Wireless

Advocacy groups say AT&T has gone too far in its lobbying efforts to oppose the Federal Communications Commission's new proposed Net neutrality regulations.

This week AT&T's top lobbyist Jim Cicconi sent a memo to managers urging them to encourage their families and friends "to join the voices telling the FCC not to regulate the Internet."

Over the past few weeks, the battle over Net neutrality has heated up as the FCC is set to start the ball rolling on a process that will make the agency's existing open Internet principles official regulation.

AT&T has been one of the biggest opponents of the new regulation, along with Verizon Communications and cable company Comcast. On the other side of the debate are consumer advocacy groups and large Web-based technology companies, such as Google and Amazon.

The phone companies have rallied support among some congressional leaders, both Democrat and Republican, who have sent letters to the FCC opposing new regulation. And the advocacy groups and big Internet companies have done the same.

But many advocacy groups say that AT&T has crossed the line by suggesting to its employees that they use their personal e-mail addresses to post comments opposing Net neutrality regulation. These groups believe that AT&T is deliberately trying to create the appearance that average citizens oppose the Net neutrality regulations.

"AT&T is practiced in spending money on so-called astroturf groups to give the appearance there is widespread support for their agenda," said Timothy Karr, campaign director for the advocacy group Free Press.

AT&T defended its actions by saying that it is merely rallying support for its cause.

"We were providing important information to our employees," said Michael Balmoris, a company spokesman. "And it was up to them to respond personally. If they use their company e-mail that is fine, too. It was not a mandatory business request."

Balmoris argued that groups such as Free Press and Public Knowledge also mobilize people on the Web. They send e-mails to thousands and provide talking points and even form letters that they can send to congressional leaders or post as comments.

This is true. But Karr argues the main difference is that Free Press and other advocacy organizations do not pay the people who post those comments and send those letters. What's more, their Web campaigns are built around people who have specifically asked for information on the subject and are generally already in support of Free Press' positions.

"Our activists aren't on our payroll," he said. "And they come to us looking for information. When a letter like this is sent to every manager from one of the company's most senior executives, it's hard to imagine AT&T employees thinking the memo was merely a suggestion."

Art Brodsky, a spokesman for Public Knowledge, another advocacy group supporting Net neutrality, also took issue with AT&T's letter to its employees. Brodsky said that not only are the talking points AT&T uses in its memo questionable and debatable at best, but he said that AT&T is subtly threatening employees by describing the FCC as "poised to regulate the Internet in a manner that would drive up consumer prices, and burden companies like ours while exempting companies like Google."

"When you send a letter to employees and say that our business will suffer if you don't do this, it's very misleading especially in this economic environment," he said. "People are afraid of losing their jobs. But the fact of the matter is that AT&T has already laid off 20,000 employees , and it's had nothing to do with Net neutrality."

The FCC is expected to begin the process of creating rules for Net neutrality regulation at its monthly meeting on Thursday. The FCC has extended the period for receiving comments until Thursday.

SAN DIEGO--In his first major address to the wireless industry, the new Federal Communications Commission chairman, Julius Genachowski, offered some good news for wireless operators at the industry's biannual gathering here Wednesday. But he reiterated the FCC's plans to apply new Net neutrality rules to wireless, a plan that has met resistance among the industry's major players.

FCC Chairman Julius Genachowski speaking at the CTIA 2009 fall show.

(Credit: Marguerite Reardon/CNET)

As part of his speech, Genachowski announced a new initiative to add more spectrum for high-speed Internet access, and he offered assurances that the FCC will help speed up 4G wireless roll-outs by cutting through red tape for new tower deployments.

The industry has applauded these new initiatives. The CTIA, which is the trade organization for the wireless industry, recently sent a letter to the FCC asking it to consider opening up more spectrum for auction to help spur growth. And it has also been urging the FCC to speed up the process for building new towers.

Specifically, Genachowski said that the agency's main priority will be to make more spectrum available to wireless operators. And he said the FCC will impose a "shot clock" timetable for companies seeking permission to build cellular towers in local communities.

But Genachowski also said that he plans to keep the wireless Internet open. And he emphasized that the agency's Net neutrality principles, which will soon become official regulation, will also apply to wireless networks. While this latest bit of his agenda hasn't been popular with wireless operators, Genachowski said the agency's hope is to work closely with the industry.

"When we say that we haven't determined what we are going to do with handset exclusivity and we want your input, we mean it," he said. "The same applies to an open Internet. We want you to be engaged. We need you to be engaged. I am committed to running an expert agency that works for all Americans, that pursues high principles while recognizing the danger of dogma and the power of pragmatism."

Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, said during his keynote address Wednesday that he is happy to work with the FCC. He applauded the agency's efforts to open up more spectrum and to speed up the bureaucratic process for building and expanding wireless networks.

"We welcome the call for a fact-based approach to these issues," he said. "And we are pleased, (Genachowski) wants to listen to us. But in a competitive market, consumers will assess the value of our service. And they will pick the winners and losers. And that is the way it should be."

Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets

(Credit: Marguerite Reardon/CNET)

De la Vega pointed out the company's latest effort to keep its network open by allowing voice over IP services such as Skype to run on the iPhone. AT&T has the exclusive deal in the U.S. to carry the popular Apple smartphone on its network.

Genachowski said he appreciates AT&T's announcement. And he said this was good news for consumers.

But he said more work needs to be done. And even though Net neutrality is a priority at the agency, he said that allocating more spectrum and adding capacity to the wireless network is the No. 1 concern at the agency. He said that mobile data usage is exploding. And by 2013 U.S. consumers will use nearly 400 petabytes per month of wireless data compared with 6 petabytes per month in 2008.

"You don't have to know what a petabyte is to know that that's a game-changing trajectory," he said. "Spectrum is the oxygen of our mobile networks. While the short-term outlook for 4G spectrum availability is adequate, the longer-term picture is very different. I believe that that the biggest threat to the future of mobile in America is the looming spectrum crisis."

He proposed that the FCC will look at secondary markets to add more spectrum and will look to make its spectrum policies more flexible to encourage the use of unlicensed spectrum. He also said the FCC will encourage the use of smart antennas and femtocells.

But most importantly, Genachowski said that the FCC must reallocate spectrum currently being used for other purposes. He said that carriers have told the FCC that they need anywhere from 40MHz to 150MHz each to bring wireless broadband to consumers.

"It takes years to reallocate spectrum and put it to use," he said. "But we have no choice. We must identify spectrum that can best be reinvested in mobile broadband."

Genachowski also said that the FCC has heard the industry's call to help it work with local communities to get new cell phone towers approved much more quickly to help them build their next-generation wireless networks.

"We at the FCC understand the many challenges operators face in (building) networks," he said. "We are ready to help you cut through red tape and overcome these hurdles."

While the industry was happy to hear the good news that the FCC is willing to help it address some of its most pressing issues, leaders such as de la Vega resisted the agency's plans to extend Net neutrality principles to the wireless market.

Genachowski said it was imperative that the agency keep wireless broadband networks open to encourage more innovation. And he tried to allay fears that the FCC would impose arcane rules that would stifle innovation and investment.

"The goal of the proceeding will be to develop sensible rules of the road," he said. "Rules clear enough to provide predictability and certainty, and flexible enough to anticipate and welcome ongoing technological evolution."

But AT&T's de la Vega argued that imposing the same policy rules on wireless networks as it applies to wired networks is not a good idea. And he said that it is unfair for the FCC to impose any rules on wireless operators who have already spent billions of dollars buying licenses for wireless spectrum.

"The rules should not change after the auction," he said. "How can you expect companies to invest billions of dollars if you change the rules? The rules were clear in the 700MHZ auction for the next generation of wireless services. And these rules should not change now after the money has been spent. What would that say about the integrity of the 700MHz auction?"

Bringing universal broadband to all Americans is not going to be cheap.

The Federal Communications Commission said Tuesday it could cost more than $350 billion to wire the United States with high-speed Internet access.

The FCC has been given the responsibility of coming up with a national broadband policy to ensure every American has access to broadband. And on Tuesday a task force at the FCC led by Blair Levin, former chief of staff to onetime FCC Chairman Reed Hundt, issued its initial report on forming this plan. The final report is due to Congress in February.

The FCC task force has been hosting workshops and hearings. And it will continue to do so over the next few months. But what it has concluded at this early stage is that bringing true broadband to all Americans is going to cost a lot.

While it would only take about $20 billion to blanket the country with broadband service with speeds between 768Kbps to 3Mbps service, the FCC has questioned whether those speeds will be enough. Instead, it is recommending more aggressive network build-outs that would increase the speed of these networks to about 100Mbps or faster. This will likely push the price tag of the entire network expansion to more than $350 billion. And if all consumers are given a choice of broadband provider, these cost estimates would be even higher.

There are a lot of factors that make building universal broadband expensive. It's much more expensive to build infrastructure in rural areas. Not only are capital expenditures more expensive in rural areas, but the operating expenses are higher, driven by transport and transit. Universal Service Fund recipients have made progress bringing broadband to rural America, but the fund faces systemic and structural problems.

So who is going to pay for this expensive infrastructure? The government will pay for some of it. Congress has already allocated $7 billion as part of the economic stimulus package. And more tax payer money is likely to be used in the future. Exactly, how much is uncertain.

But the bulk of the money used to build these networks will likely come from private industry, Levin said at the meeting held Tuesday in Washington, The Wall Street Journal reported (subscription required).

"Most of that ecosystem is funded by the private sector," Levin said. "We expect that to continue. Where can the government play a role in ensuring and improving the role of that ecosystem?"

The FCC believes these faster networks are necessary because broadband users are expected to use more bandwidth-intensive applications in the future than they use today. For example, the average consumer today uses the Internet for Web browsing, e-mail and instant messaging, and entertainment, but in the future uses will include streaming video, video teleconferencing, and electronic medical monitoring. These services and applications will require significantly more bandwidth.

If the FCC establishes regulation and policy to encourage these faster speed connections, the agency will have to figure out how to measure the quality of these connections. Today no such quality assurance is in place. And the FCC said in its report that actual broadband speeds lag advertised speeds by at least 50 percent, which means people are often paying for speeds that they do not get.

Another issue that must be dealt with is how the FCC will encourage more competition to give consumers choice, especially when it comes to these higher-speed services. At least half of Americans today only have access to one provider that can offer Internet speeds for video streaming and two-way video conferencing.

While wired broadband is critical, the FCC also noted in its report that wireless broadband access is also becoming increasingly important. By 2011, smartphones, which are more like mini-computers than phones, will overtake sales of traditional cell phones. Smartphone users generally use a lot more wireless data services, which means that carriers will have to keep beefing up their networks to provide more capacity.

While some of the biggest carriers, such as Verizon Wireless and Sprint Nextel are already building the next generation of wireless networks, which increase speeds and network capacity, the FCC noted that there is still a need to make more wireless spectrum available.

The CTIA, the trade association for the wireless industry, sent a letter to the FCC this week saying the government needs to identify more airwaves that can be used for commercial use.

AT&T is accusing Google of being a hypocrite when it comes to Net neutrality because it blocks certain phone calls on its Google Voice service.

The carrier has written a letter to the Federal Communications Commission claiming that Google has violated the agency's Net neutrality principles, which Google has long supported. Google defended its position in a blog post written by Richard Whitt, Google's main lobbyist and telecommunications lawyer in Washington, that basically said AT&T is comparing apples and oranges.

In a letter to the FCC filed on Friday, AT&T said Google is violating the fourth principle in the FCC's Internet Policy Statement, which calls for fair competition among providers of networks, applications, services, and content, as it blocks telephone calls made using Google Voice service to certain rural communities.

"By openly flaunting the call-blocking prohibition that applies to its competitors, Google is acting in a manner inconsistent with the spirit, if not the letter, of the FCC's fourth principle contained in its Internet Policy Statement," Robert Quinn, AT&T's senior vice president focusing on federal regulation, said in a statement. "Ironically, Google is also flouting the so-called 'fifth principle of nondiscrimination' for which Google has so fervently advocated."

In his blog post Friday afternoon, Google's Whitt fired back with an explanation. He acknowledged that Google is blocking calls to some rural regions. He said the company is doing that because certain local telephone carriers in rural areas charge AT&T and other long-distance companies especially high rates to connect calls to their networks.

Because they are small, rural phone companies are allowed to charge connection fees that are about 100 times higher than the rates that large local phone companies can charge. But in a practice known as traffic pumping, some of these rural carriers are sharing revenue with adult chat services, conference-calling centers, party lines, and others that are able to attract lots of incoming phone calls to their networks. The rural carriers charge the high rates and then split the revenue with these partners.

In 2008, AT&T and other long-distance phone companies complained to the FCC about the practice. Because most customers of AT&T, Verizon Communications, and Qwest Communications pay a flat fee for unlimited local and long-distance calls, these carriers are often saddled with the added costs associated with connecting calls in these regions. AT&T said it had cost them as much as $250 million in 2007.

The FCC has suspended the rural companies' rates and proposed rules to permanently ban traffic pumping. But the docket is still open on the issue.

Whitt explained that Google Voice, which allows people to keep one phone number and redirects phone calls over the Internet, is also subject to these high rates. But he said the rules that apply to traditional phone companies do not apply to Google.

AT&T and other traditional phone companies are prohibited from blocking phone calls to any number because they must abide by common carrier laws, which require infrastructure providers, such as phone companies, to allow anyone who wants to use their networks access to that "public" infrastructure. The concept of a common carrier is supposed to ensure that the public retains access to fundamental services that use public rights of way, such as telephone service or roadways.

Google says these rules don't apply to Google Voice for several reasons. For one, Google Voice is a software application that rides on infrastructure built by other companies. It is a free service. And it is not intended to be a replacement for traditional telephone service. In fact, the service requires that users have a landline phone or a wireless phone.

AT&T says that if Google argues for Net neutrality, then it must be expected to abide by common carrier rules applied to telephone services.

"While Google argues for others to be bound by Net neutrality rules, it argues against itself being bound by common carriage," Quinn said in a statement. "Such a contradiction highlights the fallacy of any approach to Internet regulation that focuses myopically on network providers, but not application, service, and content providers."

Google's Whitt fired back that AT&T is trying to equate common carrier laws, which apply to infrastructure, to Net neutrality regulation, which is about keeping the Internet open to all applications and devices.

"AT&T is trying to make this about Google's support for an open Internet, but the comparison just doesn't fly," he said in his blog. "The FCC's open Internet principles apply only to the behavior of broadband carriers--not the creators of Web-based software applications. Even though the FCC does not have jurisdiction over how software applications function, AT&T apparently wants to use the regulatory process to undermine Web-based competition and innovation."

While this particular public spat between AT&T and Google may seem trivial and arcane to some, it is yet another example of a brewing battle between the two giant companies, which appear to be on a collision course.

Google has long been a supporter of an open Internet. It was Google's lobbying efforts that convinced the FCC to include an open network provision as a condition in the 700MHz auction. And the company strongly supports Chairman Julius Genachowski's ambitions to make the current FCC Net neutrality principles official regulation. Google has also been pushing the FCC to open up excess bandwidth between broadcast TV channels known as "white spaces" available to the public for free.

On all of these issues, AT&T and other phone companies have opposed Google.

It's clear that the phone companies are leery of Google's intentions. They see Google as a potential competitor someday. Some bloggers and industry watchers have speculated that this is the reason Google Voice was rejected as an application for the popular Apple iPhone, which runs exclusively in the United States on AT&T's wireless network.

In July, the FCC asked Apple and AT&T to explain why Google Voice had been rejected. Google told the FCC that it was Apple that rejected Google Voice for the iPhone App Store.

The FCC isn't commenting yet on AT&T's most recent letter, nor is it commenting on Google's blog response. But a representative of Chairman Genachowski acknowledged that the agency has seen AT&T's letter and is reviewing it. So stay tuned for more FCC filings and Google blog posts. This is surely not the last of it.

The wireless industry is gearing up to fight new Net neutrality rules that the Federal Communications Commission is formulating to keep the Internet open.

On Monday, FCC Chairman Julius Genachowski gave a speech at the Brookings Institute in Washington, D.C., outlining plans to turn the agency's principles for open Internet access into official regulation.

In addition to making sure that network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, or attaching unharmful devices to the network, Genachowski wants to add two more rules.

The first would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. The second principle would ensure that Internet access providers are transparent about the network management practices they implement.

Broadband providers such as AT&T, Comcast, and Verizon Communications have opposed regulation or new laws that would dictate how they could run their networks. Up until this point, the Internet has been free of any regulation. And these companies would like to keep it that way.

That said, the nation's two biggest phone companies, AT&T and Verizon, have accepted the principles outlined by the FCC, when it comes to their wired broadband networks. Even though they don't think additional regulation is needed, they have agreed in principle with keeping their broadband networks open.

But the regulation that Genachowski is proposing will not apply to just wireline broadband networks, such as DSL and cable modem service. It will also apply to wireless services. And this is where the major phone companies will likely focus their opposition to the FCC's plans for new regulation.

Julius Genachowski

(Credit: LaunchBox Digital)

Verizon and AT&T, which operate the nation's largest and second-largest cell phone networks, respectively, say the rules should not apply to wireless Internet access.

"AT&T has long supported the principle of an open Internet and has conducted its business accordingly," Jim Cicconi, AT&T's senior vice president of external and legislative affairs, said in a statement. "We were also early supporters of the FCC's current four broadband principles and their case-by-case application to wired networks."

But Cicconi went on to say that the principles and new legislation should not apply to the wireless market.

"We are concerned, however, that the FCC appears ready to extend the entire array of Net neutrality requirements to what is perhaps the most competitive consumer market in America: wireless services," he said.

He argues that wireless networks differ from wireline broadband networks because bandwidth is more limited on a wireless network. And he said that imposing new rules on how carriers operate their wireless networks would stifle investment.

This is a sentiment echoed by the CTIA, the wireless industry's trade association. The group argues that the open network provision in the 700 MHz spectrum auction caused many operators to stay away from the auction. In the end, only two companies bid for the C Block licenses: Google and Verizon. And the group notes that these licenses "sold for significantly less" than other licenses in the auction.

Verizon, which ended up winning the C Block auction in that auction, also believes that regulation is unnecessary. The company's vice president of regulatory affairs, David Young, said in a panel after Genachowski's speech that these rules will be difficult to implement in the wireless market because of the capacity constraints on wireless networks.

"On a wireline broadband network, you know where your customer is," he said. "So you can build capacity to handle the peak demands. But on a wireless network, you have a crowd converge on a site that suddenly has 10 times or 100 times the users competing for the same resources. "

Young said Verizon is committed to providing open access on its wireline broadband network, as well as its wireless network. He pointed to the fact that Verizon is now building a new 4G wireless network using the C Block spectrum it acquired in the 700 MHz auction. And as required by the FCC, it will allow users to attach any device and access any application on this new network. In effort to show Verizon's commitment to open access, Young also highlighted Verizon's efforts to open its 3G cellular network through its open development initiative.

"Our customers want an open experience," he said. "They want more choices, which is why we allow third-party developers and are providing developers complete access to our network. But our concern is that these new regulations, which apply regulation to the Internet for the first time, could have unintended consequences."

During his speech, Genachowski addressed this issue.

"I recognize that if we were to create unduly detailed rules that attempted to address every possible assault on openness, such rules would become outdated quickly," he said. "But saying nothing--and doing nothing--would impose its own form of unacceptable cost."

While it is true that Verizon has made its 3G network more open, it still requires device manufacturers to "certify" their products for the network, which means that Verizon still has the ability to accept or deny devices that run on its network. As for new applications, Verizon is still in the practice of disabling some features, such as Wi-Fi, on certain phones that operate on its nonopen traditional 3G wireless network.

Still, consumer advocates applaud Verizon's attempts at openness. But they point out that other wireless providers have not taken similar steps.

" I'd like to give credit to Verizon," Ben Scott, policy director for the consumer group Free Press, said during the panel discussion at the Brookings Institute event. "They have made a lot of positive steps toward openness. But that is not universally true of all carriers. Skype (and other applications) are still blocked on other carrier networks."

Indeed, services such as Skype, which allows users to make free and low-cost phone calls over an Internet connection, and Google Voice, which allows users to use to a single phone that follows them, regardless of which voice network they use, have been blocked by certain carriers. The FCC is already investigating why Google's voice service was rejected by Apple for the popular iPhone.

But Net neutrality supporters say it is critical for the new regulation to apply to wireless, as well as to wireline, services because in the future, most people will access the Internet via wireless devices. And as wireless operators launch new 4G networks that increase capacity and network download speeds, even more mobile devices will become Internet-enabled.

While incumbent wireless providers may oppose regulation on wireless Internet access, newer players support it. Clearwire, which is building a nationwide 4G wireless network, using spectrum from Sprint Nextel, and investment from Comcast, Time Warner Cable, Google, and Intel, fully supports the FCC's efforts.

"Clearwire applauds the chairman's efforts to safeguard an open Internet and his desire to strike a balance between consumers' need for open, rich access to the Internet and appropriate network management practices," Mike Sievert, chief commercial officer for Clearwire, said in a statement. Clearwire's 4G WiMax technology, business model, and operations embody openness for access, applications and devices."

At the end of the day, Net neutrality supporters say regulation is needed to keep the Internet open because there is simply not enough competition in the market to ensure that service providers play fair.

"If consumers had a wide choice of broadband service providers, preserving an open Internet might not be such a critical issue," Vint Cerf, Google's chief Internet evangelist, wrote in a blog post he published Monday. "Unfortunately, the vast majority of Americans have few (if any) choices in selecting a provider. As a result, these providers are in a position to influence whether and how consumers and producers can use the on-ramps to the Internet--and we've already seen several examples of discriminatory actions or threats that impair openness."

While many would agree that more competition is needed in the wireline broadband market, where most consumers have access to at most two broadband service options, many would disagree that competition does not exist in the wireless industry.

"Unlike the other platforms that would be subject to the rules, the wireless industry is extremely competitive, extremely innovative, and extremely personal," Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the wireless industry's trade association, said in a statement.

But the FCC is already investigating the state of competition in the wireless market. Even though there are four major nationwide carriers--AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile USA--the majority of the market is controlled by two carriers. And their dominance is increasing.

In the second quarter of 2009, AT&T added 1.4 million new wireless subscribers, for a total of 79.6 million subscribers. Verizon Wireless also added 1.1 million new subscribers during the second quarter, for a total of 87.7 million subscribers. Meanwhile, smaller competitors such as Sprint Nextel lost subscribers.

"If your definition of a competitive market is based on what we see in the wireline market, where there are two competitors, then yes, wireless is a competitive market," Scott said. "But if you look at the wireless market comprehensively, and you aren't just counting providers, then you'll see the market power is very concentrated."

As expected, Federal Communications Commission Chairman Julius Genachowski on Monday outlined a plan to keep the Internet open.

In a speech given at the Brookings Institute, Genachowski proposed that the FCC turn its four principles of network openness official into regulation. And he suggested that the FCC add two more "principles" as part of these new rules.

The existing principles can be summarized this way: Network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching non-harmful devices to the network.

Now Genachowski is proposing two new principles. The first would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. The second principle would ensure that Internet access providers are transparent about the network management practices they implement.

Genachowski tried to alleviate fears that the FCC will overstep its bounds and create rules that hamper innovation.

"I am convinced that there are few goals more essential in the communications landscape than preserving and maintaining an open and robust Internet," he said. "I also know that achieving this goal will take an approach that is smart about technology, smart about markets, smart about law and policy, and smart about the lessons of history."

The debate over so-called Net neutrality began heating up about three years ago, when congressional leaders first held hearings on potential laws to ensure that Internet service providers couldn't monkey with traffic. There is no clear definition of the term "Net neutrality," but in general it refers to the concept that Internet users should have unfettered access to content and services. In other words, service providers should not be allowed to either impede or favor access to particular sites or applications.

The discovery that the nation's largest cable operator, Comcast, had slowed down certain kinds of peer-to-peer traffic on its network fanned the flames and sparked public outrage over such practices.

But the fight to create new laws or regulation to protect Net neutrality languished after the FCC publicly admonished Comcast for violating its open Internet principles. These principles aren't regulation and the FCC is somewhat powerless in imposing any real punishment for violating the rules. Still, the slap on the wrist coupled with public outcry was enough to get Comcast to change its practices.

Getting to "greater transparency"
Genachowski reasoned that the principles now need to be actual regulation, and that broadband providers need to know the rules of the road and need to know that they must adhere to rules to ensure open access for everyone.

"We cannot afford to rely on happenstance for consumers, businesses, and policymakers to learn about changes to the basic functioning of the Internet," he said. "Greater transparency will give consumers the confidence of knowing that they're getting the service they've paid for, enable innovators to make their offerings work effectively over the Internet, and allow policymakers to ensure that broadband providers are preserving the Internet as a level playing field."

But large broadband providers such as AT&T, Verizon Communications, and Comcast have opposed new regulation or laws protecting Net neutrality. They argue that imposing new rules would prevent them from managing their networks. And they also argue it would prevent them from introducing tiered pricing to their service line-up.

Genachowski addressed these issues in his speech as well. He assured service providers that the FCC would examine violations of these Net neutrality rules case by case. He also said that the rules are not intended to prevent network operators from handling congestion on their networks. And he specifically said that broadband providers would be able to manage networks when they are congested. He also said that service providers could introduce new tiered services, so long as there is enough Internet capacity to allow for open access to the rest of the Internet.

"I recognize that if we were to create unduly detailed rules that attempted to address every possible assault on openness, such rules would become outdated quickly," he said. "But saying nothing--and doing nothing--would impose its own form of unacceptable cost."

Genachowski also made it clear that the Net neutrality rules he plans to make regulation will be applied to wireless provider, too.

"It is essential that the Internet itself remain open, however users reach it," he said. "The principles I've been speaking about apply to the Internet however accessed."

Genachowski said that the FCC would issue a Notice of Proposed Rulemaking at the its October meeting. And he said the Commission will be seeking input and feedback from anyone interested in contributing to the process of making the rules. For example, he said, the FCC would be looking for input on how to determine whether network management practices are reasonable, what information broadband providers should disclose about their network management practices and how the rules apply to differing platforms, including mobile Internet access services.

As part of the announcement, the FCC launched a new Web site to encourage public participation.

The Federal Communications Commission plans to look more closely at the wireless industry as it scrutinizes everything from the industry's billing practices to the state of innovation and competition in the market.

The commission, headed up by newly appointed chairman Julius Genachowski, on August 27 will open up two "notice of inquiries" to look at some of these issues. The agency announced its plans Thursday when it published the agenda for its August open meeting.

Specifically, the first inquiry will look at the state of competition and innovation in the wireless market. And another inquiry will examine the need for revisions to the truth-in-billing rules to ensure subscribers know what they are paying for when they look at their monthly itemized cell phone bills.

Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the organization which represents the big wireless operators in the U.S., said he welcomes the discussion on these issues. And he said his group is taking the FCC's inquiries as an opportunity to educate policy makers and the public about advancements in the wireless industry.

"There is a misimpression out there that the U.S. lags behind in wireless," he said. "And that's simply not true."

Indeed, five years ago it would be easy to say that the U.S. was much further behind in terms of technology and services than countries in Europe or Asia. But over the past couple of years the market has changed, and the U.S. is actually leading the world in terms of innovation. Guttman-McCabe points to the smartphone phenomenon and advancements in wireless broadband services as examples.

The iPhone, which many experts believe was a major step forward in terms of design and functionality for a mobile phone, was created in the U.S. It was also offered to wireless subscribers in the U.S. before anywhere else in the world. The same is true of other innovative phones. For example, the first device to use Google's Android operating system debuted first in the U.S.

What's more, the next generation of wireless broadband service is being led by wireless operators in the U.S., who are starting to deploy the world's first mobile LTE and WiMax networks. He also pointed out that U.S. cell phone subscribers use more 3G data services than any other subscribers throughout the world. And even though Americans may pay more per month for cell phone service, they actually use more voice minutes and services than their counterparts in other countries, which means on a per-minute basis, they actually pay far less than cell phone users in other parts of the world, he said.

Guttman-McCabe said the CTIA is also looking forward to providing information to the FCC about its "truth in billing" inquiry. He said the CTIA's biggest concern on this front is the fact that cell phone operators are being asked to be "tax collectors." He said that there are many charges on cell phone bills that the government has imposed that are essentially a tax. And he said in some instances those fees are not being applied appropriately. For example, he claims that much of the money collected for 911 emergency service is not used by some states to improve or maintain 911 services, but is instead used to fill funding gaps in other parts of the government.

At this point, it's not clear what the FCC plans to do as a result of its inquiries. But it is clear that this FCC is interested in gathering data to make decisions on policy, something Guttman-McCabe said is a welcome change from the previous FCC under then-Chairman Kevin Martin.

Guttman-McCabe said there were several decisions made by the FCC that had no data or information to back it up. One such decision involved a requirement imposed by the FCC that all wireless operators have at least eight hours of battery backup at their cell sites throughout the country.

The CTIA fought this requirement in court, arguing that it was too expensive and counterproductive when wireless operators were already using mobile generators that could be moved from location to location based on need. The wireless industry won its fight and a federal appeals court granted a stay while it continues to review whether the FCC should have imposed such a rule.

"The FCC chairman has suggested that across all industries he wants the agency to make decisions based on analytical data," he said. "That is good news for us, because based on the facts, we have a good story to tell. And this will help us dispel some of the misinformation that it is out there about the market."

But it may not be all smooth-sailing for the wireless industry as the FCC takes a closer look at some of the industry's practices. FCC Chairman Genachowski has already said that he plans to look more closely at the exclusive handset arrangements that have long been a common practice in the wireless market. The FCC questions whether exclusive deals, such as the one between AT&T and Apple to offer the iPhone, are actually hurting competition and consumer choice.

Another issue that is coming to a head right now has to do with network openness. AT&T and Apple have been criticized for rejecting a voice application for the iPhone App Store from Google called Google Voice. This application allows users to choose a phone number that if called will ring on multiple phones. It also offers other services, such as low-cost international calling and free text messaging.

The FCC asked the companies for more information about why the Google application was rejected from the App Store. The initial comments are due on Friday.

Guttman-McCabe said the CTIA is not overly concerned with these issues.

"It's good for the industry to be discussing these issues," he said. "But things are evolving so rapidly. The issues that were of concern a few years ago no longer exist today. And as long as the commission is looking at the facts, we think that will benefit the industry and consumers."

The new head of the Federal Communications Commission wants affordable broadband access for all Americans, according to an article in Monday's Wall Street Journal.

Julius Genachowski sat down with the Journal for one of his first interviews since being sworn in as FCC chairman in late June and said that making affordable high-speed Internet available throughout the nation could be the "most successful driver of economic growth" in the nation.

FCC Chairman Julius Genachowski

(Credit: FCC)

Exactly, how he plans to do this is something that broadband providers, such as AT&T, Verizon Communications, and Comcast, are watching carefully. The new chairman has not been vocal yet about how he stands on many issues that will affect these companies.

Some issues that are currently under discussion at the FCC include new rules that dictate how broadband providers manage their networks. Comcast got into trouble last year for slowing down its customers' peer-to-peer Bit Torrent traffic without providing sufficient notice. Consumer groups have been advocating for stronger rules or regulation that prohibit such types of changes.

There are also discussions before the FCC about rules requiring companies to lease network space to competitors. Broadband providers have argued that imposing strict, new rules could stifle innovation and investment.

The FCC has also been looking at exclusivity deals that wireless phone providers have been striking with mobile handset makers. These deals include AT&T's exclusive contract with Apple to offer the iPhone on its network, and Sprint Nextel's exclusive arrangement to carry the Palm Pre. Some lawmakers and consumer groups say it is unfair for carriers to strike these deals because it keeps cutting-edge products out of the hands of consumers who do not live in regions where these services are offered.

In an effort to fend off criticism, Verizon Wireless, the largest wireless carrier in the U.S., said last week it will allow smaller, regional carriers to get access to its exclusive phones after six months.

There are also a slew of other issues that the FCC must deal with soon, including whether to overhaul the Universal Service Fund, which subsidizes phone service for rural Americans. Phone companies have complained for years that the system is broken. And others have urged the FCC to reallocate some of the funds collected for USF for subsidizing broadband services.

It will be interesting to see which side Genachowski will take on these issues. Generally speaking, many people perceived former chairman Kevin Martin as often siding with the phone companies, while having a more contentious relationship with cable companies. Specifically, the former chairman's campaign to force cable companies to offer a la carte pricing for cable TV put him squarely at odds with that industry.

President Barack Obama announced Thursday that he plans to nominate Meredith Attwell Baker, a former Commerce Department official, to fill the open Republican slot on the Federal Communications Commission.

Meredith Attwell Baker has been nominated by President Obama to fill one of two Republican seats on the five-member FCC.

Most recently Baker led the Commerce Department's National Telecommunications and Information Administration, or NTIA. This is the agency within the Commerce Department that was responsible for distributing the $40 coupons to consumers to convert their older analog TVs to receive digital TV signals. Baker came under fire earlier this year when the Commerce Department ran out of money for the coupons and millions of people were put on a waiting list.

Worries over the coupon program and a general feeling that too many people were unprepared for the switch to digital TV prompted Congress to push back the deadline to switch all the nation's high powered TV broadcasters from analog to digital from February to June.

With Baker's nomination to the FCC, President Obama has named his final nominee for the five member commission. Obama has already nominated Julius Genachowski to be FCC chairman. And he has also nominated Mignon Clyburn to fill a Democratic slot at the FCC. Clyburn is a member of South Carolina's public service commission. Commissioner Robert McDowell, who is a Republican, has been nominated for a second term on the commission.

For much of this year, the FCC has been operating with just three commissioners. Commissioner Michael Copps, a Democrat, is serving as acting chairman. After Genachowski is sworn in as chairman, Copps will step down from that position, but remain on the commission for at least another year. His term ends June 30, 2010. Commissioner Jonathan Adelstein, a Democrat, plans to leave the commission after the new chairman takes his position. Adelstein has been nominated to head the Internet grant program at the U.S. Department of Agriculture.

Genachowski and McDowell have already been approved by the Senate Commerce Committee and are awaiting full Senate confirmation. It's expected that Baker and Clyburn will go through the Senate approval process together.