July 16, 2007 4:00 AM PDT
Unlock the cell phone? It's a high-stakes debate
Right now that's almost impossible in the U.S. But if the rules for the upcoming Federal Communications Commission auction of 700MHz spectrum, which is being vacated by analog TV, are written in a way that encourages what's being called "open access," the wireless market could evolve into a network as open and thriving with innovation as the Internet itself. The date for the auction hasn't been finalized yet, but it's expected to take place in January 2008.
"The wireless industry is stuck in 1994," said Amol Sarva, a co-founder of Virgin Mobile USA and chief executive of Txtbl. "Back then, AOL controlled how people surfed the Internet and what content they could access. And that's what the current wireless market is like today under the control of mobile operators."
The problem is simple. Today most of the 220 million American cell phone users are forced to buy handsets provided and controlled by their service provider. In some cases, mobile operators are actually turning off features or disabling applications so consumers cannot access them.
For example, some phone manufacturers have disabled Wi-Fi radios at the request of operators to ensure that people don't circumvent the carrier's network and use their home Wi-Fi connection or public hot spots for access to the Internet. The peer-to-peer application Skype, which allows people to make free and low-cost phone calls using an IP connection, is also banned by U.S. operators.
Some providers have opened their networks to a certain degree. T-Mobile USA, the smallest of the four major operators, has just launched a service that allows people to switch between Wi-Fi and cellular. T-Mobile and AT&T also allow more third-party applications on their phones. And the phones, because they are GSM, can often be "unlocked."
Verizon Wireless, on the other hand, is the strictest of the major carriers in terms of the devices used on its network and the applications allowed on its phones. For example, many Verizon Wireless customers complain that the company blocks the use of Bluetooth-enabled applications other than headsets.
The situation is quite different in other parts of the world, such as Europe, where consumers are able to buy unlocked phones that they can load with applications from a variety of developers.
And because the devices aren't connected to any one operator, consumers are free to take their device with them when they switch carriers. In the U.S., most cell phones are "locked," which means that when American consumers switch cell phone providers, they must get a new phone.
"Imagine buying a television that stopped working if you decide to switch to satellite," Tim Wu, a professor from Columbia Law School, told lawmakers last Tuesday at a House Telecommunications Subcommittee hearing that examined wireless innovation and consumer protection. "Or a toaster that died if you switched from Potomac Power to Con Ed. You'd be outraged, for when you buy something that usually means you own it. But it's not quite so when it comes to wireless devices."
As an example, Wu said that Apple's $600 iPhone, which can only be used on AT&T's network, becomes an expensive paperweight if the consumer decides to leave the AT&T network.
Steven Zipperstein, vice president of legal affairs at Verizon Wireless, said in his testimony last week that Verizon limits the devices and applications that can be used on the network to protect consumers and its network resources. He also said Verizon works with subscribers who want to use non-Verizon approved devices on their network.
"Consumers want their wireless carriers to offer a secure, high-quality experience and to ensure reliable voice and data service free from viruses and other threats," he said. "But the experience is built on the carriers' ability to manage their networks for the benefit of all their customers. Spectrum is a finite resource that must be managed efficiently for the benefit of all network users."
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