Over the last decade, the major cell-phone companies have been accused of overcharging for inferior service, imposing onerous fees and long contracts, and generally treating their customers like ATMs with a pulse. For most of that time, the agency charged with overseeing the industry, the Federal Communications Commission, has generally let Verizon Wireless, AT&T, Sprint Nextel and T-Mobile conduct business as they please.
Today, the FCC, led by new Chairman Julius Genachowski -- President Obama's old Harvard Law School chum -- put the industry on notice that those days are over, by announcing a wide-ranging inquiry focused on ways to increase "innovation" in the wireless industry. Translation: no more business as usual.
Although many Americans may not be aware of it, the FCC has the power to profoundly affect the the ways in which they use mobile devices and applications. "It is essential that the Commission develop policies that encourage a new generation of innovators, working with new tools, on new platforms, and having an extraordinary impact on our economy and society," Genachowski said in a statement.
This FCC "notice of inquiry" could result in greater regulation of the telecom space, which in turn could touch off bitter skirmishes between advocates of greater federal oversight of the industry and proponents of a more hands-off FCC. Regardless of the how the inquiry develops, its very existence marks a sharp philosophical turn for the FCC, which under previous Chairman Kevin J. Martin focused on deregulating the industry.
When Martin announced his retirement in January, he said his goal at the FCC had been "to pursue deregulation while paying close attention to its impact on consumers and the particulars of a given market, to balance deregulation with consumer protection."
While not directly addressing the issue of increased regulation of the wireless industry, Genachowski did highlight the importance of the FCC's oversight role of the sector. "The FCC's decisions on how spectrum is allocated, assigned, and licensed (or unlicensed); on how interference is defined, disputes are adjudicated, band-sharing is administered; on how equipment is authorized and experimental licenses are granted or denied; and on a whole host of other questions discussed in today's Notice, will have a profound impact on how the wireless marketplace develops," Genachowski said.
Opponents of the FCC's inquiry quickly blasted the probe. The Institute for Policy Innovation, a pro-business group in Dallas that calls itself an independent, nonprofit public policy organization, issued a statement saying the FCC's probe "may threaten competition, limit consumer choices and reduce innovation." In particular, the IPI attacked the FCC for targeting exclusivity agreements, such as the controversial arrangement between AT&T and Apple that grants AT&T the exclusive right to provide service for the wildly popular iPhone.
"Exclusivity agreements are commonplace in our economy across all industry sectors," said Bartlett Cleland, director of the IPI Center for Technology Freedom. "If there are inquiries into the wireless market, the inquiries should focus on investigating how the vibrant competitive nature of it could be transferred to other industries."
Proponents of greater consumer protection in the wireless space praised the FCC announcement. "The Commission took exactly the right path today when it voted to look at all aspects of competition in the wireless industry," said Gigi B. Sohn, president and co-founder of Public Knowledge, a Washington-based consumer-rights group. "For too long, the appearance of competition among a few carriers has masked underlying anti-competitive industry practices ranging from consumer contracts to roaming agreements," Sohn said.
As they say: Let's get ready to rumble!
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