[A2k] Jeffrey Silva: Wireless policies under scrutiny under Obama advisers

[Manon Ress]

http://www.rcrwireless.com/article/20081121/WIRELESS/811219993/1103/wireles=
s-policies-under-scrutiny-under-obama-advisers#

Wireless policies under scrutiny under Obama advisers
November 21 2008 - 12:58 pm EDT | Jeffrey Silva | RCR Wireless News

While it will be months before President-elect Barack Obama gets his
administration in place and begins to roll out policy priorities, the
selection of individuals focusing on high-tech agencies and their
issues in the transition period suggests industry giants Verizon
Wireless and AT&T Mobility could face greater scrutiny on open access,
consolidation and other issues than they have the past eight years.

Indeed, two academics assigned to the Federal Communications
Commission transition review =97 Susan Crawford and Kevin Werbach =97 are
vocal advocates of open networks in the wireless and broadband
sectors. Both are influential bloggers on cutting-edge telecom and
high-tech policy issues.

After the FCC=92s 700 MHz auction ended in mid-March, Crawford =97 a
University of Michigan law professor =97 commented on bidding results
dominated by Verizon Wireless and AT&T Mobility.

=93Verizon has won spectrum it arguably didn=92t even need, given its
existing spectrum holdings. It retains the discretion to act as a
traditional cellphone-model company =97 picking and choosing among
applications and devices, underselling =91open=92 devices, and
discriminating against traffic that undermines its business model.
This isn=92t great news for the Internet model of access,=94 Crawford
stated.

Crawford nevertheless left open the possibility of progress as a
result of Verizon Wireless=92 acquiring a national footprint of open-
access spectrum at 700 MHz for $4.7 billion. But even that outlook was
laced with skepticism.

=93On the other hand, openness is more popular and more talked about
than it used to be. It may be that the pressure of consumer
preferences makes Verizon provide a truly open Internet and truly open
devices to the rest of us,=94 observed Crawford. (The pressure of
competition won=92t be doing that =97 AT&T and Verizon have divided the
U.S. between them, and the other players in the wireless space are far
behind.) The Android project, Verizon=92s own words about openness, and
concerns about the place of the U.S. in the international race for
innovation may all push towards a more open future.=94

Likewise, Werbach =97 assistant professor of legal studies and business
ethics at The Wharton School of the University of Pennsylvania and a
former FCC policymaker =97 reacted cautiously when news surfaced in
August about Google=92s plans to market applications built on the
Android platform. In late September, T-Mobile USA Inc. =97 the No. 4
U.S. mobile phone operator =97 unveiled the first handset based on the
Android operating system.

=93Along with Google Android/Open Handset Alliance, Verizon=92s open
development initiative, and the success of Apple=92s App Store, this is
good news for wireless subscribers in the U.S. For too long we=92ve been
stuck with a poor set of apps and features pre-selected by the
carriers,=94 blogged Werbach. =93However, a series of walled application
stores is not the same as an Internet-like open platform. Developers
still need to go through the bottleneck of Apple=92s and T-Mobile=92s (and
soon, most likely, AT&T=92s and Sprint=92s and Verizon=92s) certification
process, pricing policies, and so forth. Not to mention that we=92re
just talking about the U.S. here. The U.S. is a big mobile market, but
less than a tenth of the global handset total =85 I=92m pleasantly
surprised how quickly the major U.S operators are backing off their
policies of tightly controlling handsets and applications. The
question is whether the shift will stop at walled markets, or move
toward a truly open environment.=94

Internet search engine goliath Google, Skype Ltd., consumer advocates
and public-interest groups remain skeptical that 700 MHz open access
and vows by the four national cellular carriers to embrace open
network platforms are enough to open wireless pipes to a plethora of
new third-party applications and devices. They prefer an across-the-
board wireless open-access mandate like the one imposed on landline
telephone companies since 1968. Skype, a leading software-based
Internet phone company, asked the GOP-led FCC to do just that in early
2007. FCC Chairman Kevin Martin said he wanted to dismiss the Skype
petition earlier this year, but the agency has yet to take final
action supposedly because of differences among Republican
commissioners over the wording in the draft decision.

Short codes, market clout

On a related front, the Obama administration could significantly shape
the debate on whether short-code texting messaging should be regulated
by the FCC. The cellphone industry opposes government intrusion into
business decision-making on granting short codes for marketing
campaigns. Some proponents of wireless open access and net neutrality
are aggressively lobbying the FCC to establish a policy that forbids
discrimination when wireless providers issue short codes.

The market clout of Verizon Wireless and AT&T Mobility =97 which towers
over weaker rivals Sprint Nextel Corp. and T-Mobile USA Inc. =97 also
has prompted other competitive concerns that could put the two
carriers and their parent companies under the microscope in the Obama
administration. Small, medium-size and rural wireless carriers have
been pressing the FCC for stronger voice and data roaming rules. Rural
carriers are lobbying as well for spectrum limits and for an
investigation of exclusivity arrangements between major wireless
providers and handset manufacturers.

Then there are special access lines, dedicated links that carry
traffic from wireless base stations to mobile-switching centers and
public switched telephone networks. Verizon Communications Inc. and
AT&T Inc. dominate a special access market that the General
Accountability Office =97Congress=92 watchdog arm =97 said is not
competitive in major U.S. cities. Other wireless carriers =97 large and
small =97 continue to press federal regulators to aggressively address
the issue in light of Verizon=92s and AT&T=92s market dominance and the
costly nature of special access as a component of wireless business
operations.

Consolidation concerns

Increasing cellular industry consolidation could also get a thorough
re-examination in the Obama administration.

Reed Hundt, overseeing international trade and economic agencies for
the Obama-Biden transition team, enacted a spectrum cap during his
tenure as FCC chairman in the mid-1990s. The 45-megahertz spectrum cap
gave way to a 55 megahertz before being eliminated in 2003. The FCC
currently utilizes a 95-megahertz =93spectrum screen=94 in analyzing
proposed mergers. The screen is an internal benchmark designed to
trigger closer examination of markets involved in spectrum acquisition
as a result of wireless mergers. More recently, the FCC recently ruled
spectrum acquired at auctions will be counted toward the screen in the
future. As such, at a minimum, Verizon Wireless and AT&T Mobility
could find it more difficult to do more deals in the Obama
administration. The era of mega wireless mergers could be at an end.

AT&T and Verizon executives were big bundlers of campaign
contributions for Sen. John McCain=92s (R-Ariz.) failed presidential
campaign. AT&T executive vice president Timothy McKone raised at least
$500,000 for McCain, according to Center for Responsive Politics.
Verizon CEO Ivan Seidenberg generated between $50,000 and $100,000 in
campaign donations for the Arizona lawmaker=92s presidential run. In
addition, political action committees associated with AT&T and Verizon
accounted for substantial campaign contributions in this election
cycle, with the two companies PACs favoring Republicans over
Democrats. Democrats that will control the White House and have
stronger majorities in Congress next year are not apt to forget soon
who supported them and who did not.

Dale Hatfield, a former telecom policy-maker who teaches at the
University of Colorado and consults with industry, is another member
of the Obama-Biden transition team tackling the FCC. Hatfield has been
major force in bringing attention to shortcomings and challenges
facing wireless 911 location accuracy. The FCC=92s Martin has taken
steps to improve enhanced 911 service, despite push-back from wireless
carriers. The mobile-phone industry and the public-safety community
have subsequently found common ground by agreeing that location
accuracy should be measure at the county level for compliance purposes.

Wheeler=92s influence

On the other hand, perhaps the deck is not entirely stacked against
Verizon Wireless, AT&T Mobility and others in the wireless industry.

Thomas Wheeler, focusing on reviews of technology and other agencies
as a member of the Obama-Biden transition projects agency review
working group, had a big hand as a high-profile lobbyist in helping to
persuade Congress to deregulate the cellphone and cable TV industries.
While cable TV and wireless deregulation bills in 1984 and 1993,
respectively, spurred tremendous growth in the two sectors, both
industries have become targets of widespread consumer complaints.

What is unclear is how much influence Obama-Biden transition
individuals assigned to review specific agencies, like the FCC, will
have on future policy direction for wireless, telecom and other high-
tech industries.

The transition team recently established separate working groups that
will concentrate specifically on policy, a process in which policy
proposals from the Obama campaign are further developed for official
delivery in the new administration.

The group working on technology, innovation and government reform
policies include two former senior aides to ex-FCC chairman Hundt and
a Google official. Blair Levin, a managing director and tech analyst
at Stifel, Nicolaus & Co., was chief of staff to Hundt from 1993 to
1997. Julius Genachowski, a Harvard Law School classmate of Obama=92s
who co-founded Rock Creek Ventures and LaunchBox Digital, was chief
counsel to Hundt. Sonal Shah oversees Google.org=92s global development
efforts. Shah previously served as a vice president at Goldman, Sachs
and Co., where she worked on the firm=92s environmental policy.

Overall, the Obama-Biden transition team is highly populated with
telecom policy makers =97 who remain political insiders in telecom-tech
circles =97 from the Clinton-Gore years. Any of the individuals on the
Obama-Biden transition could end up with top posts at the FCC,
National Telecommunications and Information Administration and the
office of tech czar.

Meantime, transition members are under a strict gag rule, a carry-over
of the kind of discipline that characterized the Obama campaign. But
that is beginning to show signs of strain as the transition process =97
including intensive vetting of prospective cabinet members =97 gives way
to leaks to major media outlets.



***************************************************************************
Manon Ress
manon.ress@keionline.org
Knowledge Ecology International
1621 Connecticut Ave, NW, Washington, DC 20009 USA
Tel.:  +1.202.332.2670, Fax: +1.202.332.2673