Wireless Net Neutrality

Transmitter_tower_in_SpainWhile the FCC has not yet found a set of network neutrality rules that will stand up to a court challenge, all of the attempts they have made so far were aimed at net neutrality for landline data networks. But lately the question has been raised if the same network neutrality concepts should also be applied to wireless data.

There are several reasons why this might now make sense. There are now a substantial number of people whose only connectivity is through their wireless devices. Further, I’ve seen estimates that by sometime next year the number of data transactions from cell phones will exceed transactions from landline sources. It’s obvious that wireless data is now a major component of the general Internet and not some specialized niche like it once was. Landline data will continue to carry the vast majority of web video, but it appears that smartphones are carrying a lot of everything else.

This question has come more to the forefront lately due to some of the actions taken by cell phone providers. For example, Verizon Wireless recently announced that it would be throttling the speeds of customers who are still on its unlimited data plans on 4G LTE networks. The Verizon announcement said that starting October 1 at congested cell sites that Verizon would be throttling the speeds for unlimited plan data customers in favor of customers who buy data by the gigabyte.

This announcement seems to have angered Tom Wheeler, the FCC Chairman who sent a letter to Verizon warning them that this better be done for network management purposes and not as a play to enhance their revenues. Verizon has been trying for years to drive customers from older unlimited data plans and this just seems like another way to make life miserable for those customers to convince them to convert to more costly data plans.

The CEO of Verizon Wireless probably added fuel to the fire by comments he made at CTIA. He said that the wireless industry is still in its ‘infancy’ and needs a light regulatory touch. That’s a little hard to buy in a country where there are now as many active cell phones as there are people. He went on to say that wireless companies should be allowed to determine how they generate revenue and not regulators. He said “If a company chooses to pay us for priority access on our network, that is not a regulatory decision. It’s a business decision.”

And cell phone providers are now starting to offer blatant priority access plans. Virgin Mobile, a subsidiary of Sprint just announced plans that let customers use social media without having it count against their data plans. For example, a customer can buy a data plan for $12 per month that gives them unlimited access to any one service consisting of Facebook, Pinterest, Instagram or Twitter. Or for $10 more they can subscribe to all four. And for $5 per month extra they can add one streaming music source.

These are exactly the kinds of plans that were predicted when the courts rejected network neutrality. I read many predictions that service providers would begin giving priority to some content providers over others. To some, the Virgin Mobile plan might sound like an expansion of choice, but the fear is that customers are being herded towards a handful of big-money web services at the expense of the rest of the web.

While the Virgin Mobile plan sounds like a way for a customer to save money, in the long run going to a la carte services is going to allow wireless carriers to charge more for data than they do today. One of the concerns about lack of net neutrality is that plans like the Virgin one will kill creativity on the web by only given access to content from a handful of large providers. A customer who spends most of their time on one service like Facebook might save money with this kind of plan. But this kind of plan restricts people from trying new things on the web and will drive users towards those services that are willing to pay the wireless carriers for priority access. These plans are just starting to appear on cellphones, but how long will it be before they appear at the big ISPs?