This week in etilities: mobile phone practices are under close scrutiny in the public arena, AT&T tries to catch up to Apple, and lagging US broadband penetration is underlined.

Mobile phone practices under scrutiny

Competition between providers benefits consumers in the form of lower prices, better service, and more features. Unsurprisingly, wireless carriers tend to do whatever they can to either land exclusive deals or be on a level playing field with each other. The FCC, at the request of four US senators, is launching a probe investigating the AT&T / iPhone exclusivity deal while the Senate Judiciary Committee is exploring whether Verizon, AT&T, Sprint, and T-Mobile are colluding to set the price of SMS messages outrageously high. AT&T and Verizon claim that this is not the case.

AT&T is playing catch-up with the iPhone 3GS

The partnership between AT&T and Apple is proving quite a headache for the wireless carrier indeed. There has been much coverage about how the carrier is not yet ready to handle some of the new features of the iPhone 3GS, most notably SMS and Tethering. Unsurprisingly, a lot of the information out there is little more than hearsay. AT&T denied rumors that they were going to offer tethering for $55 a month and announced that multimedia messaging (MMS) capability will be included as part of the existing SMS bundles at no additional cost.

As for the iPhone 3GS early upgrade controversy, AT&T has announced that more 3G owners who are currently locked mid-contract will be eligible for the upgrade price of $199 for the 16GB model and $299 for the 32GB model as opposed to $399 and $499, respectively. There are several criteria for determining eligibility, including whether you’re a big spender with AT&T, and not everyone will benefit.

US broadband penetration needs a lot of work

Ars Technica published an article last week dicussing a topic dear to our hearts: broadband penetration. According to the survey, which measures per household broadband penetration rather than per capita penetration, the US ranks 20th, with 60% of households connected by broadband as opposed to 95% in South Korea, the top country on that list.
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An Oregon Senator has escalated the rhetoric about net-neturality rules and specifically the lack of clarity about them as the internet continues to grow.  The culprit, according to Senator Ron Wyden, is the Federal Communications Commission and its complete lack of focus on the issue.  Comcast (Etilities Forum) and other providers have had issues with the FCC’s rulings and authority to enforce poorly defined rules in the past.  As the pressure steps up, we hope that the FCC will provide providers and consumers alike additional clarity on net-neutrality concepts, rules and enforcement authority.

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It seems that Comcast (Etilities Forum)’s troubles with the FCC over net neutrality are not over. Although the matter of its network management practices has been settled, there is now an ongoing debate on whether Comcast favors its own VOIP offering over similar services provided by companies like Skype (Etilities Forum) and Vonage (Etilities Forum).

The issue here is that VOIP communications typically goes over your internet pipe just like any other IP-based traffic. Therefore, when the network is very congested, your calls may sound choppy. If you have Comcast as a VOIP provider, however, network congestion will not necessarily result in a problem with your calls since they operate on a different pipe, dedicated to voice.

The FCC argues that given that both pipes are IP-based, this consitutes preferential treatment by the provider for its own VOIP service over others. Comcast refutes this by saying that they are two seperate services, one being only for its own VOIP and the other being for the rest of the internet world. Comcast justifies this in part by saying that you can sign up for their voice service without signing up for their internet service and that they are therefore indeed seperate pipes.

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Given the infamous head-to-head in between Comcast (Etilities Forum) and the FCC last year over the practice of bandwidth throttling based on traffic type, one might be surprised to hear that Cox Communications (Etilities Forum) is going down the very same road. Indeed the company announced on Tuesday a “Congestion Management” program that will essentially divide all traffic into two lanes: time-sensitive and non-time-sensitive. If you are using your bandwidth for non-time-sensitive transmissions, then Cox will slow them down. Time-sensitive traffic includes Web, Voip, Email, IM, Streaming and Games, while non-time-sensitive includes P2P (surprise surprise), Network Storage, FTP and Software Updates. Cox will begin experimenting this new policy in Kansas and Arkansas in February.

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Shortly after the FCC announced in August its plan for free wireless internet, it was expected that it would receive negative feedback from existing providers.  However, few may have anticipated that roadblocks would come from the very administration that appointed the FCC’s leaders.  Commerce Secretary Carlos Gutierrez sent a letter to the commission on December 10th expressing his disapproval of the project.  The full impact of the message was still uncertain at the time.  The FCC was scheduled to vote on a number of propositions, including this one, on December 18th.  However, in a further development the FCC cancelled the 18th’s Open Commission Meeting on Friday.

This could well be the last nail in this project’s coffin, as the Dec 18 meeting was one of the last meetings that appointee Kevin Martin was to chair.  With a new administration to take power in just 35 days, the fate of the free broadband project is uncertain, to say the least.  That being said, given Obama’s affinity for technology issues, it is entirely possible that the newly-appointed FCC officers will attempt to complete the project.  But for now, it is too late for free broadband to be voted on by this commission, and too early to guess what the next administration will do.  In short, don’t get your hopes up.

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I’ve struggled for some time thinking through how much regulatory oversight the government should have over telecommunications companies.  This is of course not an easy question to answer as there are both sides of the story to consider.

On the one hand, an ardent capitalist would argue for a lack of governmental oversight on the industry to foster a more pure free-market environment.  The very concept of free market is that although never in a perfect state, the inefficiencies of companies within a given market drives innovation across the entire market space, thereby driving the industry towards improved efficiencies.  Companies that can’t keep up will go out of business and soon be replaced by new ones that can.  Too much government influence can stifle this innovation and limit potential benefits to customers.

On the other hand, particularly as it relates to the consumer business, large companies can collude against the best interest of individual customers.  Therefore, a certain level of governmental regulation can be beneficial to the consumer because it will provide them with visibility into how the companies operate.  Specifically, consumers can more easily learn how well those companies keep promises to their clients.  Such regulation can also prevent collusion between large companies against the interest of the buyer.

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Just a quick update to a previous story about Comcast (Etilities Forum) and its network management practices.  Shortly before the weekend, the Federal Communications Commission (FCC) issued a press release (warning: PDF link) explaining its order that Comcast end their discriminatory network management practices.  It goes onto explain that “Comcast has unduly interfered with Internet users’ right to access the lawful Internet content and to use the applications of their choice.”  In its fairly detailed released, the FCC highlighted some key points including that the apparently anti-competitive practices related to blocking peer-to-peer network traffic, while offering a competing offering through their Video-on-Demand (VOD) service.

The narrow 3-2 vote did not lead to a fine for the company but rather to an order for Comcast to cease their current practices and provide a plan for future compliance.  In Comcast’s reply, they note their disagreement with the findings and highlighted the impact that this ban may have on their clients.  Several other broadband providers issued releases in reaction to the ruling including Verizon (Etilities Forum) who made a statement calling on the telecommunications industry to increase their transparency while also stating that further Internet-governing rules from the FCC and the Federal Trade Commission (FTC) “are not needed.”

Certainly, the discussion surrounding the practices of “traffic shaping” or “network management” will continue to become more and more relevant to the average home user, whose needs for fair access to Internet-based content will only increase.

©2008-2009, Gallop Services, Inc. All rights reserved.