Are AT&T and Verizon Wireless Accepting Wireless Net Neutrality?

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Nothing focuses the telecommunications industry's collective minds more than the potential for significant rules from the Federal Communications Commission.

Late last month, the FCC announced a notice of proposed rulemaking on net neutrality . The basic question is, to what extent can folks who own networks use that power to squelch offerings that in some way compete with their own. The handwriting on the wall during a Democratic administration says that the correct answer is: "Not a whole lot," though regulatory lawyers will fill tens of thousands of pages turning that notion into actual rules.

Industry insiders say that the real action will be on wireless net neutrality. That prediction seems to be coming true. Yesterday, a couple of announcements suggested very strongly that at least two carriers, AT&T and Verizon Wireless, are trying to cede enough ground now to keep them from being hammered by the commission later.


The Washington Post reports on the announcements. AT&T said that it will open its network to Internet phone services from competitors. The Post uses Skype on the iPhone as an example, and says that the announcement represents a reversal of its existing stance.


The paper also reports that Verizon Wireless and Google will cooperate on Android phones that will be open to any applications. BusinessWeek offers more information on the Google/Verizon deal in two parts: A description of the press conference, followed by the press release itself. The context is that the iPhone, which is the biggest single thing to hit the mobile market since the introduction of the cell phone itself, still is an AT&T exclusive, though that is rumored to be likely to change. The task facing others is to capture at least some of the attractiveness of the Apple device and put it into a more open environment. The writer quotes Google CEO Eric Schmidt as saying that he found it "enormously surprising" that Verizon Wireless was willing to be so open.


At the highest level, the issue here is to what extent the wired and wireless carriers realize that the world has changed. The administration in Washington will insist on at least some level of openness. There also are quicksilver technical developments in at three related areas: Network capacity is increasing, devices and applications are more powerful, and online storefront channels are increasingly robust. All of these transitions lean away from staid and highly structured markets and toward openness.


The closed model many wireless carriers cling to today, in which the type of phone and applications can be tightly controlled, is obsolete. It's likely that individual wireless executives understand this. The problem is that the old ways, though outdated conceptually, may produce more revenue in the near- and medium-term than an open model. The question is if carriers want to maintain some semblance of the old structures for that short-term gain or are willing to embrace the future.


Clearly, AT&T, Verizon Wireless and every other carrier has the right to try to win the best set of rules possible. The interesting question for the next year or so will be if they are feigning acceptance of the new reality and ceding what they calculate is just enough ground to keep the FCC at bay, or if they are ready to fully compete in the new world.