Saturday, May 17, 2008
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A Reflection on Market Realities

After a fun and interesting Day 1, I thought I might provide some thoughts and reflections on my experience.
 
Some of the most thought-provoking experiences from yesterday included two policy panels that I attended, "Mobile Industry Hot Topics" and "US Wireless and the World."
 
A common theme that I heard explicitly discussed at the Hot Topics panel, and as an under-current in the “US and the World” panel, was that of wireless national framework.
 
CTIA has researched international regulatory systems, and according to our findings, the US's system of both federal and state-by-state wireless regulatory authority is unique. 
 
The possibility of expanded state regulatory authority over wireless is one that simply doesn't make sense. Wireless’ defining characteristic is its mobility -- because of that, wireless is inherently an interstate, not intrastate service. I certainly appreciate the need for state governments to enforce the generally applicable laws and look out for the best interest of their citizens. But, that being said, to allow expanded state-specific regulatory authority over a mobile, interstate service might bring with it unintended consequences.
 
By subjecting wireless carriers to 50 different regulatory systems, we potentially jeopardize the incredible levels of investment and innovation that have characterized our industry.
 
Think about that -- the innovation and investment of the domestic wireless industry is among the most impressive in the world. The regulations of today might not be relevant to the technological realities of tomorrow. To allow short-sighted regulatory preferences to potentially affect this evolving, constantly-changing industry brings with it the possibility of short-changing the American wireless consumer by depriving them new services and technologies.

Click here to listen to our "US Wireless and the World" podcast!

To the Christian Coalition: Be Careful What You Wish for on Net Neutrality

I want to share a letter I sent earlier today to Mrs. Roberta Combs, the president of the Christian Coalition of America. A representative from Mrs. Combs' organization is scheduled to appear Tuesday at the House Judiciary Antitrust Task Force hearing on "'Net Neutrality" and Free Speech.

While the Christian Coalition supports net neutrality/Internet regulation, I think it's critical to consider all of the possible and likely ramifications of government mandates in this area. In that respect, the letter speaks for itself.

I am sincerely hoping that groups such as the Christian Coalition of America recognize the outstanding work the wireless industry is doing to provide parents with useful tools to control  Internet access on their families' wireless devices, as well as the steps carriers take to protect their customers from unwanted and unsolicited material such as pornography and spam, and acknowledge the negative practical implications of ill-advised net neutrality mandates.

National Framework Discussion..... It's a Start

 Yesterday I had the opportunity to appear before Chairman Ed Markey's subcommittee to talk about an important issue facing wireless consumers in America. Overall, it was a positive hearing as nearly every committee member and witness communicated a common desire and goal - to continue providing American consumers with the most cutting-edge wireless technology at the most affordable prices possible. The main focus of the hearing was to discuss Chairman Markey's draft wireless legislation and to address the question of how best to treat mobile telecommunications services from a regulatory standpoint. While the draft legislation is still a work in progress, we are very pleased that Chairman Markey has started this important discussion and we look forward to illustrating the many valuable consumer benefits that accompany a uniform set of national standards for wireless service in America. I'd also be remiss if I didn't point out that Energy and Commerce Chairman Dingell and Subcommittee Ranking Member Stearns each expressed support for the idea of having a national set of rules for wireless service.
     

So what exactly are the consumer benefits that have flowed from national uniformity? In my testimony I mentioned that the cost per voice minute, which was about one dollar twenty years ago, has dropped to 4 cents today. According to the Bureau of Labor Statistics, prices for commercial wireless services have fallen more than 35% since December 1997. During the same period, the average minutes of use ("MOU") per subscriber increased six-fold, from an average of 120 MOU per month to an average of 746 MOU per month. Statistics and realities like the ones I just highlighted put the United States at the forefront of the global, mobile wireless revolution. And it is our hope that with a uniform set of national rules for wireless service, consumers can continue to get the cutting-edge mobile services they want and need at world-leading prices. Stay tuned.

If It Ain't Broke...

This year’s first ‘official’ step in the internet regulation debate was taken earlier this week, with the introduction of the “Internet Freedom Preservation Act of 2008” http://markey.house.gov/docs/telecomm/hr5353.pdf. There is a lot to talk about its implications and intentions, and while stakeholders are in the process of thoroughly reviewing the proposal, I want to suggest we could all save a lot of time and effort right now by answering a simple question:

What is the problem the bill is trying to ‘fix’?

Language in the bill indicates its purpose is to “promote openness, competition, innovation, and affordable ubiquitous broadband service for all individuals in the United States”.  Oh. You mean, like we have now.

The internet is a great American free market success story. It is flourishing today and is such a vital part of our lives because service and content providers all over the country and the world are driven by competition to innovate on a perpetual basis. The recent NTIA broadband report reveals robust broadband competition between multiple cable, satellite and wireless service providers, and that wireless is clearly becoming the internet access avenue of choice by new subscribers http://www.ntia.doc.gov/reports/2008/NetworkedNationBroadband
inAmerica2007.pdf.
  And last summer, the Federal Trade Commission’s Broadband Connectivity Competition Policy report http://www.ftc.gov/reports/broadband/v070000report.pdf  concluded that competition and innovation was thriving in the U.S. broadband marketplace.

So again, what is the problem the bill is trying to ‘fix’?

The internet regulation crowd bases its claims on hypotheticals that suggest we need to do something today to make sure something that is highly improbable won’t happen tomorrow. There is a reluctance to recognize the facts and accept the situation they illustrate. The market is working, wonderfully, and corrective mechanisms already exist and can be enforced should they be necessary. New business models might evolve, but consumers will let providers know loudly and clearly what they think of them. That’s what has spurred internet growth in the past, and is a guaranteed formula for success in the future. If you’re not familiar with the FTC report, take some time to look it over. Consumers are getting service, value, choice, and access to content like never before, and the last thing we need is for the government to intervene and risk bringing internet innovation grinding to a halt. Now that would a problem that would need fixed. Let’s just hope we don’t have to.



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