Continue from Wireless Wars: Will Consumers Be Collateral Damage? (Part 1)

he FCC then announced a broader probe into the wireess industry that will entail an examination of everything from billing to competition to coverage in rural versus urban areas. he probe marks a major shit from the policies of the George W. Bush administration, which took a hands-of approach in enforcing regulations on the wireless industry.

Things really heated up in September, when Genachowski announced his desire to turn existing network-neutrality principles, plus two new ones, into hard-and-fast rules. He added that the Internet should be open however users reach it, subtly suggesting that the wireless industry would come under scrutiny. At the time, Genachowski was vague about what wireless network neutrality would look like.

In October the FCC took its first step toward creating formal rules, despite a huge lobbying effort from opponents. Under an FCC proposal, wireless broadband services would be included n the rules along with cable providers. he FCC is still months away from voting on the final regulations.

However, what these rules might mean for wireless cariers is still not clear. Speakng at the CTIA conference, Genachowski acknowledged hat congestion issues and he competitive landscape of wireless pose “some difficult questions…that remain open and will be considered in the FCC’s proceeding.” He did make it known, though, that wireless carriers won’t escape his vision of an open Internet, which allows consumers to decide how to use their smartphones and 3G cards.

What do wireless carriers want from the FCC? First, they want the ability to manage their networks as they see it. “We have to manage the network to make sure that the few cannot crowd out the many,” said AT&T’s de la Vega at the CTIA show. Second, carriers want the feds to free up more wireless spectrum; the CTIA trade group has formally requested that the government provide it. Spectrum, the array of radio frequencies that mobile Internet uses for transmission, is the key factor in determining how much data a carrier can handle at a time.

Opening spectrum widens the “pipes,” allowing more bandwidth-reliant services through. Even Genachowski has acknowledged that without freeing up more spectrum, a crisis looms. At the CTIA conference, he proposed offloading traffic onto Wi-Fi networks via smart antennas or femtocells. He also discussed reallocating unused or obsolete frequencies, but acknowledged that “there are no easy pickings on the spectrum chart.”

Max Hailperin, professor of computer science at Gustavus Adolphus College, says that as both sides continue to push for their interests, the deinition of wireess network neutrality will become quite narrow. “the FCC will prohibit a few very narrowly denied, egregious behaviors, such as Comcast was found to have engaged in,” he says, referring to how Comcast was caught blocking peer-to-peer file sharers over wired Internet.

Wireless’s Future
Some industry watchers, such as Alex Winogradof, a wireless expert with the market research firm Gartner, see the feds’ meddling bringing an end to flat-rate pricing. As applications become even more bandwidth hungry and if the FCC forces carriers to offer new apps, the carriers will switch to tiered billing to discourage bandwidth hogging, the argument goes.

Chris Guttman-McCabe, CTIA vice president of regulatory affairs, says that even such tiers won’t help when a lot of users are consuming bandwidth at the same time, causing congestion although they are staying within their individual limits. Other experts wonder whether strict bandwidth caps will repel potential customers; Pablo Perez-Fernandez, a senior wireless analyst for MKM Partners, says that the reason data has become so popular on smartphones is that users don’t have to meter themselves with it as they do with voice minutes.

It’s more likely, analysts say, that carriers will receive some leeway to throttle bandwidth-intensive uses. What remains to be determined is how much control carriers will have over specific services, such as VoIP.

A few recent developments have seen carriers embracing openness voluntarily. Google and Verizon announced in early October that they will collaborate to develop apps on the Verizon network, including Google Voice. As for AT&T’s allowing of VoIP apps on the iPhone for use over 3G, “I think that’s exciting for consumers,” says Michael Tempora, Vonage senior vice president of product management, adding that he expects AT&T to become more open on its own.

These are baby steps, but they put carriers in a tough position: they’ll either have to continue opening up networks or face an FCC that is not shy about imposing regulation. Either way, it seems to be a win for consumers.