Fiefdoms in Turmoil: Revolt of the Cellular Serfs

by Moshe Yudkowsky

A handful of companies own virtual fiefdoms: by government fiat, they control the radio frequencies used in cellular telephone calls. In the US they play this advantage to the absolute maximum. They dictate what services appear on the networks, they provide deliberately-lobotomized cellular phones, they charge outrageous prices that their oligarchy easily sustains. We're all cellular serfs, dancing to the tune of the spectral aristocracy.

But a revolt is brewing. Skype filed a petition with the US FCC to require that cellular companies disaggregate the sale of airtime from the sale of handsets, and allow the bandwidth to be used in any manner — even to carry Skype VoIP calls.

A few pressure groups (to use the British term) have gotten behind this effort. Zack Exley wants to start (which is not yet operational) to collect 100,000 requests for service via an "open" phone. If all carriers refuse to provide this service, he could present that refusal to the FCC as evidence of un-met consumer demand and complain that the existing carriers are not serving the public interest.

I admit that I'm skeptical. Without a firm commitment to purchase, this is a chimera; and 100,000 customers dispersed across the US is hardly a worthwhile market for a nationwide carrier. Perhaps 100,000 in a single city would catch the eye of a cellular provider, but I doubt it.

But the most basic flaw in the plan is that it ignores the economics of of the cellular phone market. The cellular companies sell you a handset; they charge you the cost of service and the handset; the handset is paid off after two years; they continue to charge you the full price, and that's all found money to them. Additionally, the cost of the handset hangs over your head during the duration of the contract, which binds you to them as a customer and prevents your defection to a company with lower prices or better service.

So will this effort succeed? I think not. Is it worthwhile? Well, perhaps; it's certainly a low-cost effort — nothing ventured, nothing gained. But the only true solution is wireless VoIP, and that solution depends on reclaiming the airwaves from our current lords and masters.


2007-03-09 12:26:51
The real monopoly breaker will be VoIP phones (such as those from Belkin, NetGear or D-Link) combined with massive municipal WiFi coverage.

As it stands, I could probably use one of these handsets through my DSL wireless router at home, or even my neighbor's totally unsecured WiFi. Or the WiFi at my local municipal library.

But imagine if my whole town was one big hotspot... a VoIP handset would replace a cellular phone.

Zack Exley
2007-03-10 07:30:12
Please wait for there to be a plan before getting to skeptical of it. ;-)