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Author's profile photo William Dudley

For NUVOS, Will the New Open Internet Rules, Rule?

On December 21st, 2010, the FCC voted 3-2 in favor new network neutrality rules that affect mostly fixed, broadband networks.  However, there are some provisions that could protect consumers on wireless networks.  Reaction from the industry has been varied and it really seems like no one is particularly satisfied on either side.

Steve Largent, President of CTIA noted: “While we agree with Commissioners McDowell and Baker that net neutrality rules are unnecessary, and we continue to maintain that net neutrality rules are particularly unnecessary for the wireless industry that continually innovates, competes and significantly invests in our nation, we recognize that the Chairman has attempted to bridge the differences among the various stakeholders. As we await the text of the Report and Order, we appreciate that the Commission’s action today appears to recognize the important differences between fixed and mobile broadband. Whether it is the competition within the industry, the technical characteristics of the service or the distinct deregulatory framework adopted by Congress under which wireless currently operates, wireless is different.”

So, what does the rule say specifically?  From “Mobile broadband providers also may not block consumers from accessing lawful websites, and may not block applications that compete with the provider’s voice or video telephony services, subject to reasonable network management.”

Now, I’m not a lawyer (nor do I play one on TV), but that sounds fairly simple to me and, on the surface, looks to be good news for the newest service provider, the NUVOs (Network Unaffiliated Virtual Operators), otherwise known as Over The Top (OTT) service providers that provide such core services via IP applications, such as messaging, voice and video – even though not all of the services are specifically mentioned.  In many cases, these services can and do compete with the core services of the mobile network operators (MNOs).  While SMS messaging specifically has been a huge money-maker for MNOs, it has gone largely unregulated in the United States by the FCC; however, MNOs and various business interests (content providers, enterprises and any other firms that play a role in the SMS ecosystem), have put in significant guidelines from such groups as the Mobile Marketing Association (MMA), CTIA, and other groups.  To date, this industry group has been essentially self-regulated.

Gene Lew, CTO of MediaFriends (provider of the HeyWire messaging service) noted that “I would have preferred them to go further by actually naming the wireless operators, not by name, but as a sector.  The new rules imply they are included, but it could be subject to interpretation.”  Otherwise, Gene noted that they were “reasonably satisfied for now.”

In the last 2 years, as we’ve seen new classes of service providers (NUVOs / OTTs) enter the ecosystem – spurred by widely available, smart devices, the game has changed.  These service providers can be classified as disruptive technologies and services, in that they compete with and hence disrupt the status quo.  What will that mean to this self-regulated sub part of the industry?   Does that mean that the new providers don’t have to play by the old rules anymore?  Do the new “network neutrality” rules apply here?  Unfortunately, the real answer probably not a simple one.  As Mr. Lew notes the new rules “could be subject to interpretation.”

To date, the mobile industry has done a reasonably good job at keeping unsolicited marketing and SPAM out of the messaging ecosystem.  After all, that’s what a lot of the MMA recommendations are all about – keep subscribers free from countless messages of unsolicited SPAM.  It does happen, but when it does, it is shut down and blocked when found. MNOs, therefore, will be watching the NUVOs / OTT service providers quite closely.  Fortunately, most of the legitimate NUVO businesses are playing by the rules, if not vigorously working to exceed them.  After all, they should have the right to compete equally with MNOs as well as other NUVOs and OTT Service Providers.

One bad apple, as they say, can spoil it for everyone – rules or no rules.  Self-regulation is a huge reason why the United States messaging industry has done well and not been over-regulated by the US FCC.  This is also why the NUVOS and OTT Service Providers, are generally welcome in the marketplace (and are potentially protected by the recent Network Neutrality rulings), but they too should understand and abide by the simple rules of conduct that the mobile messaging industry has followed for years.

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