Think for a moment of the ideal business. Your company is one of a handful of suppliers of a service. Customers must get their equipment from you. They can use your service on your terms only. They can’t leave without getting hit with large penalties. The quality of the service isn’t that great, contrasted with other places around the world.

Welcome to the world of telecommunications. Once upon a time, most of that description could have applied to the old Ma Bell, AT&T, which provided the telephone service and controlled access to the telephones. Over the years, the old Bell System’s controls largely slipped away as regulators in 1968 decided that equipment other than the “official” gear could be attached to the network, leading to developments like the fax machine, modems and faster connections to the Internet.

The spirit of Ma Bell lives on in her grandchildren, the cellular industry. Verizon and AT&T, the direct descendents, as well as industry cousins Sprint and T-Mobile, like to present the appearance of competition. To a degree, they are right. There are four national carriers, and those carriers are spending millions of dollars to attract customers. They do offer lots of phones. That’s all well and good, but irrelevant.

What the carriers have in common is much greater than what sets them apart, namely the business structure that requires a customer to buy a certain amount of minutes (local and long-distance combined) and strongly encourages the purchase of an “approved’ handset through subsidies on the price, all locked into place by high termination fees and restricted terms of service.

There is hope for cellular customers, however. Skype, the revolutionary company that provides software for making calls over the wired Internet as well as through Wi-Fi connections, has asked the Federal Communications Commission (FCC) to apply the same rules to cellular phone companies that apply to regular telephones. Skype’s petition, supported by public-interest and consumer groups (including my day-job employer Public Knowledge) was long overdue.

From the beginning of the cellular industry in the U.S., regulators looked the other way as consumers were effectively trapped. The mistaken theory was that because there is “competition” in the business, the same rules as for landline telephones needn’t apply.

The cellular industry isn’t giving up its stranglehold without a fight. What is amazing, however, is that the arguments they are using now are basically the same arguments that the old AT&T used, unsuccessfully, 40 years ago.

Consider this summary of AT&T’s position in 1968, as described by the FCC: “Installation of unauthorized equipment, according to the telephone companies, would have at least two negative results. First, it would divide the responsibility for assuring that each part of the system is able to function effectively and, second, it would retard development of the system…”

AT&T told the FCC last month that it must protect its network against harm, needs to sustain innovation. AT&T, for example, argued: “… although AT&T does not prohibit the use of uncertified handsets, AT&T strongly encourages its customers to use certified handsets – those that are optimized for its network – and it guarantees the service of and provides technical support only for those handsets.”

The company also told the Commission: “Regulatory intervention at this point, with the market in its infancy, could have disastrous long-term effects, distorting investment and stifling the ongoing innovation and experimentation that is critical…”

Verizon chipped by saying that “Customers would no longer enjoy one-stop customer service on their devices from the carrier,” which would lead to frustrated customers. It does sound familiar.

Cell phone companies, it is true; develop their own special features. Each has its own music download service, and each is working on video delivery. The catch is that the customer can only use the download service from that one company. You can’t use Sprint’s music service on Verizon, and you can’t use iTunes on any phones that are not specially equipped. You can’t use Skype, either. While it’s technically possible to download the Skype software to some smart phones, the Terms of Service of the cellphone companies prohibit specifically use of “Voice over Internet Protocol” calling.

Here is what AT&T says you can do with your phone and the service you buy: “Data Service sessions may be conducted only for the following purposes: (i) Internet browsing; (ii) email; and (iii) corporate intranet access (including access to corporate email, customer relationship management, sales force automation, and field service automation applications).”

Ma Bell’s time has expired. She’s used up her minutes. The same arguments didn’t hold up then and don’t hold up now. It’s time for the FCC to introduce the same competition and freedom into the wireless world that it did for the wired telephones nearly 40 years ago.