REMARKS OF COMMISSIONER MICHAEL J. COPPS
“FREE MY PHONE”
NEW AMERICA FOUNDATION FORUM
WASHINGTON, DC
JANUARY 22, 2008
Good Morning and thanks to my friend Michael Calabrese and the New America
Foundation for holding another of its forums that have done so much to serve the public
interest. It’s an honor, and somewhat humbling, to speak before this distinguished panel
and what is obviously an expert audience. I’ll try to be brief because I’m just as eager to
hear from the luminaries gathered here as you are.
Over the week-end, I was remembering back to 1970 when I first went to work in
the United States Senate. Our fanciest piece of work-saving equipment was an old robo
machine that cranked out pretty awful-looking mass mailings. Everything else was typed
by hand and when Selectric typewriters came along, we all fought tooth-and-nail to be
one of the lucky few to get one. When the Senator dictated even a minor change to a
speech draft, his personal secretary had to retype the entire text. When we needed to
phone back to the state, we had a WATS line, but initially we shared it with a more senior
Senator, I think Richard Russell from Georgia, and when he wanted on, Senator Hollings
had to get off. I started out doing research and when Senator Hollings wanted
information—which was usually instantaneously—I had to call around, beg for help from
a small and over-worked Congressional Research Service, or otherwise figure out how to
get it Lone Ranger style. It was truly antediluvian—before the technology flood and the
knowledge tools that have transformed everything.
Four years ago, New America hosted a forum on cyberspace (as we called it then,
for you young folks out there), giving me a chance to think out loud about the challenges
regulators and legislators would face in maintaining the Internet’s openness. Looking
back, it’s been every bit as challenging as I predicted. But well worth the effort, I think,
because the Internet today is—for the most part—the fertile field for innovation,
democracy, and self-expression that many of us hoped it would be. That’s today, of
course—but today never comes with guarantees for tomorrow, does it?
So I am grateful that New America is always pushing us in Washington to think
about how to keep technology open and free. Today it is pushing us to think about
openness in the wireless world. Just about a year ago, New America brought a paper by
Professor Tim Wu to Washington’s attention. Tim explained why the time has come to
apply the Carterfone and Internet Openness principles from the wireline to the wireless
world. The idea is simple: wireless customers should be able to use any device or
application they want, to reach any legal content they want, so long as they don’t cause
harm to the network. It sounded right to me, and in March of last year I called for an
FCC rulemaking on the issue.
Note that I said it’s a simple idea—I didn’t say it was uncontroversial. Quite the
opposite. Critics rushed to tell me that third-party handsets just wouldn’t work for
wireless—they would lead to more dropped calls, less spectral efficiency, and maybe
even bring down whole cellular networks. (Sound familiar? These are variations on the
very arguments raised 40 years ago to Carterfone itself.) Critics also argued consumers
didn’t want network openness—they were more than happy with the services they had,
and additional choices would just confuse them.
That didn’t sound quite right to me and, as it turns out, it didn’t sound right to
some of the nation’s leading consumer technology columnists either. Even though we
inhabit very different ecosystems, they were—quite separately—concluding that the cell
phone market looks a lot worse than other parts of the personal electronics market. And,
boy, were they right! When I buy a new computer, I get to choose exactly what I want: a
personalized bundle of processor, hard drive, video card, display, networking device and
so forth, plus whatever software I wish to load. Wherever I can get a Wi-Fi or Ethernet
connection, I can reach the content I want: Business Week, the Wall Street Journal, the
FCC’s homepage, or the millions of videos on YouTube. It’s a fantastic world of
choice—and we need to keep it this way.
Now let’s look at the cell phone market. For the most part, we’re limited to the
handful of phones that our particular carriers have selected for us. Most of those devices
offer precious little choice over applications or content. And, even more amazing, though
my device may be branded Nokia, Motorola, LG or whatever—it’s the carrier (not the
handset manufacturer) that has the final say on its features. That is why, as Chairman
Martin demonstrated at an FCC open meeting, the European version of a leading
manufacturer’s popular phone comes with Wi-Fi, yet the identical model here in the U.S.
comes without Wi-Fi—simply because the U.S. carrier wanted to protect its business
model. How on earth do American consumers benefit when a perfectly good feature is
disabled so their carrier can protect its revenue stream?
In addition to the downsides for consumers, the carrier veto handicaps
entrepreneurs (which then in turn further harms consumers). When Google’s founders
had an idea about how to build a search engine, they bought some server space literally
using their credit cards (this was in 1998), put their product on the Web, and you all
know the rest. When a wireless entrepreneur has a great idea, he or she has to pitch it to
the handful of carriers—and if they say no, it never leaves the ground. The New York
Times reports that European wireless designers think our system is nuts. Maybe they’re
right.
Now let’s fast forward a few months from early 2007, when talk of wireless
Carterfone first hit Washington. All of a sudden, the rhetoric shifted 180 degrees. It was
downright seismic. In Congressional hearings, the FCC’s own 700 MHz auction rules,
and the front pages of many of the nation’s leading newspapers—all the talk was about a
new wireless Carterfone world. And the latest shoe to drop is that most major carriers
have publicly stated that open platforms and open access are, in fact, the models of the
future. No longer do we hear about awful harms to networks, gone are the predictions of
consumer indifference. Instead, we now have industry-led efforts to create open platform
standards. We have leading carriers adopting open access programs—and even asserting
that they have been pro-open access for years.
Sounds good. I hope it is as good as it sounds. But we have to ask: has the reality
shifted as much as the rhetoric? In 2009, we will start doing case-by-case review of
complaints about the 22 MHz of “open platform” 700 MHz spectrum. That will be a
good opportunity for the FCC to start looking at the details of these issues. Better yet, we
could also act at any time to declare general principles for open wireless platforms in
response to a petition for rulemaking pending at the Commission right now—something I
would enthusiastically support. But if we’re talking real-world and what is most likely
for 2008, it’s that most of the action will be in voluntary industry-led initiatives.
And I won’t object strongly to that—at least for now. We’ve seen with Wi-Fi,
for example, that enlightened FCC spectrum policies and industry-led product
development can deliver enormous benefits to consumers without too much regulation.
But I (and I hope others) will certainly be watching carefully to see how the market
develops. I would also like to see the FCC staff watching closely—monitoring is a better
word. Not many people categorize me as a Reaganite, but I always liked the sage counsel
he gave us when he said, “Trust but verify.” The real proof will be in the pudding. If
voluntary initiatives bring consumers the kind of choice and freedom that they’ve come
to expect in other parts of the technology marketplace, then I will be fully supportive. If
not, then I see and will push for a greater Commission role in protecting consumers and
entrepreneurs from the power of the giant telecom providers that now dominate the
wireless market.
In particular, I will be looking at a few key areas.
First is price. There are a thousand different ways that a carrier can use pricing
plans to discourage consumers from using third-party devices and software. The only
limit is the creativity of its marketing department. The simplest example is, of course, a
connection charge for bringing your own handset to the carrier. But there are also more
subtle ways. If I want a data-only plan because I intend to use VoIP, I shouldn’t have to
pay a price close to that for traditional voice-plus-data. That’s what happened at times in
the wireline world with standalone DSL—and we must not let this anti-consumer tactic
infect the wireless world.
And then there’s the issue of handset subsidization. If a carrier charges $50 per
month for service (based on a 2 year contract with a huge early termination fee) to
recover the cost of subsidizing a handset, then I should get a better rate if I bring my own
phone. And I shouldn’t have to accept an early termination fee, either. While I certainly
cannot enumerate today every pricing tactic that would cause me concern, I hope these
examples give an idea of how I will approach this issue.
Second is consumers’ freedom to take the phone from carrier to carrier and to
access the applications and legal content of their choosing. This is especially important as
mobile handsets become platforms for all sorts of IP-based services. At home, using my
PC, I get to choose between iTunes and Amazon.com, Google Maps and Mapquest, and
Flickr and Shutterfly. I should have that same freedom of choice on my wireless handset,
too—that’s good for consumers and good for entrepreneurs. In fact, it is precisely this
layered model that has made the Internet so great. When I switch my broadband provider
at home, I don’t have to buy a new computer. I get to use all my old software, and I can
still access the same content on the Internet. It is high time wireless users and
entrepreneurs get to take advantage of this freedom, too.
In other words: no blocking, no locking, and no discriminatory degradation of
service. This last point is worth emphasizing. It’s easy to see why blocking a particular
application is bad for consumers, but carriers can also achieve the same result more
stealthily, i.e., by using their control over the network to selectively degrade the
consumer experience for particular applications. If carriers start unreasonably
discriminating between IP packets in order to steer me towards or away from a particular
VoIP, mapping or photosharing application, for example, that would be a serious
departure from my definition of openness. Carriers can’t reduce the sound quality of my
voice call to L. L. Bean as opposed to Land’s End right now, and I see no reason why
they should gain a comparable ability as we move to an IP-based world.
Third is the question of equipment and software certification and industry
standard-setting. Entrepreneurs need freedom to innovate without permission.
Certification should be quick, inexpensive and preferably performed by an independent
lab—no one carrier or manufacturer should have undue influence over the process.
That’s how Wi-Fi works, and it’s been a big success. Carriers and manufacturers should
also strive to avoid proprietary formats and interfaces, in favor of using industry-wide
standards. I recognize, of course, that there may be other models for making the process
work well. But the further you get from the independent, standards-based model—which
we know works—the more concern there is likely to be, and more scrutiny, too.
Fourth is the wholesale market. As many of you know, I would have favored a
condition in the 700 MHz auction to mandate wholesale access. This would allow
entrepreneurs to sell wireless devices and service directly to the public, without first
requiring customers to “bring their own access.” I believe that a mandate in this direction
could have kick-started a more vigorous wholesale model, with great benefits for
consumers and entrepreneurs alike. I was told in response that carriers could, and would,
do so on their own. Well, in 2008, I’d like to see that happen. Already, with
Amazon.com’s Kindle device, we may be seeing movement in that direction. I’d like to
see more. And I would also like to see some rigorous FCC investigation of just how well
the wholesale market is functioning.
This is an exciting time in the wireless market and consumers have a lot to be
looking forward to in 2008. Cell phones allow us to leave our offices and our homes and
still be in voice contact with people who need us. The next generation of wireless
handsets should let us put the entire functionality of the modern office or home office in
our pockets. I really hope that, when I open my Wall Street Journal and Business Week
in 2009, our next panelists will be telling me that the wireless marketplace is every bit as
vibrant as the rest of the consumer electronics marketplace. But it will take work from all
of us here—industry, legislators, government, academics, and journalists—to reach that
happy place. Like all of you, I am excited to be part of the journey
Thank you.