Short Nerd Chief

While I was in Orlando (being frustrated by my inability to get an acceptable AT&T signal at the Happiest Place on Earth - 3G in most of Orange County, but EDGE inside the parks), Walt Mossberg stated the obvious - the restrictions of the cellphone oligopolies are anti-competitive and anti-consumer. Says Sir Walter:

That’s why I refer to the big cellphone carriers as the “Soviet ministries.” Like the old bureaucracies of communism, they sit athwart the market, breaking the link between the producers of goods and services and the people who use them.To some extent, they try to replace the market system, and, like the real Soviet ministries, they are a lousy substitute. They decide what phones can be used on their networks and what software and services can be offered on those phones. They require the hardware and software makers to tailor their products to meet the carriers’ specifications, not just so they work properly on the network, but so they promote the carriers’ brands and their various add-on services.

Let me be clear: Any company that spends billions to build and maintain a wireless network deserves to be paid for its use, and deserves to make a profit and a return for its shareholders. Not only that, but companies like Verizon Wireless or AT&T Inc. should be free to build or sell phones or software or services.

Mossberg’s right, of course - the current PC/internet model, in which you pay the keeper of the pipe for access and in return can do essentially whatever you want with the hardware you own, is far preferable to the current mobile telephony market, which is premised on walled gardens controlled by cellular providers.  All is not perfect in the PC world, either, as some internet providers attempt to restrict use of disruptive technologies (Comcast’s treatment of BitTorrent traffic being the most recent example).  The PC world is not completely free of walled gardens, either - you can’t easily play music purchased from the iTunes Music Store on a Sansa MP3 player, or install Leopard on non-Apple hardware - but there is definitely more freedom.

And no one but the toadies of the CTIA (I’m looking at you, Steve Largent) believes that locking phones, crippling functionality, restricting software and services or requiring onerous contracts and early-termination fees has anything to do with the stability of the network.  It’s all about protecting the revenue streams of the carriers.  Using a Windows Mobile phone has allowed me some additional flexibility, but here are some issues I’ve had lately:

• There’s still no WM6 update for the Blackjack, months after Microsoft released it and months after T-Mobile released an upgrade for the Dash. In an ideal world, MS would release the software and consumers could install it, but WM installations are so customized by handset makers at the behest of the carriers that this isn’t possible.  AT&T just announced the Blackjack II, which includes WM6. Why release a free software upgrade when they can get $150 for a new phone?
• AT&T locked down Java on the Blackjack for no good reason. I worked around this issue by installing a different Java interpreter, but with the base installation, the Opera Mini and Gmail for Mobile applications are useless.  Restricting use of the open Java platform allows AT&T to steer customers to the overpriced programs in the AT&T Mall.
• AT&T requires handset manufacturers to remove GPS and Wi-Fi functionality from their phones, in order to get the monthly fees associated with Telenav and data access, respectively.

So Mossberg is right. The carriers suck, and consumers are harmed by their actions (the red herring argument about subsidized phones notwithstanding). Where I think he’s wrong is his call for government action.  Congress won’t fix this, and given the lobbying clout of AT&T and Verizon, any statute would just make it worse.  The 700 MHz spectrum auction rules are a start, however.  And eventually, the market will address the issue.  Mossberg himself sees this, and refers to unspecified disruptive technologies. It wasn’t long ago that you couldn’t access the internet from a cell phone. Now you can.  Verizon long restricted “side-loading” of MP3s in an attempt to protect revenues from its own music store. Lack of consumer interest led to a loosening of the reins by Verizon.

The obvious success of the Carterfone decision in the 1970s makes government intervention attractive now, but beware good intentioned governments.