Apple's lack of iPhone tethering: Can 'net neutrality' render it illegal?

The principal argument made by opponents of "net neutrality" regulation, such as what the US Federal Communications Commission formally proposed today, is that government need not extend the hand of regulation to an industry that has arguably flourished in the absence of regulation. Almost like a Microsoft "embrace and extend" policy, opponents argue, government can conceivably leverage its advantages on one platform to extend itself to another, as FCC Chairman Julius Genachowski has actually admitted he's doing with respect to using telecommunications law to regulate Internet service -- an area that was, up until 2004, outside the FCC's purview.

The year 2004 is when then-Chairman Michael Powell put forth his "Four Freedoms" for Internet users which, though not actually law, were certainly cited by legislators in pushing net neutrality legislation (none of which actually passed). The third freedom, as Powell put it then, was this: "Consumers should be permitted to attach any devices they choose to the connection in their homes." Today's FCC refers to this as the "any-device rule."

In this afternoon's release of its Notice of Proposed Rule-making (PDF available here) -- an opportunity for the public to weigh in before it issues its decision -- the FCC put forth several questions to test public sentiment about the extent to which it should regulate businesses to conform with the "any-device rule." In other words, once the principle is embraced as a "rule," just how much elasticity will the public be willing to give it?

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"In this context, we ask how, in what time frames or phases, and to what extent the 'any device' rule should apply to mobile wireless broadband Internet access," the Notice reads. "In particular, we seek concrete data and specific examples that will inform our consideration of the issue. Should we require a mobile broadband Internet access service provider to allow users to attach any device with a compatible air interface directly to its network? If so, what procedures may providers use to prevent harm to the network? Who should ensure that devices are non-harmful: the providers themselves, third-party organizations, industry associations/laboratories, or the Commission? Should we allow providers to satisfy the device-attachment principle by providing wireless modems or SIM cards that could be easily inserted into end-user devices?"

It's that third question -- the one that begins, "Who should ensure...?" -- that is the heart of this probe. There are numerous public grievances about the way the entire wireless industry has handled broadband rollout in the US up to now, but is the public willing to accept the government -- or more specifically, an agency of the executive branch of government -- as the final arbiter in addressing those grievances?

One hot-button issue for many wireless users has been how certain carriers and/or phone manufacturers prohibit tethering, the use of USB or Bluetooth connections to let their users' computers borrow the broadband connections from their smartphones. In perhaps the most extensive test of the public's willingness to tolerate government regulation in the name of net neutrality, today's FCC proposal asks the public whether the absence of tethering capability be rendered illegal -- a situation which, unless existing phones are "grandfathered" in, would render Apple's iPhone subject to fines and penalties.

As the Notice reads, "Should we require providers to allow 'tethering' as a form of device interconnection? If we required wireless providers to permit tethering, what impact would that have on wireless network congestion, and what reasonable network management measures should providers be allowed to take to ensure that their networks can support tethering? Alternatively, should a tethering requirement be sufficient to satisfy the 'any device' requirement in the wireless context?"

And then the Notice proceeds to answer its own question: If the "any device rule" is enacted as a "Rule" with a capital "R," customers must be enabled to utilize any device they choose to connect with a wireless broadband network, as long as it did not harm the network. Not any smartphone, but any device -- and that would mean a laptop tethered to a smartphone. However, the Rule would not prohibit carriers from locking customers into contracts in exchange for purchasing subsidized phones at lower prices.

It was Sen. John Kerry (D - Mass.) who first took a stand against tethering prohibition, citing the iPhone specifically in hearings before Congress. Sen. Kerry grouped this and other wireless service policies together, as innovation-stifling practices that emerge as a result of exclusivity contracts between phone manufacturers like Apple, and wireless carriers like AT&T. In a June 15 letter to then-FCC Acting Chairman Michael Copps, Kerry asked the Commission to consider regulations that would prohibit carriers from using exclusivity as an excuse for denying service to customers.

But in its Notice this morning, the FCC stated explicitly that exclusivity -- at least in this round -- will not be considered as part of net neutrality regulation. "We do not view the open Internet rules proposed here as directly related to handset exclusivity, and we do not intend to address that issue in this proceeding, but rather will consider it separately," the Notice reads.

Yet the very next paragraph touched on all of Kerry's hot-buttons anyway:
"Application of a nondiscrimination principle raises important questions in wireless, given the provision of voice, SMS/MMS, and Internet service through a single device, typically sold by the same network operator. We seek comment on how, in what time frames or phases, and to what extent the prohibition on discrimination, subject to reasonable network management, should be administered for wireless services, including specific examples and data regarding practices."

Interested parties are asked to reply to the proposed rules by next January 14, and to provide any rebuttals to such replies by March 5.

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