FCC’s Tom Wheeler Suggests He Will Crack Down On Anti-Consumer Practices By Mobile Operators

From the talking-the-talk dept
FCC boss Tom Wheeler is continuing to talk the talk concerning actually putting in place more meaningful rules to protect consumers from telco/internet gatekeepers. The big question is still whether he’ll get around to walking the walk. Last week, he gave a strong speech on the lack of real competition in broadband. And this week, he gave a talk at the big CTIA (mobile operators’) trade show in which he didn’t do the usual suck-up to the industry that we’ve come to expect in the past, but suggested that the industry needs to shape up. While it starts out with some rhetoric about how he’s there to “aggressively represent the best interests of his client,” who he notes is “the American people,” he does call out some questionable practices by the carriers, including hinting that the net neutrality / open internet rules may be the tool he uses against them:
Recently, I sent letters to the four national wireless providers, asking them about their network management practices. We are very concerned about the possibility that some customers are being singled out for disparate treatment even though they have paid for the capacity that is being throttled. And we are equally concerned that customers may have been led to purchase devices relying on the promise of unlimited usage only to discover, after the device purchase, that they are subject to throttling.

I am hard pressed to understand how either practice, much less the two together, could be a reasonable way to manage a network.

Our Open Internet proceeding will look closely at both the question of what is “reasonable” and the related subject of how network management practices can be transparent to consumers and edge providers.
One of the big loopholes of the original rules was that they didn’t apply to wireless at all, which was part of the reason why companies like Verizon started focusing more on wireless instead of wired broadband. Wheeler notes that the proposed rules keep it that way, but hints about changing it, given that the landscape is changing:
As evidenced by the growth in this industry over the past decade, mobile wireless broadband is a key component of that virtuous cycle…. One of the constant themes on the record is how consumers increasingly rely on mobile broadband as an important pathway to access the Internet. Microsoft, for instance, told the Commission that because we live in what they called a “mobile first” world, “There is no question that mobile broadband access services must be subject to the same legal framework as fixed broadband access services.” Thousands of consumers have echoed that sentiment.

The Commission’s previous Open Internet rules distinguished between fixed and mobile, and our tentative conclusion in this new rulemaking suggested the Commission should maintain the same approach going forward. In this proceeding, however, we specifically recognized that there have been significant changes in the mobile marketplace since 2010. We sought comment about whether these changes should lead us to revise our treatment of mobile broadband services. The basic issue that is raised is whether the old assumptions upon which the 2010 rules were based match new realities.
It’s also nice to see that he’s speaking up for competition, and suggests he doesn’t believe consolidation is good for consumers:
This industry has always told policy makers, “We’re different, we’re competitive.” But in the last couple of years the FCC and the Department of Justice have had to be poised to intervene to protect that dynamic. First it was AT&T’s proposed acquisition of T-Mobile. Most recently the Assistant Attorney General for Antitrust and I were outspoken in discouraging Sprint’s potential acquisition of T-Mobile.

The American consumer has been the beneficiary: new pricing and new services that have been spurred by competition. I know that achieving scale is good economics, and that there is a natural economic incentive to accrue ever-expanding scale. We will continue to be skeptical of efforts to achieve scale through the consolidation of major players.
He further notes that the mobile world shows that when there is more competition, investment follows, which counters the big telco/broadband claims that consolidation and less competition will lead to greater investment.
The mobile industry has proven that competition drives capital investment. Equally important, you have shown that competition and investment are not mutually exclusive. In the past 10 years, the mobile industry has invested $260 billion to build competitive infrastructure
And getting back to the issue of net neutrality, he notes that competition alone doesn’t appear to be enough to ensure an open internet where the operators aren’t picking winners and losers:
One of the great facilitators of competition for online services is the open design of the Internet. I remember when this industry was united around the walled garden where the only apps that reached the consumer were those which the carrier approved, usually in return for a payment. That wasn’t a good environment for innovation, or the expansion of consumer services, or the industry for that matter. The fast pace of technology which we have been discussing effectively destroyed those walls. Once the world went IP it was possible to leap the garden wall and discover the abundance of an open ecosystem. And just look at the results! But it is instructive that the walled garden existed despite multi-carrier competition. At least in the short run, this suggests that competition does not assure openness.
This is great to see, as it’s much more typical of the FCC boss at such events to pander to the audience. Wheeler doesn’t do that at all. If anything, this speech is him giving them a pretty big warning shot (he also does this on the issue of spectrum auctions, but this post is getting long enough…).

Again, it’s nice (and somewhat refreshing) to see Wheeler saying these kinds of things. In fact, he’s been saying a lot of the right things over the past few months. The real question is if the actions will follow the words. Having seen an FCC that has failed to follow through for so many years, it pays to be skeptical until we see actual results. But, as a starting point, saying the right things is better than the opposite.