The same week that AT&T forced SlingMedia to cripple its iPhone application (yet another victim of its veto power), its D.C. lobbying group proudly told federal regulators that U.S. customers were benefiting from a highly competitive mobile phone market full of cool apps, fun handsets and choices for all.
The nation's cellular carriers are concerned that once Congress confirms a new regime at the FCC, it will force them to open their networks, play fair with smaller carriers and be more transparent with its customers and the government. While the mobile industry likes to pay lip service to openness, when it comes to openness requirements, the industry turns to lobbyists, filings and lawsuits to fight them.
So it's not surprising that in a letter to the FCC (.pdf) Tuesday, CTIA (The Wireless Association) trumpeted "the unparalleled value that U.S. consumers enjoy, driven by the competition and innovation in the industry." Relying on a Merill Lynch study, the Wireless group points out that U.S. customers pay lower per-minute fees, that some cellphone users can choose from tens of thousands of apps, and that the top four carriers in the United States have less of the market (86 percent) than in any other of the top 25.
That's deceptive math, according to the Consumer Union's Senior Counsel Chris Murray, who told Congress last week not to be hypnotized by per-minute cost statistics.
"It is the cost to the consumer that matters, and U.S. consumers pay more for wireless service than other developed nations — an average of $506 each year, higher than the OECD9 average of $439, and way above countries such as Sweden ($246), Spain ($293), and Germany ($371)," Murray told Congress in written testimony (.pdf). He also noted that charges keep going up for text messaging, even though the service is virtually free for carriers to run.
The glowing reference to apps stores is also humorous, given that U.S. carriers suffocated innovation on handsets over the last 15 years by severely restricting outsiders' access to handsets on their networks. That portion of the carriers' so-called walled garden has only partially opened with the popularity of Apple's app store for the iPhone.
For years, consumer groups have been pushing the FCC to step in with regulations that require carriers to let users to bring their own devices to a network, make roaming agreements for competitors mandatory and stop exclusive handset-carrier deals such as the iPhone-Apple deal. They also want net-neutrality rules to apply to wireless carriers, which currently block applications from phones and arbitrarily prohibit perfectly legal activity on their cellular networks, usually justified for performance issues.
But to date, the FCC has largely stayed away from imposing rules on wireless carriers, preferring to let competition shape the companies' practices.
Consumer groups say the carriers aren't going to budge any further on openness, unless the government sets rules that all players have to follow.
For instance, AT&T says it's not okay to use SlingBox or Skype on your iPhone's 3-G connection, but a YouTube app comes pre-installed and it's perfectly fine to stream the Masters to your phone over that same connection. Meanwhile, Microsoft and Google have also limited what applications they will sell in their respective mobile app stores to keep the carriers happy.
It all adds up to a need for regulation, Consumer Union's Murray says.
"When there is a highly concentrated industry — as the wireless industry is according to Department of Justice merger guidelines — that raises prices on consumers for services that have declining costs, reporting revenues that are way up in the midst of an economic recession, this should raise more than a few policymaker eyebrows," Murray said.
Not surprisingly, the CTIA disagrees.
"A light regulatory touch has resulted in a market that other consumers throughout the world envy, not the opposite," CTIA CEO Christopher Guttman-McCabe wrote. "For United States wireless carriers large and small, the true regulator is the customer, and carriers move quickly to react to that 'regulatory' pressure."
Those are nice-sounding words, but it's not clear whether a new regime at the FCC will be persuaded that the industry will change on its own.
Photo: Flickr/ P/\ul
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