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Technology: FCC Moves to Open Access; Boost Cell Phone Freedom

What's New in Technology

August 2007

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Technology: FCC Moves to Open Access; Boost Cell Phone Freedom

Freedom from restrictive contracts may be on the horizon for beleaguered wireless phone users in the U.S. Most of us face a ludicrous proposition if we want to move to another carrier—we can take our number with us, but odds are we can’t use our phone on the competitor’s network because it’s locked solely into our incumbent carrier. No big deal in the days of “throw-away” cheap phones maybe, but a major blow to the wallet if you use a pricey smart phone. Changes appear to be coming. Both Congress and the Federal Communications Commission (FCC) are taking up the consumers’ cause and looking for ways to free up the market from restrictive practices that limit both users’ choices and product innovations.

In early July, Congress listened to various ideas designed to give consumers freedom to change carriers. At a hearing addressing “wireless innovation and consumer protection”, Massachusetts Representative Edward Markey (D) commented that wireless carriers had “far too much control over the features, functions and applications that wireless manufacturers offer directly to consumers”. Customers in most European and Asian countries don’t experience the ties that bind American cell phone users to their carriers. Switching carriers overseas is often as simple as replacing the phone’s smart card with a new one from the new provider. It is not so in the U.S., where carriers call the shots--permitting or disabling the features that a manufacturer loads into its phones, and determining what software may be loaded and how it may be activated.

For its part, the FCC is preparing to jump start increased competitiveness and options for users by earmarking a third of the new wireless spectrum(additional capacity that will be available for use in 2009) for bidders who are prepared to provide wireless services that offer users the freedom to move freely from one carrier to another. A draft proposal requiring the winning bidders to be receptive to “all kinds of devices and applications” from independent electronics manufacturers and software providers is currently making the rounds at the FCC. Not surprisingly, the big carriers are fighting moves to create a more open environment.

Industry leaders like Verizon and ATT&T have suggested that any FCC proposals to foster “open access” could create security problems–a hot button in today’s climate of constant geopolitical tensions and worldwide concern about terrorists. Despite these contentions, industry observers note that the upcoming battle for a more open marketplace is reminiscent of the skirmishes and arguments that resulted in the landmark decision that opened up landlines in the 1960s—back then Ma Bell tried to stem the clamor for change. It seems likely that today’s wireless carriers are girding for a similar –and possibly equally unsuccessful –battle.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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