superior Generation 3 Tivo. The Tivo uses two CableCards (one for each of its two tuners), and they have worked flawlessly so far.

  • http://www.uglyshz.com/blog Jon L

    Comment & Question:

    The continuing auctions of spectrum tends to scare me, mainly because an auction of a resource like that would logically only be won by the highest bidders. The highest bidders also being the most well-funded corporations already in existence who want to protect their turf.

    Now, the question part – I don’t know how the auctions have gone in the past. Have their been small, innovative start-up companies that do manage to get their hands on spectrum in the auctions?

  • http://www.uglyshz.com/blog Jon L

    Comment & Question:

    The continuing auctions of spectrum tends to scare me, mainly because an auction of a resource like that would logically only be won by the highest bidders. The highest bidders also being the most well-funded corporations already in existence who want to protect their turf.

    Now, the question part – I don’t know how the auctions have gone in the past. Have their been small, innovative start-up companies that do manage to get their hands on spectrum in the auctions?

  • Tim Wu

    Tim,

    Two points. First, I did have spectrum auctions on the mind when writing the paper, and in fact I do mention then, but not in depth, and of course there is only so much ground you can cover in one paper.

    Second, though i didn’t have time to get into it, I consider some of the other “open access” regimes failures for various reasons — first, crazy pricing ideas, second, lack of a truly separate market. But the network / physical attachment is a proven divide, hence the proposal for cellular carterfone.

    Getting network access rules right is very hard — though if you get it right the results can be spectacular. Ideally the separation happens without regulation (that’s what happened with the internet, though not the phone networks). As I said in the paper, ideally consumer and public pressure will move the mobile networks toward a more open posture;

    It may however take enforcement of the actual Part 68 rules — you’ll see some of that coming up soon.

  • Tim Wu

    Tim,

    Two points. First, I did have spectrum auctions on the mind when writing the paper, and in fact I do mention then, but not in depth, and of course there is only so much ground you can cover in one paper.

    Second, though i didn’t have time to get into it, I consider some of the other “open access” regimes failures for various reasons — first, crazy pricing ideas, second, lack of a truly separate market. But the network / physical attachment is a proven divide, hence the proposal for cellular carterfone.

    Getting network access rules right is very hard — though if you get it right the results can be spectacular. Ideally the separation happens without regulation (that’s what happened with the internet, though not the phone networks). As I said in the paper, ideally consumer and public pressure will move the mobile networks toward a more open posture;

    It may however take enforcement of the actual Part 68 rules — you’ll see some of that coming up soon.

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