Yesterday the FCC finally issued its long awaited ruling on Net Neutrality. Net Neutrality is a fundamental principle that dictates that Internet Service Providers cannot discriminate against different types of applications and content. If you’re unfamiliar with the concept of Net Neutrality and its importance head over to endadget for some background.
What does this have to do with mobile phones? In the last three years, mobile Internet usage has grown dramatically. Twenty-Five percent of Americans own smartphones. That number will grow considerably in the next year. The initial success of the iPad indicates that mobile computing is going to grow in a big way. Americans use their phones to access data services, through tens of thousands of apps and their phones’ browsers. The carriers now have a green light to say, ‘If you want to access this service you’re going to pay us an additional fee to do so.’
Let’s consider some hypotheticals. Are you using the wildly popular Pandora app to stream music to your phone? Your carrier might develop a relationship that allows you to stream music from a preferred partner; if you’d like to use Pandora you could be hit with a per/megabyte fee. Are you streaming Netflix movies to your iPad using that 3G service you’re already paying AT&T or Verizon for? Sorry, streaming a movie really taxes wireless networks so that will cost you an additional fee. Maybe they won’t charge an additional fee; instead they’ll throttle back your speed, which will result in a lower quality stream. Streaming movies and music are good hypotheticals because these do seem like cases where the carriers might have a point. Streaming a movie is taxing. But we cannot allow the carriers to pick and choose what is appropriate and what isn’t appropriate. If you think they aren’t actively considering this very question take a look at this slide prepared by Openet and Allot:
That is the future the FCC’s wireless exemption allows. Quoting from Ars Technica:
Want Facebook? Get ready to pay—or not; as a further slide makes clear, one of the key business models here might be bundling connectivity with the app. In other words, the Facebook app would come with, say, unlimited data use while the YouTube app would not. Wireless carriers could charge Facebook a fee to provide this “free” data use to consumers.
We’ve been talking about content producers and their right to reach consumers without paying off the carriers. We say paying off because the fact is the carriers are already charging their consumers to access that content. The FCC ruling will allow them to grab money with both hands. Don’t pay, you cannot play. Now let’s consider mobile marketers. If the carriers shred the principle of Net Neutrality for content producers there is no doubt they will press mobile marketers.
The carriers already assert that they can pick and choose what marketing campaigns are permitted on their networks. If they don’t approve of your campaign they won’t provision your short code on their network. They’re actively discriminating against text message marketing campaigns. As mobile marketers embrace richer formats like video, promotional applications and Apple’ s iAd the carriers have been given the green light to setup a toll booth.
Yesterday’s ruling did not occur in a vacuum. In August, Verizon and Google proposed that Net Neutrality should not apply to the mobile web. The outcry against this proposal was fierce. Technology journalists criticized it. The Editors of The New York Times opined against it. Mobile marketers accept a very similar reality when it comes to text messaging. Some thought this summer’s backlash would lead the FCC to afford mobile broadband the protections it deserves. Perhaps in doing so the FCC would finally grant text messaging the common carrier non-discrimination protections it deserves. Instead we have yesterday’s FCC ruling. The lobbying of Google and Verizon, among others, has produced a ruling that is as dangerous as the most pessimistic among us had feared. MG Siegler of TechCrunch is all over this. First, an excerpt from the FCC’s statement:
Further, we recognize that there have been meaningful recent moves toward openness, including the introduction of open operating systems like Android. In addition, we anticipate soon seeing the effects on the market of the openness conditions we imposed on mobile providers that operate on upper 700 MHz C-Block spectrum, which includes Verizon Wireless, one of the largest mobile wireless carriers in the U.S.
In light of these considerations, we conclude it is appropriate to take measured steps at this time to protect the openness of the Internet when accessed through mobile broadband.
Now we’ll quote Mr. Siegler who rounds up the reactions from around the web:
While that may read like it’s a statement from Google or Verizon — actually, the entire section reads a lot like their joint proposal — it’s actually the FCC’s statement. Yes, that’s the FCC citing Android’s openness as a reason why they don’t need to impose net neutrality rules for mobile broadband.
Except wait. What the hell does an open operating system have anything to do with network access? Nilay Patel wonders this. John Gruber wonders this. Everyone should wonder this. It really does almost read as if they just copied what Google and Verizon laid out and forgot to remove the self-promotion.
I’ve made my thoughts on Android’s “openness” very clear. So have others. I believe the carriers are taking advantage of it and will continue to do so to the detriment of consumers. Now the FCC is using the “openness” label to screw us on net neutrality? Great.
Why doesn’t the FCC just say something like: “We just attended this great Google conference and heard that Android was open. Therefore, we see no need to regulate mobile broadband. It’s open, you see. That’s good for everyone. That means that everyone is going to do the right thing. An open operating system ensures there won’t be any throttling or filtering. Why? Because. Well. Open! Verizon agrees.”
As mobile marketers and as consumers we all should worry about yesterday’s ruling. Serious headwinds now stand in the way of further mobile innovation. Three years ago few could have imagined the broad array of services that would be available on our mobile phones. Going forward, developers of new services will stop and ask, will the carriers permit this service? Will they throttle it back if it grows popular? Will they require me to pay to reach consumers?
MG Siegler and the other writers quoted are rightfully alarmed. Yesterday’s ruling was the result of intense lobbying and numerous astroturfing campaigns. Search Google for Net Neutrality and you’re likely to see paid advertisements for groups that claim to represent the interests of consumers. Search for ‘net neutrality astroturfing’ and you’ll find links to writers and organizations who have outed ‘consumer advocacy’ groups staffed and funded by the wireless and broadband carriers.
Just this morning we received a heads up about a group called MyWireless.org. They bill themselves as ‘a nonpartisan non-profit advocacy organization, made up of wireless consumers, businesses and community leaders from around the country, supporting reasonable pro-consumer wireless policies.’ It turns out this group shares a Washington DC office address with CTIA, the international trade group of the telecommunication industry. If you’d like to make a press inquiry you can contact Brian Johnston, their Director of Communications & Federal Advocacy. Mr. Johnston also serves as the Director of Communications and Public Affairs for the CTIA.
We checked out their stance on Net Neutrality. That the carriers are astroturfing is a given; if they’re going to do so they should at least hire better writers:
The country’s big Internet giants are once again lobbying the U.S. Congress and the U.S. Federal Communications Commission (FCC) for dangerously misguided regulations that could negatively impact your wireless and Internet services.
These big online companies – and their blogosphere and celebrity supporters – want to stop wireless carriers from managing their wireless networks – especially wireless Internet. This would make the Internet companies lots of money, by shifting costs onto network providers like the wireless carriers. But it could cost consumers even more. That’s not fair, and it’s simply bad policy.
The proposed regulations could seriously degrade the quality of your wireless and Internet service (including the ability to make E9-1-1 emergency calls), opening it up to a host of quality and security problems – unwanted SPAM, viruses, adult content and more. Not to mention that you may end up paying higher bills for worse service!
If the FCC and Congress let flashy online companies and their billionaire founders write regulations that favor their businesses, American wireless and Internet consumers will ultimately lose money, choices, security and quality.
The carriers claim to be acting in the interests of consumers. It would be humorous if it wasn’t so dangerous.