Wireless Carterfone

Tim Wu
2007 International Journal of Communication   unpublished
Over the next decade, regulators will spend increasing time on conflicts between the private interests of the wireless industry and the public's interest in the best uses of its spectrum. This report examines the practices of the wireless industry with an eye toward understanding their influence on innovation and consumer welfare. In many respects, the mobile wireless market is and remains a wonder. Thanks to both policy and technological innovations, devices that were science fiction 30 years
more » ... go are now widely available. Over the last decade, wireless mobile has been an "infant industry," attempting to achieve economies of scale. That period is over: Today, in the United States, there are more than 200 million mobile subscribers, and mobile revenues are over $100 billion. As the industry and platform mature, the wireless industry warrants a new look. This report finds a mixed picture. The American wireless industry, over the last decade, has succeeded in bringing wireless telephony at competitive prices to the public. Yet at the same time, we also find the wireless carriers in the United States aggressively controlling product design and innovation in the equipment and application markets, to the detriment of consumers. In the wired world, their policies would, in some cases, be considered simply misguided, and in other cases be considered outrageous and illegal. Four areas warrant particular attention: 1. Network Attachments-Carriers exercise strong control over what devices may be used on the public's wireless spectrum. The carriers place strong controls over "foreign attachments," like the AT&T of the 1950s. The FCC's Carterfone rules, which allow consumers to attach devices of their choice to the wired telephone networks, have not been applied to wireless networks. These controls continue to affect innovation and the development of new devices and applications for wireless networks. 2. Product Design and Feature Crippling-By controlling entry, carriers are in a position to exercise strong control over the design of mobile equipment. They have used that power to force equipment developers to omit or cripple many consumer-friendly features. Carriers have also forced manufacturers to include technologies, like "walled garden" Internet access, that neither equipment Tim Wu: wu@pobox.com
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