Tuesday, March 27, 2007

Remember When Cellphones Were Just for Calling

The "unbundle everything" crowd has made the highly successful competitive wireless industry its latest target. Before anyone at the FCC joins in the unbundling chorus for wireless, they should read the Wall Street Journal's March 26 Special Technology Report, "What's New in Wireless." [subscription required].

Here are the just first few paragraphs from the WSJ report:

Remember when cellphones were just for calling?

Over the past few years, cellphones have evolved from simple communication devices into multimedia powerhouses. First came cameras, then Web surfing, then music players. Now, get ready for a host of new features.

In the next two to three years, consumers will be able to get TV broadcasts on their cellphones with better picture quality than current video offerings -- and a greater range of live programming from major networks like NBC, FOX, ABC and Comedy Central.

Users will also get sophisticated software applications for surfing the mobile Web, and more services to connect with friends, share videos and exchange photos. And they'll likely see mobile devices that can roam seamlessly across Wi-Fi hot spots, cellular networks and new high-speed data networks, bringing a much faster and smoother surfing experience.

Does this sound like a market that needs more government regulation in order to give consumers the services and applications they want? Can the unbundling crowd really say with a straight face that there has been a lack of innovation and investment by the industry in the absence of public utility regulation? Before long the "cellphone" will be able to do everything but put on your pajamas and put you to bed. And if there is demand for that...well, who knows?

Yesterday, I wrote in "Net Neutrality, the NOI, and Unbundling" about how Commissioner Copps, guided by his own strong pro-regulatory instincts, is right in tying together the unbundling issue that lies at the heart of the net neutrality debate with the unbundling issues that are at the core of other of today's most important communications policy issues. The unbundling crowd knows that "unbundling" and enforcement of "non-discrimination" mandates ultimately leads to common carrier regulation because it will always be necessary, in order to determine whether alleged discrimination has occurred, for the regulators to finely parse sometimes subtle differences in the price of various kinds of offerings.

If you haven't read it, you should read Bruce Owen's FSF paper, The Net Neutrality Debate: Twenty Five Years after United States v. AT&T and 120 Years after the Act to Regulate Commerce. Oliver Wendell Holmes said: "When I want to understand what's happening today, to decide what to do tommorrow, I look back." Professor Owen's paper examines a lot of history concerning regulatory failures over the last hundred years. His paper ought to be required reading for today's policymakers.

In the case of wireless, and broadband more generally, unless regulators can identify specific instances of non-transitory market failures causing demonstrable consumer harm, they should rely on marketplace competition to continue to deliver the types of innovative communications and information services and applications we witness everyday when we turn on our "cellphones."