Today, PK and the Public Interest Spectrum Coalition joined Google, Skype, Frontline Wireless, and other technology sector organizations in filing a letter to FCC Chairman Kevin Martin. This letter presents a united front among advocates for open access: public interest groups and high tech companies (in essence, everyone but incumbent broadband service providers) all agree that open access is an absolute must for the upcoming 700 MHz auction. You can read PISC's previous filings here and here, more about open access here, and more about the 700 MHz auction here. In addition to highlighting the unity of open access advocates, the letter clarifies four principles of open access. Each and every one of these principles is essential if the auction is going to encourage the entrance of a third-pipe competitor to incumbent telephone and cable companies and promote innovation and competition in the wireless industry.
The four principles of successful open access are:
Open Devices: An open devices provision would require the licensee to allow any device to attach to the network, so long as that device does not harm the network. This, essentially, is wireless Carterfone. Using a current (and very appropriate, given the recent Congressional hearing) example, with this open devices requirement, iPhone users would be able to discontinue their AT&T service and sign up for a competing service, but still keep and use their iPhones with the new service. Even more important, an open devices provision would spark the same kind of innovation in the wireless market that the Carterfone decision produced in the wired market. For those who don't know, Carterfone is industry shorthand for the FCC decision that required then-dominant AT&T to allow consumers to attach any device to the telephone network, so long as that device did not harm the network. This led to the invention of the modem and the fax machine.
Open Applications: The second “open principle” would allow consumers to access the same applications if they move their devices from one network to another. Going back to the iPhone, this means that consumers parting with AT&T but not their iPhone would still be able to use Google Maps, and would not be required to use, say, T-Mobile's specialized mapping service. An open applications provision would not only allow consumers to use the applications of their choice, but it would spark the creation of new and innovative applications.
Open Services: Here, the licensee would be required to make every important network interfaces available to wholesale customers and third-party application providers. For example, let's say a company like Best Buy decides that it wants to sell wireless internet service – maybe it wants to sell innovative devices that come with access to a “Best Buy internet” – but it can't afford to purchase spectrum licenses at auction. An open services condition would require the licensee to sell access to its internet service to Best Buy. The licensee would have to do so on a non-discriminatory basis and at a wholesale price. This provision promotes competition in the wireless service market: smaller service providers who are unable to bid (or unable to out-bid the incumbents) at auction would still be able to purchase access to the wireless network from licensees at wholesale prices. The rest is an old song: more service providers equals more competition equals better service for consumers.
Open Networks: This is the wholesale open access that PK and the Public Interest Spectrum Coalition have been discussing from the beginning. Requiring the licensee to make the network available to other service providers on a non-discriminatory basis at wholesale prices remains the only way to ensure competition and new wireless service providers. This would set-up a market much like the highly-competitive days of dial-up ISPs. Smaller service providers who, again, are unable to acquire spectrum at auction or who cannot afford to build-out their own networks, would still be able to lease network access from licensees at wholesale prices. Old songs are worth repeating: more service providers equals more competition equals better service for consumers.
While these distinctions may seem minute, they are important. Without all four types of open access, incumbents would be able to maintain their stranglehold on competition and innovation. For example, if the Commission implemented an open devices provision only, then AT&T would have to allow iPhone users to switch to T-Mobile; however, T-Mobile would still be able to block iPhone users from accessing Google Maps or using the Safari web-browser, rendering the applications useless icons on the iPhone screen. Or if the Commission adopts open networks without open services, 700 MHz licensees may have to offer wholesale access to internet service, but could maintain unreasonably high prices for access to the network, effectively stifling overall competition and innovation. Of course, the above requirements would only exist for the 700 MHz band, but it's our hope that the added “third pipe” competition would help change the broadband and wireless market for the better.
We hope that the Commission will take this filing into account and adopt the above four open principles as it considers the Chairman's draft rules and works towards solidifying the final rules for the auction. The final rules should be public July 31st – stay tuned!