Lawmakers: New wireless rules needed

U.S. consumers should be allowed to take phones along with them when they switch wireless carriers, and spectrum to be auctioned through the U.S. Federal Communications Commission should include rules requiring the winning bidders to sell access to competitors at wholesale rates, some U.S. lawmakers said Wednesday.

Some members of the U.S. House of Representatives Subcommittee on Telecommunications and the Internet also questioned what they called huge early termination fees on wireless telephone contracts. But other lawmakers and executives with wireless carriers questioned the need for new wireless regulations, saying an already competitive market protects customers.

The U.S. wireless industry is “vigorously competitive,” with four national and several regional carriers, said Representative Fred Upton, a Michigan Republican. New net neutrality and open access rules that would require carriers to open up their networks to new devices and applications could slow wireless innovations, he said.

“We should take care to not adopt policies that would set back the highly competitive wireless market,” he added. “No matter how you slice it, forced network neutrality smothers investment in a competitive market and in the end will leave consumers worse off with probably fewer choices.”

But other members of the subcommittee, mostly Democrats, questioned why phones can’t switch between wireless networks. U.S. customers should also be able to run any applications they want on wireless networks instead of having limited choices approved by the carrier, said Representative Mike Doyle, a Pennsylvania Democrat.

“It’s time for consumers to become the deciders of what they want their phones to do,” Doyle said.

Apple’s recent launch of its iPhone demonstrates the “promise and problems” of the U.S. wireless industry, added Representative Ed Markey, the subcommittee chairman and a Massachusetts Democrat. While the iPhone has innovative new technologies, U.S. customers can use it with only one wireless carrier, AT&T, he said.

Other lawmakers called on the FCC to go farther than requiring device portability and application choices when it sets the rules for the use of spectrum to be auctioned in the 700MHz band. Part of the 60MHz of spectrum to be auctioned by early next year should include requirements for the winner to offer the spectrum at wholesale rates to other wireless and broadband providers, said Representative Chip Pickering, a Mississippi Republican.

A wholesale rule would allow new wireless broadband providers to spring up all over the country, Pickering said. The 700MHz spectrum, now used by U.S. television stations for over-the-air broadcasts, would allow for long-range wireless broadband services, many experts say.

The wholesale rule wouldn’t put new regulations on existing wireless services, Pickering said. “What’s wrong with that?” he asked.

There’s nothing wrong with a carrier voluntarily deciding to wholesale its spectrum, said Steven Zipperstein, general counsel for Verizon Wireless. “We don’t think a business model should be hardwired into the auction by regulatory fiat,” he said.

Ed Evans, CEO of startup carrier Stelera Wireless, questioned whether a wholesale business model would succeed in the new spectrum. “You’re going to give up a scarce resource … that you’re not going to be able to recoup the value on,” he said. “You’re going to prohibit other people from deploying proven technologies in that same area.”

But Jason Devitt, cofounder and former CEO of Vindigo, a company that distributes local guides on mobile phones, said the U.S. needs a more open wireless system where application providers don’t have to work out deals with wireless carriers. “We have a regulatory system that doesn’t work,” said Devitt, now CEO of Skydeck, a wireless startup. “I’m mad as hell that I require permission to innovate in the wireless market.”

While wireless customers usually have to switch devices when they switch carriers, U.S. television subscribers don’t have to buy a new TV set when they switch from cable TV service to satellite, added Timothy Wu, a professor at the Columbia Law School and supporter of open access rules. “There’s something strange about this industry,” he said. “Even the rules of personal property … seem to be suppressed.”