Tuesday, September 1, 2009

Does the FCC Have Jurisdiction to Regulate Wireless Handsets?

As the FCC launches a number of inquiries into the wireless marketplace, some opponents to such scrutiny have raised the argument that the FCC has no legal basis for regulating wireless handsets, much less interfere with exclusive distribution agreements. This strategy does inject fear, uncertainty and doubt possibly leading to the argument that regulatory uncertainty constitutes the sole basis for any finding of insufficient infrastructure investment. But is there a legal basis to the no jurisdiction argument?

As to the question about general jurisdiction, the FCC surely has a legal basis on grounds that wireless handsets are radiotransceivers. These devices transmit and receive using radio spectrum. The FCC has jurisdiction even over low powered devices that open garages, fly model planes, nuke food, and monitor baby sounds. No manufacturer of such spectrum using equipment can sell any device without certification by the FCC.

The harder question addresses whether the FCC can abrogate contracts between regulated carriers and unregulated ventures, such as Apple, regarding a regulated handset. I don’t have a definitive answer, but I can refer to a recent instance where the FCC did claim lawful authority to abrogate any and all types of exclusive service contracts between real estate owners of multiple dwelling units and a multichannel video program distributor. See Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, MB Docket No. 07-51, Report and Order and Further Notice of Proposed Rulemaking, 22 F.C.C. Rcd. 20235 (2007).

Arguably, if the FCC determines that the public interest justifies mandatory non-exclusivity, then the FCC can order the elimination of contracts that established exclusivity. I am sure sponsored researchers, wireless carriers, and handset manufacturers will try to find ways to distinguish video program service from wireless devices. But bear in mind that the FCC also rejects exclusivity for cable operator provided set top boxes, a device, and not a service.

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