Wednesday, May 30, 2012

Hanging Up On Handset Device Regulation

On May 18, the FCC's Wireless Telecommunications Bureau granted the Rural Carrier Association's request to withdraw its petition seeking rules for restricting handset exclusivity arrangements between device manufacturers and wireless carriers.

In and of itself, this is a welcome development. Typically, these kinds of arrangements are economically beneficial, providing ways for addressing risks accompanying the launch of new devices and for matching up the financial incentives of manufacturers and carriers. 
As FSF President Randolph May explained in a 2009 blog post, "Wireless Regulation: First Do No Harm":
In this competitive market environment, the ability of wireless providers and device manufacturers to enter freely into voluntary agreements to provide for a period of handset exclusivity provides financial incentives necessary for the parties to undertake the investment necessary to develop, say, an innovative I-Phone. And then if a device, say the I-Phone, actually succeeds in the marketplace, such success provides incentives for other device manufacturers and providers to enter into risk-sharing agreements with a period of exclusivity to develop innovative competitive models, say the Palm Pre. And so on and on. With the spate of innovative, feature-rich new handset devices coming to market in rapid succession, and with over 630 handset devices available, the market is working well without government intervention, all to the long-run benefit of consumers.
RCA's request for withdrawal points to the FCC's March 2012 proposed rulemaking for Lower 700 MHz Band Interoperability. So future debates over wireless regulation appear to be shifting from handset device exclusivity to network interoperability. We may have more to say on interoperability standards and regulation in the weeks ahead. But in the meantime, FCC Commissioner Robert McDowell offers a place to start with his statement: "I hope that all interested parties will come to the negotiating table and work in good faith to develop their own solution."