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The FCC Is At It Again -- (Big) Industry Knows Best

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It’s time again to delve into the weeds at the Federal Communications Commission (FCC). This time, we’re looking for a relatively obscure decision likely to come in the next few weeks that will thwart the choices have for cellphones and other wireless devices.

The decision in this instance will come in a couple of weeks, although FCC Chairman Kevin Martin telegraphed the move earlier this week in a speech at a convention of the cellular industry. He announced that he wants to dismiss the petition filed last year by Skype that would bring the wireless world into the freedom of the wireline world by allowing any device to be connected to the wireless network. Chances are Commissioners Robert McDowell and Deborah Tate, the other two Republicans on the Commission, will vote with Martin.

It's a shame, and another opportunity to help consumers is wasted.

Rather than guarantee that any innovator with a great idea for a gadget or a great new service will have the right to offer it, the FCC is prepared to fall back on discredited ideology and instead will put that innovator at the mercy of the big telecom carriers. It’s unfortunate, because 40 years ago the FCC made just the opposite decision when it came to regular landline telephones.

Consider your basic cordless phone. Cordless phones have gone through a significant metamorphosis in recent years. They improved their technical capabilities by changing the part of the radio spectrum in which they operate. They went from having a big antenna to no visible antenna. Consumers once bought one phone. Now they can buy a set of three phones – a base and two others. The speakerphone, long a staple of the business desktop telephone, is now part of the cordless revolution.

Now, here is the key question for Martin, McDowell and Tate: Who gave permission for those telephone manufacturers to bring those advances to market? Who gave the approvals to change the spectrum, or to redesign the antenna or to add extensions or speakerphones? Was it up to AT&T, because the company was feeling good about “openness” one day? Did Verizon give its blessing, perhaps so that it could see how the equipment was made, while taking eight weeks to make up its mind?

One answer will suffice for all of those questions: No. No permission was needed from any company for any device. Let’s go further. What telephone company gave permission for the FCC to operate a Web site? Not one, just as no telephone company gave anyone permission to offer any online service.

The results from the “innovation without permission” explosion are undeniable – to everyone except the majority of the FCC. Do they think this all came about by the goodness of an industry’s heart? Apparently so, judging from Martin’s remarks at the cellular industry trade show in Las Vegas, in which he praised companies for their commitments and embraces of openness.

So, based on some announcement or two and on a perceived change of attitude, what Martin calls “the industry’s embrace of a more open wireless platform,” he concluded it would be “premature to adopt any other requirements across the industry.” I, for one, certainly hope the chairman tries to test this attitude by going to his nearest Verizon store and buying an iPhone.

The reason that all of those cordless phones are available, and that the Web exists, is that government made it all possible. Specifically, the FCC in 1968, albeit in a monopoly environment, said that control over equipment by AT&T had to end. It was the government that removed restrictions, which in turn set the conditions for a new sector of private industry to flourish.

It’s the failure to see government as a market-enabling mechanism that makes so disappointing. The problem is one of ideology. Martin and his fellow commissioners in the majority see government as a tool to be avoided being used whenever possible. Their one small step in the other direction in the 700 MHz auction has now been completely retraced. The irony is that by dismissing the Skype petition, the FCC is enabling the dreaded “heavy hand of government,” rather than stopping it from throttling the market.

Instead of letting a free and open market blossom in wireless devices and applications as it has on the landline side, the FCC instead has delegated to a massive oligopoly the power to control the market as it wishes. That’s not the free market that Martin, McDowell and Tate want to see and it’s a shame they won’t use the authority at their disposal to make that market a reality.


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