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Wireless Experts Predict FCC's 'Net Neutrality' Rule's Impact on Mobile Operators

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Wireless Experts Predict FCC's 'Net Neutrality' Rule's Impact on Mobile Operators
September 24, 2009
By Marisa Torrieri, TMCnet Editor

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As the FCC (News - Alert) preps its notice of proposed rulemaking based on new ‘Open Internet’ goals, industry experts are weighing in on how the new rule will impact wireless carriers.  

 
The forthcoming FCC proposal -- outlined in Chairman Genachowski's speech made at the Washington, D.C.-based Brookings Institution – calls for ‘open Internet regulations’ that would treat all Web content equally, regardless of its destination.
 
“It’s crucial that the FCC balances net neutrality with network management,” Alan Reiter, founder of Wireless Internet & Mobile Computing and industry consultant, told TMCnet. “And there are indications from the speech that the FCC understands this.”
 
AT&T’s current network is already “buckling from the profusion of iPhone (News - Alert) users,” Reiter said. Because tomorrow’s wireless networks require much more bandwidth, there will no doubt be issues of network strain.  
 
“And what if thousands of people in a concentration are all downloading TV shows? The cellular tower will be overcome,” Reiter said, noting that Skype (News - Alert) is just one application that some carriers are currently crippling because it takes up a lot more bandwidth. “Under the ‘net neutrality’ rules, it’s possible some operators may be required to allow Skype over 3G. It could dramatically affect the congestion because the future of wireless is data. 4G is all about IP.”
 
The result is that carriers are left asking themselves how much they should charge for high-bandwidth users. “Network operators might say, ‘that’s fine but we’ll charge $100 for that.’ Nowhere in the ‘net neutrality’ speech was it said that you couldn’t charge for services – only that you couldn’t discriminate.”
 
Still, it’s unclear whether such a regulation would spur or slow the growth of mobile video. On the one hand, a rule that would treat all types of content equally would encourage developers to go all out. On the other hand, consumers may not want to pay extra money just to use a mobile-video chat application on their handsets.   
 
According to Ronald Gruia, Principal analyst for market research firm Frost & Sullivan (News - Alert), carriers will come up with new plans to enforce fair usage.
 
“Let’s say you have a solid limit of downloads, like 4 gigs. Once the consumer reaches that volume limit, [a carrier] could reduce their speed to 2 gigs, or trigger an additional charge to consumers with the note ‘you reached your limits - are you ready to pay more?’” Gruia told TMCnet. “You have less than 5 percent of the total users taking up 90 percent of the bandwidth. So you don’t want to degrade the network performance for low-volume users [to accomomodate] high-volume users.”
 
Reiter said he could not decisively weigh in on carriers’ reactions.
 
“Genekowski only outlined what might happen,” Reiter said. “They’re going to still have a notice of proposed rulemaking. Until that happens, we won’t know. It’s going to be a balancing act – what applications are allowed, versus what cellular operators might charge if they are forced to allow applications. You can’t answer that question because no one will know.”
 
The wireless community will no doubt participate in the rule’s open comment period, and the open forums FCC Chairman Genachowski spoke of during Monday’s speech.
 
“Bottom line, the ruling raises the ire of wireless carriers because their bread and butter is providing access,” said ABI Research (News - Alert) analyst Daniel Shey. “If the FCC or anyone is going to tell them how to use and manage their networks, the operators better have a seat at the table.”

Marisa Torrieri is a TMCnet Editor. To read more of her articles, please visit her columnist page.

Edited by Marisa Torrieri

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