Net Neutrality Battle Spills Into Wireless World

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A battle is brewing between wireless carriers and the feds--and caught in the crossfire are the smartphones, netbooks, and bandwidth-hungry mobile applications that users are increasingly enjoying. Both camps claim to be doing what's right for consumers: One side says that it is heading off a mobile meltdown by enforcing rules on the types of devices and services that can access networks, while the other says that giving users unfettered access to the wireless Web should be the priority.

Depending on which side wins, if you're an AT&T Mobility customer, in the future you might be prohibited from visiting certain Web sites or using competing voice and television services on your iPhone or on a 3G-enabled netbook. Or, in an alternate scenario, the Federal Communications Commission might be able to force Verizon Wireless to allow its customers to stress its cellular network through downloads of mammoth files via BitTorrent.

The fight, in a nutshell, is about who controls the wireless pipes of tomorrow, and whether emerging wireless services will bloom or wither as a result. In other words, the conflict concerns network neutrality--the idea that carriers must give equal treatment to all uses of the Internet--as it might be applied to the wireless industry. And just as network neutrality has caused a ruckus this week in Washington with a bevy of tech firms calling for stronger neutrality measures, in the wireless industry the debate is heating up.

Wireless Comes With Warnings

Illustration: Jeffrey Pelo
The problem, wireless providers such as AT&T say, is that wireless bandwidth is a finite resource. That has forced AT&T and other carriers to restrict bandwidth-hungry services--such as a mobile version of the video-streaming service for Slingbox--from running on their networks. AT&T says that if everyone could stream SlingPlayer data over AT&T's 3G network, the network would grind to a halt. Currently, users can run SlingPlayer, which streams content from a Slingbox device, only over Wi-Fi. 3G is off-limits.

AT&T says that it wants to keep a tight grip on its biggest bandwidth hogs. At the CTIA wireless-industry trade show earlier this month, AT&T Mobility president and chief executive officer Ralph de la Vega remarked that AT&T needs to manage its network's most-intensive users, alluding to the iPhone subscriber base.

De la Vega claims AT&T research shows that 3 percent of AT&T's smartphone customers (likely iPhone owners) use 40 percent of all the smartphone data on its network. He estimates that this 3 percent consumes 13 times the data of "the average smartphone customer" yet represents less than 1 percent of AT&T's total postpaid customer base. Is this disproportionate usage a harbinger of problems to come for other wireless carriers?

AT&T, Sprint, and Verizon all deal with bandwidth hogs by limiting the total amount of data that a customer can use each month to around 5GB for the 3G data service offered to laptop users. AT&T doesn't cap data usage for iPhone customers. If you go beyond the 5GB cap, the carriers either throttle your network speeds or charge overage fees. What's less clear is how they manage specific uses of their mobile networks before customers reach that bandwidth limit.

Things are even less straightforward when it comes to services that could be competitive with wireless carriers. "The number one concern any telecom has is about seeing their margins get eroded by new entrants with a different cost structure," says Joshua King, a wireless-industry veteran who has worked for AT&T Wireless and Clearwire. That new entrant might be a service like Google Voice or Skype, piggybacking on AT&T's own network. And the pricing for Google Voice or Skype is, in many cases, free.

Recently, with Apple's rejection of Google Voice on the iPhone, AT&T has found itself at the center of this issue. Though Apple has taken complete responsibility for rejecting the app, it's not hard to see how Google Voice's free text messaging and cheap international calls could ruffle AT&T's feathers. AT&T has shown a change of heart on Skype and other VoIP services, allowing them to run over 3G on the iPhone in exchange for AT&T talk-time voice minutes--but even so, using Skype over 3G as an alternative to traditional cell phone minutes isn't possible. All of this could change in an open wireless network, says King, who sees a proliferation of VoIP services in an age of regulated wireless Internet.

Is AT&T really worried about bandwidth, or is it just trying to keep a lid on competitive services? That remains the subject of debate.

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