Skype Ltd. is looking to a 1968 ruling by the U.S. Federal Communications Commission to open up the country's mobile phone industry for "unlocked" devices and third-party applications -- such as Skype.
The eBay Inc. unit, a pioneer in peer-to-peer VOIP (voice over Internet Protocol), petitioned the FCC this week to affirm that the landmark Carterphone decision applies to the cellular world. That ruling, which involved an early type of wireless handset, said carriers couldn't stop consumers from attaching any device to the wired telecommunications network as long as it couldn't do any damage.
Letting any device connect to cellular networks would gradually open the door to a wide range of new choices for consumers, including handsets that use VOIP for voice calls over operators' 3G (third-generation) data networks. Almost all cell phones in use on mobile networks in the U.S. are sold by the operators and locked so they can't be used on another provider's network. But Skype's proposal also would stop carriers from blocking or forbidding applications on 3G networks -- again, as long as those applications can't damage the network.
The plan cuts to the heart of mobile operators' revenue stream, which still predominantly comes from voice calls and also depends on exclusive ringtone, music, video and other services offered by the carriers. But there's no reason the earlier ruling on the wireline phone network shouldn't apply to mobile, according to Christopher Libertelli, Skype's senior director for government and regulatory affairs. In addition, preventing carriers from blocking outside applications is in keeping with the FCC's policy on network neutrality, he said.
Cellular providers have always had closed networks, but the rollout of 3G makes possible many more uses of those networks, he said.
"What we're trying to do is get in front of that trend so that policy is set in the correct way," Libertelli said. In addition to the new rules, Skype proposed an industry forum to determine what types of devices are harmful to the wireless network.
The mobile industry promptly slammed Skype's petition. It would freeze innovation, according to a statement by Steve Largent, president and CEO of the Cellular Telecommunications & Internet Association (CTIA), an industry group.
"Skype's self-interested filing contains glaring legal flaws and a complete disregard for the vast consumer benefits provided by the competitive marketplace," Largent said.
Skype's Libertelli said the company has a big job to do in educating cellular companies and others but believes the change would help carriers by creating new uses for their networks.
It's hard to predict how the FCC may respond to Skype's petition, said Johna Till Johnson, president of Nemertes Research, in Mokena, Illinois. In recent years the agency has been alternately supportive and wary of disruptive technologies, she said. It might even drag its heels on making a ruling, not wanting to be drawn into a big political fight. It's most likely to come down somewhere in the middle, Johnson believes.
Though the cost of phone calls might fall if Skype won, there could be a downside: Without the incentive of selling their captive services, cellular companies might be less motivated to upgrade their networks, Johnson said.
Skype expects the agency to put the petition out for public comment and response, a process that would take several weeks.