Policy Brief

No More iPhones: How Network Neutrality Threatens Wireless Broadband Innovation

What FCC net neutrality regulations will mean to your cell phone
Policy Brief 85

The Federal Communications Commission (FCC) is proposing unprecedented intervention and regulation of the wireless industry.

The Commission argues that the proposals, grouped under the heading of “Network Neutrality,” are necessary to prevent Internet service providers from gaining monopoly-like control over Internet access and applications. The FCC cannot point to any pattern of consumer exploitation or abuse. It simply claims that new regulations are needed just in case there might be a problem. However, there is scant evidence of any such danger. At the same time, these sweeping regulations would pose highly negative consequences for consumers, businesses and American technology leadership.

The FCC has had four “Open Internet” guidelines in place since 2005. Those guidelines were designed to protect consumers’ interests in regard to Internet access. Under a general policy to encourage broadband deployment, and preserve and promote the open and interconnected nature of the public Internet, they state:

  • Consumers are entitled to access the lawful Internet content of their choice.
  • Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.
  • Consumers are entitled to connect their choice of legal devices that do not harm the network.
  • Consumers are entitled to competition among network providers, application and service providers, and content providers.

In a “Notice of Proposed Rulemaking” issued October 22, 2009, FCC Chairman Julius Genachowski proposed several major changes to these established principles.

First, the FCC wants to codify these guidelines as rules. This is a critical, albeit subtle, change in FCC Internet policy. The original open network principles were spelled out in terms of baseline consumer expectations. By creating a new set of rules, the FCC is converting a statement of consumer rights into a set of costly obligations on a single class of Internet service providers-obligations that do not apply to other companies involved in the delivery of Internet applications service and are of questionable value.

Second, the FCC is proposing to add an additional guideline labeled as a “non-discrimination” rule. Such a regulation would prohibit a service provider from prioritizing or optimizing any application, voice or data, as it crosses its network.

Finally, the FCC wants all Internet regulations, including this new, controversial non-discrimination regulation, to apply to wireless service (cell phone) providers.

A non-discrimination mandate would dumb-down wireless services, devices and networks and preclude consumers from having access to the kinds of customized mobile services and related service plans they are growing to expect. Functionality is as much a part of a free and open Internet as is access. “Free and open” becomes meaningless if bandwidth crowding and congestion renders many Internet applications useless. This paper will focus on those unintended, but likely, consequences.