Federal Communications Commission Chairman Julius Genachowski wants to mandate Internet service providers to grant consumers equal access to all legal Web applications and services -- and the debate is on. What was once the battleground for wired service providers has been expanded to the flourishing wireless industry, and that spells bad news for large telecom and cable operators like AT&T, Verizon Wireless, T-Mobile and Comcast.
As of now, these companies can restrict any device, , service or content on their networks that competes with their own products, Zacks Investment Research explained in a research note.
"In regard to controlling the flow of bandwidth-consuming applications such as video streaming, the ISPs have been discriminating against several Web content and application developers," Zacks said. "The FCC recommendation will disallow this discriminatory practice on the part of wireless, wireline or cable operators from either blocking or slowing access to any video or phone services. The new Net-neutrality rule will be a boost to the Web content and application providers like Google."
Skype Welcomes Mandates
Christopher Libertelli, Skype's senior director of government and regulatory affairs, welcomes Genachowski's balanced approach to protecting investments in networks and the applications that drive people to buy broadband access. The FCC's decision could make room for Skype on phones.
"If done correctly, this move will open up more innovation and allow consumers to make the choice about which applications they would like to use, without having that choice dictated to them by operators," Libertelli said. "There has been much debate about whether to apply openness rules to both wired and wireless networks, and we are pleased about the (FCC) Notice of Proposed Rule Making, which maintains incentives for carriers to invest in their networks and it provides ample flexibility for carriers to manage their networks -- all while protecting a consumer's right to choose an application like Skype."
According to a recent Skype-commissioned poll by Zogby International, consumers want more value and control over their mobile phones. The poll says the FCC has 64 percent of Americans' support for its recent decision to open an inquiry into competition among wireless providers. In addition, the poll revealed two-thirds of Americans report that consumers are best suited to decide which applications should be allowed to run on a mobile handset.
The CTIA Responds
Wireless carriers are gearing up for a fight. The CTIA, which represents the wireless carriers, believes there is enough competition to regulate the Internet world already.
"As we have said before, we are concerned about the unintended consequences Internet regulation would have on consumers, considering that competition within the industry has spurred innovation, investment and growth for the U.S. economy," said Chris Guttman-McCabe, vice president of regulatory affairs for CTIA.
Avi Greengart, an analyst at Current Analysis, spoke to ,us after attending the 3G Americas conference in Dallas. He said Net neutrality was a hot topic among operators and vendors at this year's event.
"From the carrier perspective, the FCC is reopening a discussion that had been closed as of the last spectrum action. Some of the spectrum was auctioned off with explicit Net-neutrality rules, and some was not. There were different prices for those different blocks of spectrum," Greengart said. "To now go back and say that government would potentially like the entire wireless industry to operate by different rules than the ones that were just implemented in the last bidding process, which wasn't that long ago, raises red flags for them."