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About That Second, Third and Fourth Wireless "Attachment"

Rob Frieden

There is some good news about the decision by Verizon Wireless to offer shared monthly data plans. But there could be a lot more if the FCC applied its Carterfone policy. That policy gave consumers the power to decide what and how many devices to attach to a network connection. If Carterfone applied, consumers could use multiple devices to access a network subscription, albeit perhaps not at the same time. Because wireless handsets each have a separate identity, Verizon and soon every other carrier will offer the shared data plan option, albeit at much higher prices factoring in the surcharges for using more than one wireless device.

Readers over the age of 40 may recall that there was a time when the wireline telephone company totally controlled what devices could connect to the network. The Bell System had a monopoly on "authorized" handsets and prevented even a used, secondary market for Bell telephones. Subscribers feared that the Bell System would know whether a non-Bell vintage telephone was in use, when more than one phone was attached. Carterfone liberated the marketplace for both new and used handsets.

It is a remarkable time that the Carterfone policy somehow can be converted into "job killing government regulation." The policy promotes consumer sovereignty, but in this bizarre time it gets framed as something bad because it requires government to do something. And what does government do? It removes the ability of companies to establish bogus regulations designed to preserve a monopoly and maximize profits. In retrospect it appears crazy that Bell System managers could argue that anytnon-Western Electric telephone could harm the network (and something they called "systemic integrity") as well as risk the lives of telephone company personnel. But that strategy lasted for years and preserved incredible profit margins for AT&T.

History repeats itself. Verizon surely cannot make a credible argument that allowing multiple devices to share a download basket of capacity triggers greater costs for the company. Bear in mind that every wireless carrier provides shared access to a basket of voice minutes. So how is data any different? It isn't.

The lack of Carterfone enforcement means that wireless carriers can create a bogus, new "cost element." Because these carriers copy each other (some would say collude), expect every wireless carrier to create a new billing line item for that second, third and fourth device sharing a single monthly throughput allowance.

By Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law. More blog posts from Rob Frieden can also be read here.

Related topics: Mobile, Policy & Regulation, Telecom, Wireless

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Comments

Framing Carterfone Frank Bulk  –  Jun 16, 2012 8:40 AM PDT

Carterfone was about customers having the right to attach CPE of their choice to their phone line, as long as it did no harm the system.  The Carterfone decision really has no direct correlation to the data sharing discussion.

One can't equate wireline and wireless technologies because the former can operate in a way that has very little impact on ones' neighbors while for the latter interference is very real — in fact, with WCDMA, inherent factor of the system design.  It's also a stretch to compare the lack of data sharing in most cellular plans today with restrictions on CPE use, as was the case with Carterfone.  Carriers offer lots of mobile phone options today and many allow you to bring your own phone.  And if you have SIM card, you can share one data plan among many phones.

There's no need for government involvement.  Market forces are already at work — Verizon Wireless is providing a data sharing option for those who want it — and if it's successful (or not) other wireless carriers will offer the same thing.

Carterfone is a policy that included specific Phil Howard  –  Jun 17, 2012 8:03 AM PDT

Carterfone is a policy that included specific regulations.  It is the fundamental policy that needs to be maintained in the wireless market (really, in all markets).  It is an essential to keep markets open and free and to disallow corporations from closing them.

Interference issues are technical and relate to the way devices connect.  A tethered device adds virtually no new interference compared to merely another device operating in the area.  When another device is using RF to communicate, that does add new spectrum load to the area.  But that isn't a free market issue.  The freedom to choose a device must exist.  If someone is using a defective device that causes interference to the carrier spectrum, that's a valid carrier concern and the FCC should be involved if that cannot be corrected.  If someone us causing interference to nearby Wifi users, the carrier should not be concerned, though the FCC certainly should be (and that is best handled by market regulations on wifi devices with solid enforcement).

Free market itself is still not working well and government does need to continue to be involved.  It always will need to be around, because big businesses cannot be left to play for themselves as history shows they all migrate to being monopoly bullies when left unchaperoned.  For example Verizon is still making rules about the number of devices, when the number should not matter.  The only thing that should matter is the volume of data (peak and accumulative data rates).  Imagine if the electric company told you that you may not have more than 12 lights on at one time, but it did not matter what the wattage was.

Users can hide additional devices from the carrier, anyway.  They just need an appropriate router as the tethered device.

Thanks for discussing the interference aspect in Frank Bulk  –  Jun 18, 2012 9:28 PM PDT

Thanks for discussing the interference aspect in more detail.  The point I was attempting to differentiate was between guided and unguided mediums and how wired access allow for spectrum re-use, unlike wireless.

I want to re-emphasize that there is device choice — carriers are very much aware that a good percentage of customers subscribe to their service based on phone itself (the Apple iPhone is an extreme example).  Second, most carriers already support BYOP (bring your own phone), but it's the customers who would rather subscribe to a higher-rate plan that subsidizes the cost of the phone than pay for the phone up front.  Third, and more by way of example, there are phones that don't pass a carrier internal testing.  A training rep for a wireless carrier mentioned to me that it's not atypical for handsets not to pass testing (for a variety of reasons), but because there is more and more device choice they are able to find other phones in the same category (flip, slide out, keyboard, etc).

Verizon Wireless is not making rules about the number of devices — you can have as many as you want.  Before you had to pay for them separately, but now they're now making it possible to them under one plan, each with their own number.

It's a stretch to apply the Carterfone policies to the current cellular situation — as dominating as the wireless carriers are, it's nothing like what Ma Bell was.  We have carrier choice and device choice, both with a wide range of options.

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