Mobile Malcontent
( <a href="http://www.flickr.com/photos/jonjon_2k8/340305918/" target="_blank">JonJon2k8</a>/flickr
)
Transcript
BROOKE GLADSTONE:
In the U.S. today there are two hundred million cell phone subscribers. The wireless industry has grown up in the last decade, so it’s a good time to ask, how’s it doing? Columbia law professor Tim Wu says, not so good. Yes, we have service at competitive prices, but we could have so much more.
We don’t, says Wu, because the big wireless carriers, Verizon, Cingular, AT&T, Sprint Nextel and T-Mobile have a stranglehold on product design. In a paper he presented to the Federal Trade Commission, Wu details many of the improvements we could enjoy if the wireless carriers let us.
For example, we could more easily transfer photos or browse the Net, or even keep track of how much we talk. We can’t, because the carriers are engaged in what Wu calls “feature crippling.”
PROFESSOR WU:
There’s often cases where a phone is technologically capable of doing quite a bit, but carriers, because of their business model, a fear of losing revenue or potential fear of losing control, won’t let the feature be on the telephone and will force the equipment manufacturers not to allow the telephone to do something. That’s crippling.
BROOKE GLADSTONE:
And you give us a couple of examples in your paper. I have to say, when I was reading through it, I got angrier and angrier, so let’s go through a couple.
The first, call timers on telephones--what are they, are why don’t we have them?
PROFESSOR WU:
Well, you know, some of the device manufacturers think it would be handy to have something that keeps track of how much time you’ve used per month, you know, per day. You can monitor your own usage.
Phone carriers have acted to prevent consumers from having their own records of how long they’ve been speaking on their telephones.
It’s a little bit like, you know, when you’re in a casino in Las Vegas, they don’t really want you to know how long you’ve been there, and so there’s been a lot of crippling, or disabling, of phone timers for the full capabilities they could have.
BROOKE GLADSTONE:
And why don’t they want us to know?
PROFESSOR WU:
Well, there’s I guess the possibility you could generate an independent record of your billing, and you could compare that with he bill you’re sent, and you could say that, you know, I actually didn’t talk this much on my phone, and you know, why would a carrier want that?
BROOKE GLADSTONE:
That’s why I got so angry. And you also talked about access to WiFi and web browsers and GPS and Bluetooth technology.
PROFESSOR WU:
Ah! Bluetooth was promised to make it easy for phones to communicate with other things, computers, printers. It’s really hard, believe it or not, just to get your cell phone to talk to your computer, for something as simple as just backing up your address book, so if you lose your phone, you’ve got a backup.
Under a lot of carriers’ constructions today, Bluetooth is almost completely crippled. You can’t send music back and forth. It’s very hard to send photos from your phone to your, all, again, because there’s a fear of losing control and there’s a fear of crippling some potential business model that revolves around charging you to do something with your phone.
BROOKE GLADSTONE:
I would assume that a lot of these technological advances are being hatched at the places where they make phones--Motorola, Nokia. Why aren’t they putting some pressure on the carriers?
PROFESSOR WU:
You know, they try, but they’re sort of living in a state of fear, because they depend on being sold by the carriers. You know, the carriers have an almost complete grip on the retailing of phones in this country. They’re responsible for over 90 per cent of the retailing of phones, and so, you know, people actually did talk to me secretly [LAUGHS].
I’ll quote a developer. “The carriers have all the power in this area. What they say goes.”
BROOKE GLADSTONE:
Now, you say that in the world of wired phones, the policies of these carriers would be, in some cases, not just outrageous but possibly illegal. So could you take us back to the era before the mobile phone, when a similar battle was being fought over land lines?
PROFESSOR WU:
Sure. So in the 1950s, 1960s, the Bell Company would not allow you to hook up anything to their phone network. You know, you had to use a Bell phone and only a Bell phone. There was no such thing as consumers hooking up an answering machine, a Mickey Mouse telephone. This was not allowed.
There was a large revolution in the late ‘60s, along with other revolutions. [LAUGHS] The outcome of this consumer revolution was something called, technically, the Carter phone Rule, but more clearly, as a consumer’s right to attach anything they want to their phone network, whether it’s a strange phone, whether, more importantly, it’s a modem, whether it’s an answering machine.
And consumers don’t have that right, in the wireless world. You don’t have the same consumer right to attach. It may sound very technical [LAUGHS], but that consumer right to attach modems in the 1970s and ‘80s is what led to the birth of the entire Internet in the first place.
But I’m suggesting that if consumers have that right to use their mobile service for what they want to use it for, we will see a similar revolution and a similar blossoming that we saw in the Internet in the 1990s.
BROOKE GLADSTONE:
Even if you’re not technically inclined, you can see the limitations of this lockdown. For instance, if you buy a phone that you really like and you change carriers, your phone is locked up. You have to buy a new phone. You can’t take it with you, and you wrote in your paper that it would be very easy to unlock these phones. They’re simply not permitted to.
And that leads to a question that I think a lot of consumers have had about Apple’s much bally-hooed iPhone. You can’t use it, unless you subscribe to Cingular, an AT&T service, right?
PROFESSOR WU:
I think that’s right, and I think it was a surprise to a lot of people. You know, you think Apple had this great new product and, you know, it turns out it’s locked to Cingular’s network.
Now that may change. I’m hoping the consumer pressure will lead to a world where you see your phone as something that you own [LAUGHS], not the carrier. You own. I mean, you pay for it, and then you can bring it and say, listen, I’ve got this great phone, or this great device, and I want to use it.
BROOKE GLADSTONE:
Now, back before the Carter phone decision, AT&T was saying if you don’t have a unified system, it just won’t work. And that system is AT&T.
Now the carriers are saying, you don’t need to be re-regulating us, you don’t need to be telling us what to do. There’s so much competition in the mobile phone market that this situation will correct itself. Well, isn’t there? And won’t it?
PROFESSOR WU:
I think there’s always a role for consumer rights, no matter how competitive an industry is, and the truth is, it’s not a truly competitive industry in any case.
The spectrum that they depend upon is government property, which they lease. There’s really only four major players who have the tens of billions of dollars required to be in this market in the first place.
We’re not talking about the vodka market. We’re not talking about blue jeans. We’re talking about a government supervised spectrum-based oligopoly, which is doing things that are not good for consumers, and I think, you know, to say, well, we’ve got competition, forget about it, is just not an answer to the things we’ve identified in this study.
BROOKE GLADSTONE:
But you’ve also said that comprehensive legislation should only be used as a last resort, so what do you recommend in the short term?
PROFESSOR WU:
The most important power is consumer pressure. The industry likes to say everything is competitive, everything’s fine. You know, they love to keep things as they are. They like the current model.
The only thing that pushes them, besides government, is consumer knowledge, consumer pressure, and if people get more and want more out of their cell phones, they will eventually get more. That’s the most powerful force out here, is the force of the educated consumer.
BROOKE GLADSTONE:
Tim, thanks so much.
PROFESSOR WU:
It’s always a pleasure.
BROOKE GLADSTONE:
Tim Wu is a professor at Columbia Law School. We’ll link to his paper, Wireless Net Neutrality, from our site onthemedia.org.
So we just heard Tim say that phone developers have told him, off the record, that they’re hamstrung by wireless carriers who shun certain kinds of upgrades. So I put it to Chris Guttman McCabe, the vice-president of regulatory affairs for CTIA, The Wireless Association.
CHRIS GUTTMAN McCABE:
You know, I haven’t seen any of those statements on the record. We haven’t seen any complaints like that, but what I would say is that we have an industry where there are constantly new carriers entering the market. So in addition to the four large carriers, we just had three other carriers spend several billion dollars to enter a market that is competitive.
We just saw a new handset manufacturer, Apple, move into this space, so I would challenge, you know, you or your audience to find an industry that is more competitive, particularly in the telecommunications space, than what we have here in the wireless industry.
BROOKE GLADSTONE:
But why do we have to pay extra for text messages, or for sending photos? Why aren’t our cell phones in fluid conversation with our computers, via Bluetooth?
CHRIS GUTTMAN McCABE:
When it comes to things like text messaging and use of pictures, carriers charge different things and they are completely subject to the market.
If they are pricing outside of where the market is, then they’re going to lose customers.
BROOKE GLADSTONE:
If competition really were the solution, it would have brought forth the kind of services that people say they want every day.
CHRIS GUTTMAN McCABE:
You know, in a perfect world, from a consumer’s perspective, you would be able to get every product and service that you want at no cost. But the reality is, in a competitive environment, you let the market dictate.
BROOKE GLADSTONE:
Chris, if the Carter phone decision regarding land lines made sense--of course, we should be allowed to buy any phone and answering machine we like and plug them into a phone jack—why should any other standard be justified for mobile phones?
CHRIS GUTTMAN McCABE:
I would start from the premise that there isn’t a need for regulation unless there’s a failure, a market failure. When you had the Carter phone decision, you had a vertically integrated monopoly, so you had one provider providing both the network and the service offerings, but also providing the technology that you use, the phones and the handsets.
In this case, you have multiple providers using multiple handset manufacturers, within and outside the United States. You have, for all intents and purposes, exactly what government wants. You have an ultra-competitive industry.
BROOKE GLADSTONE:
Why can’t we have call timers?
CHRIS GUTTMAN McCABE:
You know, if that is something that’s wanted, then that will happen. Carriers didn’t have cameras in their phones two or three years ago. Now almost every single phone has it.
So you know, our carriers absolutely listen to the customers. They do surveys. They reach out. And the reason they do is because it’s in their best interest to serve their customers.
BROOKE GLADSTONE:
Customers want call timers, and despite the confusion among the various cost plans, they would be able to use their call timers to compare their usage with their bills. The carriers don’t want them on the phones, and so the manufacturers don’t provide them.
CHRIS GUTTMAN McCABE:
And I would argue that, as I said, that in a competitive environment, if something is wanted by consumers, someone will provide it, either a niche service provider or one of the large providers.
T- Mobile’s service offerings are different than Verizon’s, which are different than Cingular’s, which are different that, you know, Sprint Nextel’s and Alltel’s. And each of them try to identify where consumer wants and requests and needs are, and they try to fill it.
And if they’re not, the consumer will move. They’ll leave, and they’ll go to another carrier.
BROOKE GLADSTONE:
Chris, thank you very much.
CHRIS GUTTMAN McCABE:
Brooke, I appreciate it. Thank you.
BROOKE GLADSTONE:
Chris Guttman McCabe is the vice-president of regulatory affairs for CTIA, The Wireless Association.
In the U.S. today there are two hundred million cell phone subscribers. The wireless industry has grown up in the last decade, so it’s a good time to ask, how’s it doing? Columbia law professor Tim Wu says, not so good. Yes, we have service at competitive prices, but we could have so much more.
We don’t, says Wu, because the big wireless carriers, Verizon, Cingular, AT&T, Sprint Nextel and T-Mobile have a stranglehold on product design. In a paper he presented to the Federal Trade Commission, Wu details many of the improvements we could enjoy if the wireless carriers let us.
For example, we could more easily transfer photos or browse the Net, or even keep track of how much we talk. We can’t, because the carriers are engaged in what Wu calls “feature crippling.”
PROFESSOR WU:
There’s often cases where a phone is technologically capable of doing quite a bit, but carriers, because of their business model, a fear of losing revenue or potential fear of losing control, won’t let the feature be on the telephone and will force the equipment manufacturers not to allow the telephone to do something. That’s crippling.
BROOKE GLADSTONE:
And you give us a couple of examples in your paper. I have to say, when I was reading through it, I got angrier and angrier, so let’s go through a couple.
The first, call timers on telephones--what are they, are why don’t we have them?
PROFESSOR WU:
Well, you know, some of the device manufacturers think it would be handy to have something that keeps track of how much time you’ve used per month, you know, per day. You can monitor your own usage.
Phone carriers have acted to prevent consumers from having their own records of how long they’ve been speaking on their telephones.
It’s a little bit like, you know, when you’re in a casino in Las Vegas, they don’t really want you to know how long you’ve been there, and so there’s been a lot of crippling, or disabling, of phone timers for the full capabilities they could have.
BROOKE GLADSTONE:
And why don’t they want us to know?
PROFESSOR WU:
Well, there’s I guess the possibility you could generate an independent record of your billing, and you could compare that with he bill you’re sent, and you could say that, you know, I actually didn’t talk this much on my phone, and you know, why would a carrier want that?
BROOKE GLADSTONE:
That’s why I got so angry. And you also talked about access to WiFi and web browsers and GPS and Bluetooth technology.
PROFESSOR WU:
Ah! Bluetooth was promised to make it easy for phones to communicate with other things, computers, printers. It’s really hard, believe it or not, just to get your cell phone to talk to your computer, for something as simple as just backing up your address book, so if you lose your phone, you’ve got a backup.
Under a lot of carriers’ constructions today, Bluetooth is almost completely crippled. You can’t send music back and forth. It’s very hard to send photos from your phone to your, all, again, because there’s a fear of losing control and there’s a fear of crippling some potential business model that revolves around charging you to do something with your phone.
BROOKE GLADSTONE:
I would assume that a lot of these technological advances are being hatched at the places where they make phones--Motorola, Nokia. Why aren’t they putting some pressure on the carriers?
PROFESSOR WU:
You know, they try, but they’re sort of living in a state of fear, because they depend on being sold by the carriers. You know, the carriers have an almost complete grip on the retailing of phones in this country. They’re responsible for over 90 per cent of the retailing of phones, and so, you know, people actually did talk to me secretly [LAUGHS].
I’ll quote a developer. “The carriers have all the power in this area. What they say goes.”
BROOKE GLADSTONE:
Now, you say that in the world of wired phones, the policies of these carriers would be, in some cases, not just outrageous but possibly illegal. So could you take us back to the era before the mobile phone, when a similar battle was being fought over land lines?
PROFESSOR WU:
Sure. So in the 1950s, 1960s, the Bell Company would not allow you to hook up anything to their phone network. You know, you had to use a Bell phone and only a Bell phone. There was no such thing as consumers hooking up an answering machine, a Mickey Mouse telephone. This was not allowed.
There was a large revolution in the late ‘60s, along with other revolutions. [LAUGHS] The outcome of this consumer revolution was something called, technically, the Carter phone Rule, but more clearly, as a consumer’s right to attach anything they want to their phone network, whether it’s a strange phone, whether, more importantly, it’s a modem, whether it’s an answering machine.
And consumers don’t have that right, in the wireless world. You don’t have the same consumer right to attach. It may sound very technical [LAUGHS], but that consumer right to attach modems in the 1970s and ‘80s is what led to the birth of the entire Internet in the first place.
But I’m suggesting that if consumers have that right to use their mobile service for what they want to use it for, we will see a similar revolution and a similar blossoming that we saw in the Internet in the 1990s.
BROOKE GLADSTONE:
Even if you’re not technically inclined, you can see the limitations of this lockdown. For instance, if you buy a phone that you really like and you change carriers, your phone is locked up. You have to buy a new phone. You can’t take it with you, and you wrote in your paper that it would be very easy to unlock these phones. They’re simply not permitted to.
And that leads to a question that I think a lot of consumers have had about Apple’s much bally-hooed iPhone. You can’t use it, unless you subscribe to Cingular, an AT&T service, right?
PROFESSOR WU:
I think that’s right, and I think it was a surprise to a lot of people. You know, you think Apple had this great new product and, you know, it turns out it’s locked to Cingular’s network.
Now that may change. I’m hoping the consumer pressure will lead to a world where you see your phone as something that you own [LAUGHS], not the carrier. You own. I mean, you pay for it, and then you can bring it and say, listen, I’ve got this great phone, or this great device, and I want to use it.
BROOKE GLADSTONE:
Now, back before the Carter phone decision, AT&T was saying if you don’t have a unified system, it just won’t work. And that system is AT&T.
Now the carriers are saying, you don’t need to be re-regulating us, you don’t need to be telling us what to do. There’s so much competition in the mobile phone market that this situation will correct itself. Well, isn’t there? And won’t it?
PROFESSOR WU:
I think there’s always a role for consumer rights, no matter how competitive an industry is, and the truth is, it’s not a truly competitive industry in any case.
The spectrum that they depend upon is government property, which they lease. There’s really only four major players who have the tens of billions of dollars required to be in this market in the first place.
We’re not talking about the vodka market. We’re not talking about blue jeans. We’re talking about a government supervised spectrum-based oligopoly, which is doing things that are not good for consumers, and I think, you know, to say, well, we’ve got competition, forget about it, is just not an answer to the things we’ve identified in this study.
BROOKE GLADSTONE:
But you’ve also said that comprehensive legislation should only be used as a last resort, so what do you recommend in the short term?
PROFESSOR WU:
The most important power is consumer pressure. The industry likes to say everything is competitive, everything’s fine. You know, they love to keep things as they are. They like the current model.
The only thing that pushes them, besides government, is consumer knowledge, consumer pressure, and if people get more and want more out of their cell phones, they will eventually get more. That’s the most powerful force out here, is the force of the educated consumer.
BROOKE GLADSTONE:
Tim, thanks so much.
PROFESSOR WU:
It’s always a pleasure.
BROOKE GLADSTONE:
Tim Wu is a professor at Columbia Law School. We’ll link to his paper, Wireless Net Neutrality, from our site onthemedia.org.
So we just heard Tim say that phone developers have told him, off the record, that they’re hamstrung by wireless carriers who shun certain kinds of upgrades. So I put it to Chris Guttman McCabe, the vice-president of regulatory affairs for CTIA, The Wireless Association.
CHRIS GUTTMAN McCABE:
You know, I haven’t seen any of those statements on the record. We haven’t seen any complaints like that, but what I would say is that we have an industry where there are constantly new carriers entering the market. So in addition to the four large carriers, we just had three other carriers spend several billion dollars to enter a market that is competitive.
We just saw a new handset manufacturer, Apple, move into this space, so I would challenge, you know, you or your audience to find an industry that is more competitive, particularly in the telecommunications space, than what we have here in the wireless industry.
BROOKE GLADSTONE:
But why do we have to pay extra for text messages, or for sending photos? Why aren’t our cell phones in fluid conversation with our computers, via Bluetooth?
CHRIS GUTTMAN McCABE:
When it comes to things like text messaging and use of pictures, carriers charge different things and they are completely subject to the market.
If they are pricing outside of where the market is, then they’re going to lose customers.
BROOKE GLADSTONE:
If competition really were the solution, it would have brought forth the kind of services that people say they want every day.
CHRIS GUTTMAN McCABE:
You know, in a perfect world, from a consumer’s perspective, you would be able to get every product and service that you want at no cost. But the reality is, in a competitive environment, you let the market dictate.
BROOKE GLADSTONE:
Chris, if the Carter phone decision regarding land lines made sense--of course, we should be allowed to buy any phone and answering machine we like and plug them into a phone jack—why should any other standard be justified for mobile phones?
CHRIS GUTTMAN McCABE:
I would start from the premise that there isn’t a need for regulation unless there’s a failure, a market failure. When you had the Carter phone decision, you had a vertically integrated monopoly, so you had one provider providing both the network and the service offerings, but also providing the technology that you use, the phones and the handsets.
In this case, you have multiple providers using multiple handset manufacturers, within and outside the United States. You have, for all intents and purposes, exactly what government wants. You have an ultra-competitive industry.
BROOKE GLADSTONE:
Why can’t we have call timers?
CHRIS GUTTMAN McCABE:
You know, if that is something that’s wanted, then that will happen. Carriers didn’t have cameras in their phones two or three years ago. Now almost every single phone has it.
So you know, our carriers absolutely listen to the customers. They do surveys. They reach out. And the reason they do is because it’s in their best interest to serve their customers.
BROOKE GLADSTONE:
Customers want call timers, and despite the confusion among the various cost plans, they would be able to use their call timers to compare their usage with their bills. The carriers don’t want them on the phones, and so the manufacturers don’t provide them.
CHRIS GUTTMAN McCABE:
And I would argue that, as I said, that in a competitive environment, if something is wanted by consumers, someone will provide it, either a niche service provider or one of the large providers.
T- Mobile’s service offerings are different than Verizon’s, which are different than Cingular’s, which are different that, you know, Sprint Nextel’s and Alltel’s. And each of them try to identify where consumer wants and requests and needs are, and they try to fill it.
And if they’re not, the consumer will move. They’ll leave, and they’ll go to another carrier.
BROOKE GLADSTONE:
Chris, thank you very much.
CHRIS GUTTMAN McCABE:
Brooke, I appreciate it. Thank you.
BROOKE GLADSTONE:
Chris Guttman McCabe is the vice-president of regulatory affairs for CTIA, The Wireless Association.
