FCC Probe Puts Carriers in the Crosshairs

The Federal Communications Commission has turned up the heat on the wireless industry expanding its probe of mobile phone practices following widespread complaints about a lack of competition, openness and innovation.

The "Notice of Inquiry," announced during a Thursday agency meeting, expands on open FCC proceedings, including a look into exclusive contracts that lock phones to provider networks, and the anti-competitive blocking of applications and services.

With the new inquests the agency is broadening its investigation into innovation and consumer choice in the wireless marketplace. Issues that will come under consideration in this proceeding will likely include exorbitant text-messaging and termination fees, device and application blocking, and others.

AT&T and Verizon Wireless are the two largest carriers in the marketplace controlling more than 60 percent of mobile phone accounts in the U.S.

Hovering in the foreground is the principle of Net Neutrality, which ensures that Internet users have full access to the Web sites, services and applications of their choice, without discrimination by their service provider.

The new inquiry will reveal more about efforts by large companies like AT&T to stifle competition by barring certain applications from devices that operate on their wireless networks. It will also weigh the true openness of the Internet that more consumers can access via a new generation of smart phones.

“This FCC will have a relentless focus on innovation and investment, on competition and consumers,” FCC Chairman Julius Genachowski said on Thursday as the agency announced its "Notice of Inquiry" into wireless practices.

Earlier in the week, Genachowski said that the FCC will stand with the public interest to prevent wired and wireless Internet providers from blocking, slowing or in any way degrading lawful content. "This FCC will support Net Neutrality and will enforce any violation of Net Neutrality principles,” he said.

The issue of Net Neutrality has been on a collision course with apparent plans by wireless providers to block certain applications, services and content over Web-enabled handheld devices.

Concerns boiled over earlier this summer after Apple rejected the Google Voice application from its iPhone service. In their responses to an FCC inquiry regarding the ban, AT&T and Apple revealed contractual provisions requiring Apple to gain approval from AT&T before allowing VoIP applications such as Skype onto the carrier's networks.

Skype is only available on the iPhone when a user is connected through a Wi-Fi network. Skype has been at the center of the open access debate since 2007, when it petitioned the FCC to apply the 1968 Carterfone decision to the wireless industry. The Carterfone ruling forced AT&T to allow outside equipment onto its wire line network, paving the way for an explosion of new devices, such as fax and answering machines, and the early dial-up modem.

"Wireless Carterfone would break the carriers' gatekeeper control over the entire mobile ecosystem, creating competitive and consumer-friendly markets for devices, services, and applications," said Chris Riley, Free Press Policy Counsel. "The Notice of Inquiry is a start. But the FCC needs to move quickly to pass new rules to prohibit exclusive contracts for devices and violations of Net Neutrality."

Prior to the FCC’s meeting on Thursday, Free Press delivered a petition signed by 23,000 members calling for the agency to give mobile phone users the freedom to “choose any phone on any compatible network” and “access any Web content, applications or services we want through our phones.”

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