Ed Markey’s at it again, this time meddling in the wireless services market. He has a new bill out which is aimed at wireless carriers primarily (see my post on his previous effort here.)
From the preamble, which lays out the context for the proposed legislation:
(2) Wireless service has become a replacement for traditional telephone service for millions of consumers in the United States.
(3) As wireless service is increasingly used and relied upon by residential and business consumers, such consumers will increasingly depend on Federal and State authorities to apply and enforce essential consumer protections applicable to such service in a manner commensurate with the role such authorities have played in ensuring consumer protection with traditional telephone service.
So, the key argument here is that, since wireless services are replacing wireline services for at least some people, the same (or similar) “consumer protection” provisions are required for wireless services as have previously been made for wireline services. Before I got to the second half of (3) above while I was reading it, I assumed it was going to say “the same protections as are applied to other commercial businesses under existing US law.” Because that’s the logical thing to say: wireless consumers should be subject to all the same consumer protection provisions as consumers of any other product or service. Why do we need special rules for wireless services?
In Section 101 (a) (1) we get to the meat of the matter. The Bill proposes that carriers should have to disclose to consumers the complete terms of any plan they’re signing up for, including the duration of the plan, the number of minutes included (although no mention of data transfer), any trial period, “the terms of subsidizing any wireless customer equipment” (whatever that means), and information on early termination and other non-recurring fees. Carriers also have to disclose up front any and all charges, including taxes (which could be tricky since they change from time to time, as do charges).Now, in and of itself, this is reasonable enough, but isn’t the bulk of it covered by existing consumer protection laws? And if not, why does the wireless industry have to be different from other industries?
Section 102 deals with early termination fees. The first requirement is:
each commercial mobile service provider to offer a wireless service plan for which there is no early termination fee;
Which would presumably be covered by prepaid plans, now offered by all major carriers. Which makes this a bit of a hollow provision. Section (2) adds:
that if a commercial mobile service provider offers such plans with subsidized wireless customer equipment, such provider shall offer to consumers the opportunity to purchase subsidy-free wireless customer equipment in return for the ability to secure service, without a long-term wireless service plan, at a price no higher than a comparable wireless service plan offered with subsidized wireless customer equipment;
Now, some people have assumed this means that AT&T would have to offer unsubsidized iPhones. I’m not sure it does, since it doesn’t specify that customers shall get the same “wireless customer equipment”. At the very least, this is an easily exploitable loophole. But it’s not clear that Markey’s intention is even to force de-subsidization of all handsets, just the option to buy one or more handsets in this way. Of course, Verizon Wireless has already announced that it plans to allow customers to attach any phone that meets basic requirements to its network, and AT&T and T-Mobile as GSM carriers offer this option by default.
Section (3) requires that early termination fees (ETFs) must be prorated over the life of the contract, and that the proration is just based on the cost of subsidizing handsets (which suggests that ETFs should be different for each handset rather than standardized).
Then we get onto wireless coverage maps, which must be provided by each carrier, and which must depict sufficient detail that they show
(A) generally geographic areas where commercial mobile service is not predicted to be regularly available; and
(B) whether or not a consumer is predicted to receive commercial mobile service in the general geographic area in which such consumer’s primary residence is located, to the extent prediction of reception in such area is feasible using the formats specified in paragraph (1).
“General geographic area” is just vague enough to be completely useless. All carriers provide some kinds of maps for coverage – see:
These tend to provide enough detail to see if your street gets coverage, and that’s about all that can reasonably be expected. So what’s the point of this provision? To be really useful, these maps need to tell you whether you can get coverage inside your house (which is where most people have problems) but that’s impossible. So again, this feels pretty pointless, especially given the fact that the carriers are already providing such maps without legislation requiring them to.
Markey also wants the carriers to do the government’s dirty work for it:
to require that any charge specifically required by a Federal, State, or local statute, rule, regulation, or order to be collected from a subscriber be listed in a separate section of each bill sent to a subscriber and itemized separately in clear and plain language;
Section 105 is the “create employment in the wireless industry section” (not really, but it could be), since it requires potentially huge amounts of disclosure on the part of the carriers about their coverage, signal strength and other items. This seems to be covering more or less the same ground as the mapping question, but could potentially go a lot further in the hands of an interventionist FCC.
Now onto contract extension. The bill requires that customers not be provided contract extensions unless:
the subscriber agrees to extend such plan by providing express consent to such extension
Cue angry customers a few months from now wondering why the heck their cellphone service has been cut off when they pay their bill every month, because the alternative to extension is cessation of service, and we all know a lot of customers won’t respond in time.
We now get to the Verizon clause. Apparently, the fact that Verizon has offerered a 30-day trial period (its “Worry Free Guarantee“) means not that the market will take care of this on its own, but that everyone should be forced to do it. At least the bill doesn’t require carriers to pay back any fees racked up during those 30 days as Verizon has willingly agreed to do.
This Worry Penalty Free option is pretty ironclad:
a wireless service plan may be canceled upon the request of a subscriber for any reason during the 30-day period that begins on the date on which such plan was executed.
Note: “for any reason” – i.e. just if they feel like it, or if they enjoy hopping from carrier to carrier just to drive them nuts and cost them money by forcing them to restock used devices and sell them at a discount. And this next point is not quite clear either:
If a subscriber exercises the right to cancel such plan under paragraph (1), a subscriber shall receive a pro rata refund of the charges, if any, paid for wireless customer equipment used in conjunction with such plan if such equipment is returned during such 30- day period.
What’s pro rata about buying a phone? If they mean that carriers can charge a reasonable re-stocking fee, that seems sensible, but there’s nothing pro rata about that.
I’m not going to dwell on the wireless broadband stuff or the spectrum efficiency stuff at the end but might come back to that later.
Overall, this feels like more intervention in a market which has generally done very well by consumers in terms of providing good service at declining prices and offering compelling devices and services. Yes, there are transparency issues, and yes, there are misunderstandings about contracts, but I believe these can be addressed under existing laws and through market-based incentives (just look at that Verizon Worry Free Guarantee and the presence of coverage maps on all the major carriers’ sites as examples). We really don’t need more legislation in this area.
After failed attempts to get net neutrality legislation passed in 2006, Ed Markey and friends are at it again. This time, the bill has been softened a bit, with the language toned down and the focus on giving the FCC more authority and a mandate to enforce three of Michael Powell’s Four Net Freedoms as drawn from an official policy document of the FCC.
The Bill is actually presented as an amendment to the Communications Act of 1934, as was the 1996 Telecom Act. The preamble lays out the purpose of the Bill, which seems inocuous enough:
The importance of the broadband marketplace to citizens, communities, and commerce warrants a thorough inquiry to obtain input and ideas for a variety of broadband policies that will promote openness, competition, innovation, and affordable, ubiquitous broadband service for all individuals in the United States.
It then moves into rather shakier territory:
It is the policy of the United States… to maintain the freedom to use for lawful purposes broadband telecommunications networks, including the Internet, without unreasonable interference from or discrimination by network operators, as has been the policy and history of the Internet and the basis of user expectations since its inception.
Here’s where things get tricky, because in proposing a new set of formal rules for the Internet Markey is relying on a presumed “policy” that has existed hitherto, but this of course is nonsense. Since the Internet is a private enterprise made up of thousands of individuals and companies, it hasn’t had a policy because it hasn’t needed one – it’s been run according to the competing priorities and goals of all those involved in it.
The other crutch for his position is “user expectations” which, of course, is at least as vague, if not more so. And herein lies the problem – rather than allowing the FCC full freedom to determine what future policy around the Internet should be, what user expectations really are, and how to balance those against the real-world economics that underpin the Internet, Markey has taken the first few steps for them and thereby limited their options. So, far from allowing the FCC to undertake “a thorough inquiry to obtain input and ideas for a variety of broadband policies” Markey has provided a much narrower framework than his preamble suggests.
A little lower down in the policy section the Bill states that it should be US policy:
(3) to preserve and promote the open and interconnected nature of broadband networks that enable consumers to reach, and service providers to offer, lawful content, applications, and services of their choosing, using their selection of devices, as long as such devices do not harm the network; and
(4) to safeguard the open marketplace of ideas on the Internet by adopting and enforcing baseline protections to guard against unreasonable discriminatory favoritism for, or degradation of, content by network operators based upon its source, ownership, or destination on the Internet.
Part (3) is merely a summary of the three net freedoms which will be enumerated later on, but note the reference to legality here. Part (4) then goes on to state the simple premise of neutrality, which forbids “unreasonable” treatment based on source, ownership or destination. For starters, we have a conflict between the ownership provision here and the legality provision in part (3) – if a provider was able to conclude that content being shared was not owned by the person sharing it and therefore was being transmitted illegally, would that come under part 3 (where it would be allowed) or part 4 (where it wouldn’t)?
And how do we define “reasonable”? Comcast (the only provider to have openly stated it plans to be non-neutral in its treatment of traffic) would argue that its traffic management and shaping are reasonable because they are necessary to allow its services to all customers to run smoothly without massive additional investment. On what basis will the FCC second guess this judgement if the only criterion is that such action should be “reasonable”?
The specific mandate for the FCC to look into the current state of the market and determine appropriate policies comes a little later:
Within 90 days after the date of the enactment of this Act, the Federal Communications Commission (in this Act referred to as the ‘‘Commission’’) shall commence a proceeding on broadband services and consumer rights.
Specifically, this proceeding needs to determine the following:
- Whether any provider is currently in violation of the three net freedoms (relating to applications, content and devices)
- Whether “broadband network providers add charges for quality of service, or other similar additional fees or surcharges, to certain Internet applications and service providers” in contravention of the net neutrality principles set out earlier. This obviously goes right to the heart of one of the two scenarios which have been laid out by providers under which they would want to be less than neutral – to deliver content at premium speeds and quality for a premium price (the FedEx vs. USPS model), and is therefore worrying. In addition, it’s not clear how this would affect players like Akamai, which specialise in providing such services.
- Whether “broadband network providers offer to consumers parental control protection tools, services to combat unsolicited commercial electronic mail, and other similar consumer services, the manner in which such services are offered, and the extent to which such services are consistent with such policies of the United States”. Most people seem to have read this as a sop to Republican lawmakers but I wonder if it isn’t actually the opposite – since it’s hard to imagine a way in which the lack of parental controls and spam filters could contravene net neutrality, but it’s possible to see how an extreme interpretation of net neutrality principles could lead you to believe the presence of such controls would violate them. At the very least the intent of this paragraph needs to be clarified.
- Network prioritisation practices by providers and their consistency with net neutrality principles
- The relationship between net neutrality principles as applied so far with competition in Internet services
- Whether providing a sufficiently fat pipe could excuse a provider from these rules. This is a particularly interesting one – the whole point is that we’re getting fatter and fatter pipes in the access network, but the backhaul portion is where the bottleneck occurs, and that’s the very reason for wanting to offer QoS enabled services in the first place. Carriers want to avoid building out massive additional bandwidth in that part of the network by more effectively prioritising traffic – few will qualify for this condition as a result, unless the FCC is stupid enough to look at access speeds alone. But it also goes to the heart of the matter – whether prioritising some traffic necessarily degrades all other traffic, including competing traffic. If it does, the argument for neutrality at least has some merit. If it doesn’t, then that argument essentially goes away.
The Bill further requires eight additional broadband summits to be held around the country within one year of the passage of the Bill into law. These summits will exist
to assess competition, consumer protection, and consumer choice issues related to broadband Internet access services.
Note no mention of current limitations of the Internet, the economics associated with the current business model and any future business models either in keeping with or in contravention of net neutrality. And the “technology sector” is the last group mentioned in the list of individuals and entities to be invited to such summits, and presumably includes providers, though that’s not explicit. The focus is very much on consumers and their “rights” and views rather than on a balanced evaluation of the competing interests of consumers and providers.
The output of all this is a report back to Congress with recommendations, which is the kicker here. Representative Chip Pickering (R) has signed on for this Bill but had opposed previous attempts, on the basis that this one was rather softer than previous attempts in its aims and prescriptiveness. However, the idea that the ball is going to be back in Congress’s court rather than remaining with the FCC at the end of the process suggests this may just be a smokescreen to get a net neutrality Act into the statute books and then follow up in a year’s time with a much harsher version based on all the work done by the FCC. The Bill has largely been described in blogs and articles as giving the FCC more teeth to deal with abuses of the net freedoms but there’s actually nothing in here that does that. It merely asks the FCC to go and do the legwork and then hand the results over to Congress for a solution. At a time when Democrats (who largely strongly favour net neutrality) are likely to increase their majority in Congress and also appoint a Democrat-led FCC, this is particularly worrying.
My own position on net neutrality has always been this: that those willing to pay a premium for premium delivery (whether they be content owners or end users) should be able to do so, and that the best way to architect such a delivery system is to do it in parallel with the existing Internet infrastructure such that other traffic is not degraded by it. To the extent that there is a bottleneck in traffic, all remaining traffic would be degraded equally by virtue of its volume, not because of any discriminatory measures. I also think it would be reasonable within that broad flow of content to prioritise real-time traffic (primarily voice and video) and allow non-real-time traffic such as website data and emails to be processed slightly more slowly. I don’t think the Bill as currently written would allow that model to exist, and I therefore believe it’s deeply flawed.
