Wireless Net Neutrality : From Carterfone to Cable Boxes

Over the past few months there have been calls to impose "wireless net neutrality" rules on the burgeoning United States wireless industry. These critics assert that certain practices by the wireless industry - such as handset "locking" practices, data bandwidth limitations, and control over features included on handsets - unduly hamper the ability of consumers to access and use advanced data communications services and, therefore, require severe regulatory intervention to protect consumers. To correct this perceived market defect, wireless network neutrality advocates essentially seek to turn highly sophisticated wireless telecommunications networks into commodity-based networks. In support of this proposal, wireless network neutrality advocates point to the Federal Communications Commission's 1968 Carterfone decision and the more recent Cable Navigation Devices rules as examples in which the Commission has taken what they allege to be a similar regulatory approach for both the landline telephone and video programming distribution market. In this Bulletin we show that neither the mandates of, nor conditions relevant to, Carterfone and the Cable Navigation Devices decisions appear to support the regulatory intervention sought by the wireless network neutrality advocates. Indeed, the Carterfone and Cable Navigation Devices decisions appear to decidedly call for a rejection of the recent proposals for wireless network neutrality. We also discuss the substantial risks that Carterfone-type regulation would commoditize wireless network services in a way that could substantially harm the prospects for entry and competition in the industry