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WSJ on Wireless Network Neutrality

Eric Hernaez

Today's Wall Street Journal had an interesting article (subscription required) on the current state of the wireless walled garden. It cites several recent clashes between handset vendors and cellcos over the extent to which consumers can use their phones to access non cellco content. Says the Journal:

At stake for consumers are what services will be available on their mobile phones and whether they're free or cost a monthly fee. The wireless Web is taking off more slowly in America than overseas, and one reason is that U.S. carriers tightly control what applications are available on mobile devices. That's a contrast with Europe and parts of Asia, where carriers' control is less tight and where wireless services have been more broadly available for years.

The conflict is an outgrowth of the dumb pipe dilemma, in which wireless carriers now find themselves.

As the Web goes wireless, they want to prevent a repeat of what happened when the Internet first arose. They provided access to it, but the businesses that thrived were others, such as Amazon.com, that provided services over the Net. Carriers were reduced to what the industry calls "dumb pipes." To avoid that plight, wireless companies tightly control what services cellphone consumers can access, their cost and who displays what on cellphone screens.

I love that the issues surrounding wireless network neutrality are finally starting to get attention in the mainstream media. For that, we have Steve Jobs to thank. The upcoming release of Apple's iPhone is putting a spotlight on the struggle that content vendors face when they try to create direct relationships with mobile consumers. The fact that Apple convinced AT&T to allow its subscribers to access iTunes (as opposed to a generic AT&T music service) is the first small victory in a war that is sure to escalate over the coming months and years.

Meanwhile, the next front of the battle is taking shape in the FCC where the rules for the 700Mhz spectrum auction in January are now being hashed out. The availability of the 700Mhz spectrum (currently being used by TV broadcasters) creates an opportunity for new wireless networks that would eclipse those currently available from the major wireless carriers. As a result, the outcome of the auction competition could determine the direction that competition for mobile services will take in the years to come.

By Eric Hernaez, Chief Executive Officer of Netmobo
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