Wireless Players Rally Against Net Neutrality Regs

WASHINGTON — In some ways, this is a nervous time for the wireless industry.

Amid the meteoric rise of smartphones, app stores and consumer dependency on mobile broadband service, the Federal Communications Commission is taking a close look at the industry in a move that many fear will bring new burdensome regulations and ultimately harm consumers.

In response, the Progress and Freedom Foundation, a conservative Washington think tank that generally opposes regulatory interference in the market, convened a panel of scholars, analysts and industry insiders to flesh out the opposition to wireless regulation.

“The FCC is stepping into this at a time when the economic equation is being turned in its head,” said Craig Moffett, a senior analyst with the financial house Bernstein Research.

Moffett described the dwindling economics for carriers that have come with the soaring usage of wireless broadband, citing the recent claim of an AT&T executive that traffic on the company’s mobile data network has increased 5,000 percent over the past three years.

This afternoon’s panel discussion was particularly timely, given the FCC’s plan to vote on Thursday on a proposed rule-making that would tighten the commission’s stance on Net neutrality, and apply non-discrimination rules to wireless networks. That controversial step follows notices of inquiry the FCC has already issued calling for comments on the state of competition, investment and innovation in the wireless sector.

When coupled with the FCC’s recent interest in other industry feuds, such as the decision to keep Google Voice out of Apple’s iPhone app store and an inquiry into the special access market, the commission has sent plenty of signs that it plans to give the wireless market greater scrutiny than it’s received in recent years.

Ruth Milkman, the chief of the FCC’s Wireless Telecommunications Bureau, was on hand to offer the commission’s perspective, though she was constrained by FCC rules that prohibited her from addressing specific points about Thursday’s rule-making.

“I think there is tremendous agreement that the wireless sector is vibrant, contributing greatly to the economy,” she said. “It’s just a phenomenal set of services and applications.”

Milkman said that she viewed mobile as the future of the broadband market, and urged the industry not to read too much into the FCC’s recent heightened interest in the space.

“Having said all that, the wireless industry is on the verge of a very important transition as we move to mobile broadband,” she said. “What we want to make sure of is that we continue to have investment and competition in the wireless sector as we make this transition.”

Mindful of the FCC’s “sunshine rules,” Milkman left after making her introductory remarks to ensure she wouldn’t get caught up in the debate over the commission’s still-unreleased notice of proposed rulemaking.

Had she stayed, she would have heard a long list of arguments as to why Net neutrality rules should be a dead letter for the wireless industry.

Brett Glass, the owner of Lariat Networks, a small wireless Internet service provider in Laramie, Wyo., warned of the “unintended consequences” of regulations that would sow confusion about the rules of the road for network operators, saying that they could “threaten our financial viability.”

“People who we’ve been courting to invest in our small company have walked away,” he said.

Glass and other panelists argued that the FCC could better help wireless consumers by pursuing policies that would eliminate some of the impediments that have slowed the deployment of high-speed wireless data networks.

For small providers like Lariat, one of those areas would be to put caps on special access rates, the fees larger carriers exact from smaller firms to ride on their networks. Earlier this month, the FCC opened an inquiry into the special access market after a chorus of protests from smaller carriers and advocacy groups.

The panelists also argued that the FCC could do much to alleviate the network congestion for wireless providers by reforming its spectrum regime, with some suggesting that the agency take on the politically difficult task of trying to reclaim some of the airwaves from over-the-air broadcasters.

The panelists also took aim at the notion that the wireless industry suffers from a shortage of competition, an argument that advocates of Net neutrality and other regulatory initiatives have advanced.

“There’s plenty of competition,” Glass said. “The idea that regulation is necessary because there’s a lack of competition, it just doesn’t pass the smell test.”

For all the hand-wringing and lobbying that has attended the run-up to Thursday’s meeting, the FCC’s Milkman urged members of the industry not to get ahead of themselves. Thursday’s vote, after all, is only a procedural formality to set in motion a process of rule-making which is likely to last several months.

“We’re very sensitive to the difference between wireline and wireless networks,” Milkman said. “Keep in mind, these are not final rules — this is a notice, and there will be plenty of room for comment.”

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