Wireless Net Neutrality
February 11, 2007 9:25 PM   Subscribe

A Call to Free the Cell Phones. Law professor and Net Neutrality activist Tim Wu throws down the gauntlet to wireless industry. Building on the Carterphone ruling, he makes the argument for Wireless Net Neutrality: that consumers, not wireless carriers, should choose how they connect to the wireless networks, what devices they use, and what they do with the bandwidth.
posted by alms (37 comments total)
 
That's fine, as long as all of those users pledge to ask for no tech support from the service providers.

The primary reason that the cell companies limit the number of handsets they offer is because they have to provide technical support for all the ones they do offer. That means answering questions, and it means firmware updates.

The cell companies also do extensive testing on handsets for quality and interoperability, so as to make sure that they'll work everywhere in the network and work well.

You can bring any handset you want to the game as long as you're willing to give up all that support and interoperability testing.

"Law professor and Net Neutrality activist" Tim Wu evidently doesn't know anything about the nuts and bolts of the cell phone industry, or he'd know that this is not just a case of the service providers being greedy fascists.
posted by Steven C. Den Beste at 9:56 PM on February 11, 2007


"a number of researchers are asking why the companies are allowed to force consumers to buy new handsets when they change carriers"

Well, if you're going to Verizon to Cingular, you kind of need to have a different handset.

This is nice, but I don't see it going too far. Even here in California, our "Wireless Bill of Rights" was smacked down by the powers that be because the wireless companies are 'too important to the economy.' How dare we rob them of revenue by *not* using THEIR music download services!

All of the wireless carriers suck. Greedy bastards!
posted by drstein at 9:59 PM on February 11, 2007


...a number of researchers are asking why the companies are allowed to force consumers to buy new handsets when they change carriers...

What they're talking about is the subsidy lock, a technological limit built into the handsets which prevents the handset from being used on any home network except the one that sold it to you.

The "subsidy" part of that refers to the fact that the service provider sells you that handset for substantially less than it costs them to buy it from the manufacturer. Depending on the handset they can lose upwards of $200 per.

The reason they do that is because you have to have a handset to use their network. So they sell you the handset at a loss, but require you to commit to use the network for one year or two years in expectation of making back that loss on use fees.

If they sell you a handset at a substantial loss, and you immediately take that handset and switch to their competitor and use it on the other network, they're out the subsidy and can't make it back.

So if you want to be able to take your handset with you, then you have to agree to pay a price for that handset that at least permits the service provider to break even on it. Handset pricess will rise substantially.

"A number of researchers" apparently aren't up on how the industry runs financially, or they'd know that. (It's not exactly a secret.)
posted by Steven C. Den Beste at 10:14 PM on February 11, 2007 [1 favorite]


This Walt Mossberg piece sums it up nicely. Four orifices, indeed.
posted by lovejones at 10:15 PM on February 11, 2007


If they sell you a handset at a substantial loss, and you immediately take that handset and switch to their competitor and use it on the other network, they're out the subsidy and can't make it back.

Steven, for someone who is up on the industries' finances, you forget to mention the now standard two-year contract that the consumer is required to sign to get that fat subsidy. And if the consumer cancels, they are required to pay a cancellation fee that compensates the carrier for the subsidy.
posted by lovejones at 10:20 PM on February 11, 2007


Sorry, Tim is insightful on a wide range of policy and legal issues related to emerging technologies, but on this one I have to disagree with him. Unlike the ol' AT&T, there ain't no monopoly in cell phone carriers. If you don't like Verizon's rules, restrictions and fees, then don't use 'em. What's next? Restaurants get required by federal regulation to charge no corkage fee and allow customers to bring in their own appetizers, as well?
posted by twsf at 10:20 PM on February 11, 2007


If they sell you a handset at a substantial loss, and you immediately take that handset and switch to their competitor and use it on the other network, they're out the subsidy and can't make it back.

My heart bleeds for cell companies. Handsets cost peanuts to make, and cell companies overcharge for them as it is. These huge coprorations should have figured all of these economics out by now. I'm telling you, sometimes you just feel like Howard Beal.
posted by RayOrama at 10:22 PM on February 11, 2007


If they sell you a handset at a substantial loss, and you immediately take that handset and switch to their competitor and use it on the other network, they're out the subsidy and can't make it back.

Yeah, but they don't sell you a handset at a substantial loss. You sign up for a two-year service contract and finance the real cost of the phone over two years.

This is Wu-go Chavez economics: go ahead and get the phone unlocked, use another network, but still pay the monthly fee on the contract you signed whilst not using the service. That will show those Yankee bastards!
posted by three blind mice at 10:41 PM on February 11, 2007 [1 favorite]


RayOrama: Handsets cost peanuts to make...

I know that boring facts get in the way of a nice conspiracy theory, but I'm afraid you're wrong. Handsets cost quite a lot to make. The companies that produce them do a good business, but they're not ripping anyone off with ridiculous markups.

lovejones: ...you forget to mention the now standard two-year contract...

I said: ...require you to commit to use the network for one year or two years in expectation of making back that loss on use fees.
posted by Steven C. Den Beste at 10:51 PM on February 11, 2007


"That's fine, as long as all of those users pledge to ask for no tech support from the service providers."

Well fine then Steven, let's just have the cellphone manufacturers provide support for their finite product lines.

Just like other device manufacturers.
posted by Matt Oneiros at 11:22 PM on February 11, 2007


Heh. Nokia's got a (back of the envelope) 26% unlevered ROIC, while Motorola chugs along at 11%. Maybe neither of you should make blanket statements about how good the handset business is.
posted by Kwantsar at 11:28 PM on February 11, 2007


Sorry Steven, selectively reading there!
posted by lovejones at 11:35 PM on February 11, 2007


Huh?

I look at cablemodems as a model for the industry. There is a standard (DOCSIS), and devices are tested and certified against this standard.

Next, cable companies select from that list CMs they support. You go buy one of those, the cable company works with the manufacturers to get firmware updates, tech support training for their techs and such.

Finally, you go pay for a device at BB or whatever, take it home, call the cable company and get service.

Whats so different that this model couldnt be applied to the cellphone system? Yea there is GSM vs CDMA, but even within those standards you could allow this behavior.
posted by SirOmega at 12:33 AM on February 12, 2007


Here in Belgium, I believe its illegal for a network to sunsidise a handset (!) - at least noone does it and there are no network locks on the handsets sold.

The cheapest handset is therefore the 0-feature Nokia 1600 for EUR49. Expect to pay ~EUR 100 for the cheapest cameraphone, ~200-250 for a 'fashion' phone, or ~400+ for a smartphone/blackberry. (who knows what the iPhone will cost over here!)

It would be nice to think that the subscription fees and call costs are lower because of this, but apparantly not (when I compare tariffs to my UK based friends who get several hundred euro cameraphones for 'free' and *still* have a cheaper tariff than me /sulk!)
posted by nielm at 12:35 AM on February 12, 2007


Sorry Steve, but do you understand how things work in Europe? All the carriers use GSM, and almost none of them do locking. Buying a phone and paying for service are separate deals.

It's like you know just enough to be dangerous.
posted by blasdelf at 2:05 AM on February 12, 2007


All the carriers use GSM, and almost none of them do locking. Buying a phone and paying for service are separate deals.

Neither of those statements is even slightly true in the UK.

It's like you know just enough to be dangerous.
posted by cillit bang at 2:24 AM on February 12, 2007


I was talking about mainland Europe, but whatever, I've already been pwned.

The UK is one of the big oddball cellular markets, along with the US and Japan. Always confounding blanket statements and whatnot.
posted by blasdelf at 2:46 AM on February 12, 2007


Blasdelf, I sure as hell do know about mainland Europe, where all the carriers use GSM because bureacrats decided to freeze innovation, secure in the knowledge that they had already invented the perfect cell phone standard.

Yes, my friend, I know a lot about Europe's cell phone system.
posted by Steven C. Den Beste at 5:11 AM on February 12, 2007


consumers, not wireless carriers, should choose how they connect to the wireless networks, what devices they use, and what they do with the bandwidth

Anyone who wants to is free to buy an unsubsidised handset, and in most places you can get 2.5/3G connectivity without a subscription by buying a pay-as-you-go SIM card from an operator.

As for letting users choose how they use the bandwidth, I suspect that a government awarding this right to the consumer would be in breach of the terms under which it licensed its 3G spectrum to carriers.
posted by runkelfinker at 5:35 AM on February 12, 2007


Actually, there are many, many ways in which US wireless carriers suck. If you've ever tried to develop applications for modern wireless phones, you probably already know most of them.

One example: in the US, wireless carriers charge for text and picture messaging on a per-message basis (for plans that don't feature unlimited messaging at a flat rate). So, whether you send or receive a message, you get dinged for the cost of the message. In most of the rest of the world, callers are only charged for sending a message.

What this means is that US wireless carriers are (justifiably, given their greedy profit model) fanatical about controlling all of the messages that their users receive. They don't want their users to have to pay for receiving spam, after all. So, unlike the EU, if you try to send an MMS to a US phone via a server that isn't recognized by the phone company's gateway, it will get dumped on the floor. You basically have to be another wireless provider, or enter into a special (expensive) agreement with THAT SPECIFIC CARRIER, in order to be able to send MMS to their users' phones.

US wireless carriers aren't much of an evil monopoly when it comes to phones and service. Where they ARE an evil monopoly is when it comes to shutting out competition on the content side of things. Witness Verizon's crippling of Bluetooth on their phones, so that you have to pay Verizon in order to get your own photographs off of your phone. Look at the rarity of open content platforms (such as Symbian) among the phones offered by US carriers, except among expensive high-end smartphones. The US has been hobbling along behind the rest of the world for a decade now, thanks to the inability of small companies to innovate in this space.

I'm hopeful that (finally) with the advent of widespread internet connectivity among phones, the content issue will be leapfrogged by mobile email and web browsing. But still, the average phone-based browser in the US is a crippled WAP thingy that can only pull down content from the provider's own network of sites.

SCDB: OK, I'll buy that CDMA is better than GSM as a wireless standard. But the platform (and more specifically, the use of SIM cards) has lent itself better to innovative business models that foster competition and give the consumer more choices.
posted by xthlc at 6:21 AM on February 12, 2007


That's fine, as long as all of those users pledge to ask for no tech support from the service providers.

The primary reason that the cell companies limit the number of handsets they offer is because they have to provide technical support for all the ones they do offer. That means answering questions, and it means firmware updates.


oh puh-leez.

SCDB: OK, I'll buy that CDMA is better than GSM as a wireless standard. But the platform (and more specifically, the use of SIM cards) has lent itself better to innovative business models that foster competition and give the consumer more choices.

GSM is a standard (like TCP/IP) and CDMA is a multiplexing algorithm (like, say, eithernet or WiFi). Newer GSM systems use CDMA. And having SIM cards rock. My next cellphone will have one for sure, and I plan on buying an unlocked handset. No handset slavery for me!

Wireless net neutrality would be awesome, and I hope it happens. I'm not exactly holding my breath...
posted by delmoi at 6:56 AM on February 12, 2007


If they sell you a handset at a substantial loss, and you immediately take that handset and switch to their competitor and use it on the other network, they're out the subsidy and can't make it back.

not if you pay full price for your phone in the first place. Which is what people would do if they wanted an unlocked phone. Right now, if you pay full price you're phone can still be locked. I paid full price for my phone because the 'subsidized' phone broke, and I wanted another one of a different model, rather then having the same phone replaced (so it could break again. Fucking Motorola)

Just because the current business model works, doesn't mean it's any good.

Yes, my friend, I know a lot about Europe's cell phone system. That article was written in 2002. (I think I actually read it at the time, or something like it at one point)

The idea that you can just have no regulation and everything will be flowers and candy is stupid. The fact that we can take our phone numbers with us when we move from carrier to carrier is a result of regulation. Net neutrality is the result of regulation as well. You don't need the government to dictate standards, but having the government prevent corporations from raping people up the ass is a good thing.
posted by delmoi at 7:09 AM on February 12, 2007


A list of features that carriers have blocked, crippled, modified or made difficult to use, at one time or another include:

* Call timers on telephones
* WiFi technology
* Bluetooth technology
* GPS Services
* Advanced SMS services
* Internet Browsers
* Easy Photo file transfer capabilities
* Easy Sound file transfer capabilities
* Email clients
* SIM Card Mobility


Regardless of the numbers, the links above argue how oligopoly capitalism can choke innovation for (socially concentrated) profit as effectively as old fashioned state communism choked it for power.

What promises toward the eventual unlocking (assuming it takes some time to make their money) of networks and phones have the four corporations made? (akin to the record companies' promise of lowering the cost of CDs?)

How long can "restricting access" be a main component of the business model before it becomes unethical? Are we supposed to think that, just because the corporate planners plan to make x amount of money over the decades, they have a right to?

At what point do consumers get to plan their own uses?
posted by eustatic at 7:47 AM on February 12, 2007


And having SIM cards rock. My next cellphone will have one for sure, and I plan on buying an unlocked handset. No handset slavery for me!

You can buy unlocked GSM phones retail online, including phones not meant for the U.S. market, and get a sim card from, e.g. T-Mobile. However, they will still put you on a contract, though it's only one year rather than the two you'd be obliged to take if you got a discounted phone through them. The thing is, the carriers work with the manufacturer to customize the firmware to work with their services. A BYO phone may have a few quirks, such as voice mail notification not being integrated properly. I've yet to find something that doesn't work at all, but it can work a little strangely and you'll get no support for it. If you're okay with this, go for it.
posted by George_Spiggott at 8:13 AM on February 12, 2007


Though it is irritating to realize that my rates are set to subsidize the cost of a handset that I already paid cash for to somebody else. It would be really nice to have a "service only" rate for BYO phones or out-of-contract phones which you've already paid for.
posted by George_Spiggott at 8:36 AM on February 12, 2007


george and SDB:
Wouldn't it make more sense for the phone companies to offer traditional financing on the cell phones, earn interest on monthly payments to pay off the phone, and then offer lower rates on the monthly service for people who have used their financing service, or have their own phones.

This way, they still get paid for the phone, the upfront costs to the customer are about the same, the monthly payments for phone+service are the same, they can advertise cheaper monthly rates.

The whole market becomes more efficient, and we all benefit from the increased efficiency and competition.

The support issue is a problem, as is the different cellular standards, but if you're not on a financed or carrier branded phone, you're out of luck in the support department.
posted by Freen at 10:23 AM on February 12, 2007


Here's what Wu and others are getting wrong by calling it "wireless" - the idea that because it's the public's spectrum that the phones are operating over, the public should have unfettered access to the telephone network. Wrong.

Wireless is just your phone to the tower. The tower is owned by a private entity, but the rest of the telephone network (a) isn't wireless, and (b) is extremely expensive to maintain and is owned privately. All the features that are being discussed, texting, data, etc, are all enabled by the network on the ground implemented by the phone company, they aren't some magical consequence of radio transmission.

The difference with net neutrality is that the government built the internet in the first place, and still exerts control and authority over it. The government does not control or exercise direct authority of the telephone system.

And to correct some sloppy thinking, the idea that these companies are raping consumers is laughable. Look at their balance sheets. The marginal production cost of an additional handset is not the number to look at. Factor in the R&D and fixed costs required to make the first phone. Then factor in the costs to maintain the network, to keep it running 24-7 with no downtime. These companies do not make money hand over fist as some are suggesting.
posted by Pastabagel at 10:33 AM on February 12, 2007


Pastabagel: True, but there are ways of dealing with those increased costs without resorting to 2 year contracts that create individualized artificial monopolies.

AFAIK, the same industries, with the same handset creators have managed to figure it out in other countries.
posted by Freen at 10:53 AM on February 12, 2007


That's fine, as long as all of those users pledge to ask for no tech support from the service providers.

Fine. Standardize your protocol, open it up, and let third-party manufacturers do the testing. I'll get my tech support from them.
posted by deadfather at 10:57 AM on February 12, 2007


A list of features that carriers have blocked, crippled, modified or made difficult to use, at one time or another include:

* Call timers on telephones
* WiFi technology
* Bluetooth technology
* GPS Services
* Advanced SMS services
* Internet Browsers
* Easy Photo file transfer capabilities
* Easy Sound file transfer capabilities
* Email clients
* SIM Card Mobility

Regardless of the numbers, the links above argue how oligopoly capitalism can choke innovation for (socially concentrated) profit as effectively as old fashioned state communism choked it for power.


If you don't like the restrictions your carrier has placed on you, why not just switch to another carrier without those restrictions?
posted by gyc at 11:06 AM on February 12, 2007


why not just switch to another carrier without those restrictions?

Ah, the perennial non-answer that falsely assumes that a choice exists. Anyone found a US carrier that doesn't play these anti-competitive games?
posted by Llama-Lime at 11:24 AM on February 12, 2007


I can use web browsing, a variety of email clients, use mp3s as ringtones, and email clients on my t-mobile phone.

They do lock my phone, though.
posted by zabuni at 11:35 AM on February 12, 2007


Here's what Wu and others are getting wrong by calling it "wireless" - the idea that because it's the public's spectrum that the phones are operating over, the public should have unfettered access to the telephone network. Wrong.

No, the idea is that we should have unfettered access to the telephone network because we want it. The second reason is that if it was a truly free market, some service provider would offer service with unlocked phones. But since it's not, we need the government no mandate these things.

The telephone network is a piece of public infrastructure.
posted by delmoi at 11:37 AM on February 12, 2007


delmoi, see above. They do offer service on unlocked phones. They won't sell you the phones but other people will. You also don't need a contract; you're perfectly at liberty to buy a pay-as-you-go plan. Thing is, they're more expensive.

Most of the problems in that laundry list are long gone. In particular if your phone has a full web browser and a proper email client, you're not confined to their walled-garden services.

The next battleground will over VOIP and 3rd party messaging. People with data plans will want to use them for IP phone, eliminating the call charges, and third party messaging systems which are effectively free, skirting the SMS charges. Stable wireless high-speed data is only now becoming available in the U.S. so this hasn't become an issue yet, but it's being fought out in Europe now, where the terms of service on data plans explicitly forbids this.
posted by George_Spiggott at 12:02 PM on February 12, 2007


delmoi, I dunno who your carrier is, but of the 4 phones that I've paid for outright and brought to Cingular I've been required to sign a minimum 1 year contract for each. That is, adding a line to my account with a phone I paid for outright renewed my contract for another year. Nice.

Fuck the phone companies.
posted by kableh at 2:31 PM on February 12, 2007


Damn, should have previewed, or at least read all the thread. All the pent up anger from waiting out my contract with Cingular is getting to me.

George_Spiggot has it right. I'm sure we could have WiFi in smartphones by now, but that is an obvious threat to the cell service provider's business model, so no handset manufacturer would dare.
posted by kableh at 2:36 PM on February 12, 2007


Actually you can get wifi in smartphones, though it's not common. I was referring to using your cellphone provider's data plan for VOIP, effectively using their network but not paying for the call itself. If you already have an unlimited data plan this would effectively make the call free. It's yet to become an issue in the US because cellphone data speeds are awful (the advertised speeds are usually burst speeds) and QoS nonexistent, but eventually we'll see it becoming one.
posted by George_Spiggott at 3:06 PM on February 12, 2007


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