FCC inquiries could spawn new wireless regulations

The Federal Communications Commission is taking a closer look at the practices of the wireless industry, potentially the first step toward more regulations intended to push down prices and increase choices for consumers.

At its first meeting with all five commissioners seated since the inauguration of President Obama, the FCC voted unanimously Thursday to open an inquiry into the state of competition in the wireless industry. The FCC also wants to explore factors that encourage innovation and investment in wireless.

The FCC inquiries are information-gathering exercises and it is too soon to know where they will lead. But the agency faces mounting pressure from public interest groups and Congress to investigate common business practices in a market dominated by four national carriers, including AT&T and Verizon Wireless.

These examinations are likely to look at everything from spectrum auction rules to roaming obligations to handset exclusivity deals, such as AT&T's contract with Apple to serve as the sole U.S. carrier for the iPhone. The FCC is also looking into expanding so-called "truth-in-billing" rules, which require phone companies to clearly describe charges on consumer bills.

"It is essential that the Commission develop policies that encourage a new generation of innovators, working with new tools, on new platforms, and having an extraordinary impact on our economy and society," said Julius Genachowski, who took over as FCC chairman at the end of June.

The Senate and House have been probing the wireless business as well, holding hearings on such topics as handset exclusivity and text messaging rates.

In July, Herb Kohl, D-Wis., chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, sent letters to Genachowski and Christine Varney, the new head of the antitrust division at the Justice Department, urging them to take action to promote competition in the wireless industry.

The FCC has already sent a strong signal that it intends to step in when it sees potential problems in the industry. Last month, the agency sent letters to Apple, AT&T and Google asking why Google's Voice App messaging service has not been approved for use on the iPhone.

Michael Scurato, a third-year law student at Georgetown University, is one wireless customer who welcomes more oversight of the industry.

Scurato switched from Verizon Wireless to AT&T because he wanted an iPhone. But once he was locked into a contract with AT&T, he lamented the network holes he experienced on his weekly drives to see his wife in Pennsylvania. Now he would like to use Skype's Internet calling service and the SlingPlayer Mobile application, which redirects TV signals to the device. But Apple limits his ability to use those programs because it lets them run only when the device is connected to a Wi-Fi hot spot rather than AT&T's cellular network.

Joel Kelsey, a policy analyst at Consumers Union, said regulators will have to consider two main issues: The high switching costs that lock consumers into lengthy contracts, and the practices that make it difficult for smaller rivals to unseat the industry heavyweights. Kelsey would like to see the FCC ban exclusive handset deals.

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