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Kick big telecom companies in the butt with an open access spectrumposted by Joe on July 18th, 2007 - 1:00 pm | 700 MHz spectrum
Imagine you just bought a state-of-the-art 60-inch HDTV. It’s so neat and so big and so awesome. The delivery people hardly have the thing installed before you’re on the phone with your cable company, instructing them to come install service so you can get the most out of your TV. You want it all: sports, movies, heck, even the news. It is such a perfect device that you feel you now can’t live without it — and even wonder how you lived life before you had it. So for months and months, you bask in television’s arm glowing warming glow.
A few months into your service, though, you find your TV company wanting. The signal isn’t all it’s cracked up to be, there are only, like, five HD channels, and the Internet you have on top of the cable bill is slow and constantly disconnects you. The straw has broken the camel’s back. This is America, and in America if something sucks, you’re supposed to be able to get your money back. Or, at the very lest, ditch the sucky service and get a better one.
So you call your cable company and cancel, and then call a satellite company to install service so that you can go back to using your uber-awesome HDTV. However, it doesn’t go so smoothly with the satellite representative. Seems that your TV is locked into service with your cable company.
What? You immediately lose your cool, spouting off to the representative, who only tells you that he is sorry, but they simply cannot activate service unless you buy a new TV from them. Since you just spent $3,000 on your TV, you’re not about to do that, so you tell the rep where he can stick that new TV and hang up. But now you’re in a worse position. You have this awesome TV, but no service. And your options are severely limited.
You could go crawling back to the cable company, but why on Earth would you do that? Didn’t you just ditch them because of their crappy service? So going back to them is a last resort option. But what else can you do? You can’t use the TV on any other service, so to switch you’d have to buy a new one. Once again, it makes little sense to do that after recently purchasing a $3,000 one.
That’s the industry though. And ‘dems the breaks.
Does this make sense?
Do you see how absurd that scenario is? Can you ever imagine that being the case with the cable TV industry? Of course not. It’s ridiculous to have expensive devices locked into one company’s service. In fact, you can consider it downright un-American. We’re supposed to have choices, and by locking a device to a particular carrier, we’re reduced to having one choice, lest we shell out even more money to a company that might not be any better.
Unfortunately, this is the way the cell phone industry operates. We’re not sure why there haven’t been any laws enacted that bar this practice, but then we think back to when AT&T forced customers to lease phones rather than buy them, which ended up costing them around 10 times the cost of the phone, depending on how long they had it. And, of course, no third party phones could be attached to the network.
This did change eventually with the Carterfone decision in 1968. However, the “leased phones only” policy lasted since Western Electric’s relationship with AT&T began, which was back in, geeze, 1881.
It’s shocking, then, that this phone locking policy stays in place. Even more shockingly, it was only deemed legal in November of 2006. The difference, as the telecom companies will tell you, is that you own the phone, whereas the phones were leased in the AT&T era. But what good is owning a phone if you can’t do what you want with it? If you leave your current provider, it’s next to useless.
Open access is the cure
All of this is leads up to one point: in order to combat the policy of companies locking phones, the impending 700 MHz spectrum auction must be reserved, at least in part but ideally in whole, for open access devices. This is seemingly the only way to evoke change in the wireless industry. And it’s becoming more and more evident that change is needed.
By enforcing open access standards, new innovations can be made. Now, if you listen to the likes of Zippy (Steven Zipperstein, general counsel and vice president of Verizon Wireless), you’ll think that there is no need for open access because “no one has identified that the current system is failing customers.” Uh, I think we just identify how the system is failing customers. They’re not getting full access to a device that they purchased, no matter what the subsidy. They handed a clerk money, they signed on a dotted line, clerk gave them the phone; that’s a complete transaction, yet you’re not getting complete service.
(And don’t even get us started on Verizon’s universal operating program. That thing is so damn restrictive. And it looks dumb. We’re appalled that handset makers haven’t officially protested this.)
Zippy would also have you believe that there is ample competition in the wireless industry, and that open access would actually quell innovation, rather than accelerate it. The reasoning: major carriers have to pump out new and better products all the time to stay ahead of their own competition. That’s all fine and good, but what’s to keep Verizon and AT&T from having a hush-hush agreement to hold back certain technologies? It happens in the fuel industry all the time, with the companies buying up patents for devices that would improve fuel economy. A little collusion never hurt anyone, right? [/sarcasm]
Innovation = progress = competition
We don’t know where the big carriers get off saying that open access will reduce innovation. Hello! Tech companies are openly complaining that they can’t get their devices in the hands of the major carriers. So let’s see what they’re made of. The open access spectrum means that they can test and make available any device that complies with FCC regulations.
Could it be that, once again, the major carriers are trying to stifle competition so that this whole technology boom doesn’t get out of hand? They surely would have an interest in doing that. With open access, we might get 100 iPhone clones in a year. That would be bad for AT&T.
You see, the faster technology develops, the more money the major carriers have to pay for said technology. We’re alleging that they’re doing everything in their power to quell that competition so they can release devices at their own pace, thus saving them money. WIth open access, they’d be forced to buy the latest and greatest handset, which would probably be replaced in a month or so by something newer and better. Such is the nature of competition and open access.
It’s not just about the handsets
Remember, reserving an open spectrum doesn’t just mean that more handsets will be available. It also means that more third-party applications will be available for those handsets. These applications could potentially change the way we use our phones. But, see, most major carriers restrict third party applications — Verizon most notably — and that simply stifles innovation.
Verizon may tell you to look at the landscape for the answer. There aren’t a glut of high-quality third party applications, so you’re not missing much, they’ll tell you. Well, there’s a reason for there not being much: there’s no place to use these applications. So why develop them? Yes, there is a certain admiration for someone who develops applications which he is restricted to use, but we can’t blame anyone who has ceased trying to break down Verizon’s barriers.
Think about this, too: if there’s not much out there that we’re missing, what would Verizon have to lose by opening up phones to third party apps? They’ll tell you that viruses are a problem, but they can contain that kind of problem. Hey, we’re all at a risk for viruses when we surf the ‘net every day, but you don’t see Internet providers telling us we need a new computer when we use their service (a computer on which we can only run their applications).
A new mobile network operator
That’s what we’re really looking for here: another company to compete with Verizon, AT&T, Sprint, and T-Mobile. The latter two are far less reaching than the former two, so not only are we in need of another network operator, but we’re in need of a major one. The 700 MHz spectrum would be an excellent starting point for such a network.
If that carrier was open access, it would be all the better. You could then get the same quality service you get from AT&T or Verizon (actually, hopefully a ton better), but you’d be free to use any device on the network. Imagine going to your local mall and instead of choosing from whatever AT&T or Verizon is selling, you can choose from among thousands of phones, developed by hundreds of independent tech companies. Surely you’d find something you like there.
We’d like to share a quick personal anecdote to support this. Our girlfriend is an independent Verizon agent. She works in a ritzy town where kids come in once a month to get a new phone. However, many times people walk in with the intention of buying, but walk out empty handed because the phones are either too expensive or not what they’re looking for.
This is another problem solved by open access. Don’t like what you find somewhere? Well, just head to the next store and see what they have. It doesn’t matter that they’re Company X and you’re with Company Y; it’s all open-access, so you can use any device that you can purchase. And if you don’t like Company Y anymore, you can switch to Company X and use whatever phone you were using in the first place.
End of the contract?
Open access would also likely mean a move towards prepaid, much like they have in Europe. Once you buy a phone, it’s yours completely. You can switch it from carrier to carrier. But if you have a two-year contract, that doesn’t do you much good, does it?
By having open access and unlocked phones, people would be naturally drawn to prepaid because they could test the service for themselves. It’s not practical to do that now, because to switch prepaid providers you’d have to buy a new phone, too. That makes little sense.
However, with open access, your phone is your phone is your phone, and you can take it to any carrier you want. So if Net10 screws you over, you can take the phone you bought from them and activate it with MetroPCS. And if you didn’t like them, you could cancel after a month and go sign up with Liberty. And so on and so on.
It boils down to big vs. small
Look, we don’t try to be some hippie who runs around saying that corporations are taking over. What corporations? And what are they taking over? We’ve always addressed that notion with a grain of salt. However, we feel much differently about this issue.
The major wireless carriers have a vested interest in locked phones. It affords them a level of control over not only the subscriber base, but the cost of the phones. Open access would be a nightmare for them, because they’d lose a considerable amount of power.
For example, if you have purchased a new phone recently, it likely has a GPS unit in it. But guess what? You can’t go out and purchase a third-party GPS application. You have to use that of your carrier. Did someone just develop a revamped Tetris with tons of cool new ways to combine blocks? Too bad; if they don’t offer it through your provider, you’re SOL.
Telecommunications companies, as currently constituted, don’t want power, they need it. They’ve painted themselves into a corner with many of these policies, and to reverse the policies would create mayhem for them. No longer could they control the flow of phones and the pace of technology. Open access would allow for Joe Schmoe in his basement to create a cell phone and test it. If it works, he could then patent it and sell it to interested parties.
What would that mean for Big Telecom? It would mean that they could no longer force you to buy Model D. Models XU, ID, and OI would be available, too, giving you a choice.
Yes, it would probably mean the end of phone subsidies. But you know what? Sometimes you have to make a sacrifice for progress. In fact, most of the time you have to. Okay, so you end up paying full price for a phone. Big deal. It’s a much better value if you can use that phone on any network.
We see this becoming a big issue as this auction nears. “Open access means no more phone subsidies.” Since people react when something affects their wallets, they’ll probably show resistance to open access. And that could mean yet another victory for major telecom companies. However, a victory for them means a loss in the long run for consumers.
It’s all about the big picture. Open access might get off to a staggering start, but over time it will come to benefit consumers. We just hope that people realize this. The fear, however, is that like much everything else, people will succumb to instant gratification.