Carriers That Can Say No

Recently several press accounts reported that AT&T will allow iPhone subscribers to access Skype’s Voice Over the Internet Protocol (“VoIP”) telephone service via wi-fi, but not using the AT&T wireless network. See, e.g., http://www.usatoday.com/tech/news/2009-04-01-att-skype-iphone_N.htm. Unlike some carriers that disable wi-fi access via cellphones, AT&T could not block Apple’s interest in making handsets operate more like wireless computers. But the financial stakes were too high for AT&T to allow its subscribers to substitute cheap Skype international long distance minutes for quite expensive and quite lucrative AT&T minutes.

Apparently few seem troubled by AT&T’s unilateral decision about what subscribers can and cannot do with their handsets. (But see Skype’s concern: http://digg.com/d1ntP3) So we a carrier that can say no to subscribers when a proposed use threatened revenues despite no credible evidence that such use would cause technical harm to the AT&T network. Perhaps AT&T can base the restriction on contract law and the carrier’s need to recoup the cost of its subsidy for below cost access to the iPhone. However, AT&T retains the restriction even for iPhone subscribers after their two year service term and for subscribers who do not trigger a subsidy in the first place.

The FCC’s passive acceptance of AT&T’s blanket freedom to impose a walled garden access to telephone services, contrasts with what the Commission did when a wireline telephone company blocked DSL access to Skype. Why should this be? If a wire-based telephone company ostensibly provides an information service when provisioning DSL access to the Internet, arguably the FCC has no jurisdiction to mandate interconnection with Skype, or to impose a monetary forfeiture. Yet that is exactly what the Commission did when a rural North Carolina telephone company (Madison River) blocked access to Skype. Now the FCC does nothing when a wireless telephone company, ostensibly providing a similar information service, broadband Internet access, block subscribers from using the carrier’s network.

Can anyone make legal or public policy sense out of this inconsistency?

FCC Makes the Right Call

The FCC today issued a Declaratory Ruling stating that "that no carriers, including interexchange carriers, may block, choke, reduce or restrict traffic in any way."
available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-2863A1.doc. I trust that statement is clear enough for the wireline and wireless carriers who decided they could serve as judge, jury and executioner when one of their telecom brethren gamed the system.

Several major carriers decided not to complete calls to clever independent local exchange carriers who pump up call volume and access charge interconnection payments by offering "free" conference and international calling. Ample FCC and case law precedent conclusively states that telecommunications service providers operate as common carriers. Likewise the "Filed Rate Doctrine" binds both carriers and end users to pay tariffed rates. If the blocking carriers did not like the access charge rate of compensation--and they surely should not like 7 or cents per minute rates--then they can contest the tariff when filed.

Remarkably the FCC made the right call.