Wireless Net Neutrality Redux

Tim Wu’s paper, Wireless Net Neutrality: Cellular Carterfone on Mobile Networks, continues to draw reactions. This one is a bit puzzling:
First, Wu writes as if this were a new issue. Just like the broader debate over network neutrality, in reality this is another version of an extensively debated topic: when should a network operator be forced to allow users particular types of access to its network? Wu ignores the history of this type of regulation.

Wireless Net Neutrality? by Scott Wallsten, Progress Snapshot, Release 3.2 February 2007,

Puzzling because the subtitle of Wu’s paper mentions Carterfone, as in the FCC decision that began net neutrality as we know it. Wu’s paper proceeds to discuss Carterfone on several pages, even including a picture of the actual physical object.

Wallsten continues:

Most advocates of network access regulations base their argument on a plausible assumption that some firm has enough market power to profitably act anticompetitively. The wireless industry displays no such evidence of a market failure. Indeed, the evidence suggests that the wireless market is competitive and has brought tremendous benefits to consumers.
I suppose that depends on your expectations. We’re finally starting to see things like the iPhone and Slacker. Neither of these innovations originated with the telcos.

Meanwhile, the various wireless telephone carriers each have their own weirdly shaped coverage maps, and may or may not support roaming over other carriers’ networks, for fees that seem Byzantine at best. Transparency and universal service I don’t see.

As Wallsten says, prices per minute have gone down. He also says:

The presence of four major national carriers and several regional players (some of which have now bought enough spectrum to eventually provide nationwide service) suggests that investors are able to mobilize resources to enter the market.
That’s also true, and four is better than the duopoly at best that landline broadband customers usually have available. Although I can attest that there are parts of the U.S. where there’s really only one national and one local mobile phone carrier. We’ll see how long multiple mobile carriers last as the landline carriers continue to fold together into fewer big ones.

Wallsten cites rules that required ILECs to provide access to CLECs as failed regulation because the CLECs didn’t invest in infrastructure. I agree that it failed, but I’d say because the ILECs found ways to game the regulations to prevent the CLECs from getting a flat playing field.

But Wallsten’s main contention seems to be that there’s competition now, so why regulate? Plus comparing the current wireless market to the old Ma Bell monopoly is absurd, he says. Well, I don’t know. I’m looking to change my cellphone service, and I don’t really want to bother with changing my physical phone right now. Looks like I’ll have to do that, and sign up for a two year contract. Different from Ma Bell, maybe, but I see some similarity. Wallsten addresses this scenario and appears to see it as a competitive feature for t-mobile and Cingular, since their networks will permit unlocked GSM phones to work on either. I guess I don’t see why it should be special, since I’m used to connecting my wireless Internet laptop to any old wireless network through any ISP without having to buy a special device or pay extra for compatibility.

Wallsten says in his final paragraph:

Any proposed regulation must always be considered carefully to ensure that it carefully targets a specific market failure and that the benefits of the regulation are expected to exceed its costs.
I’d be more impressed with that argument if I were convinced that the FCC had taken such care before abrogating net neutrality for the Internet in August 2005.

Besides, sometimes regulation is required for more important reasons, such as the rule of law, protection of the people from physical harm, etc. The U.S. First Amendment has a pretty good track record for freedom of the press, for instance. Market failure isn’t the only reason for regulation. In the case of net neutrality, issues such as innovation and freedom of speech may enter into it, as well.