**REMARKS OF COMMISSIONER MICHAEL J. COPPS**

** "FREE MY PHONE"**

**NEW AMERICA FOUNDATION FORUM**

**WASHINGTON, DC**

**JANUARY 22, 2008**

             Good Morning and thanks to my friend Michael Calabrese and
the New America Foundation for holding another of its forums that have
done so much to serve the public interest.  It's an honor, and somewhat
humbling, to speak before this distinguished panel and what is obviously
an expert audience.  I'll try to be brief because I'm just as eager to
hear from the luminaries gathered here as you are. 

            Over the week-end, I was remembering back to 1970 when I
first went to work in the United States Senate.  Our fanciest piece of
work-saving equipment was an old robo machine that cranked out pretty
awful-looking mass mailings.  Everything else was typed by hand and when
Selectric typewriters came along, we all fought tooth-and-nail to be one
of the lucky few to get one.  When the Senator dictated even a minor
change to a speech draft, his personal secretary had to retype the
entire text.  When we needed to phone back to the state, we had a WATS
line, but initially we shared it with a more senior Senator, I think
Richard Russell from Georgia, and when he wanted on, Senator Hollings
had to get off.  I started out doing research and when Senator Hollings
wanted information---which was usually instantaneously---I had to call
around, beg for help from a small and over-worked Congressional Research
Service, or otherwise figure out how to get it Lone Ranger style.  It
was truly antediluvian---before the technology flood and the knowledge
tools that have transformed everything.   

Four years ago, New America hosted a forum on cyberspace (as we called
it then, for you young folks out there), giving me a chance to think out
loud about the challenges regulators and legislators would face in
maintaining the Internet's openness.  Looking back, it's been every bit
as challenging as I predicted.  But well worth the effort, I think,
because the Internet today ***is***---for the most part---the fertile
field for innovation, democracy, and self-expression that many of us
hoped it would be.  That's today, of course---but today never comes with
guarantees for tomorrow, does it? 

            So I am grateful that New America is always pushing us in
Washington to think about how to keep technology open and free.  Today
it is pushing us to think about openness in the wireless world.  Just
about a year ago, New America brought a paper by Professor Tim Wu to
Washington's attention.  Tim explained why the time has come to apply
the *Carterfone* and Internet Openness principles from the
wire***line*** to the wire***less*** world.  The idea is simple:
wireless customers should be able to use ***any*** device or application
they want, to reach ***any*** legal content they want, so long as they
don't cause harm to the network.   It sounded right to me, and in March
of last year I called for an FCC rulemaking on the issue.

             Note that I said it's a simple idea---I didn't say it was
uncontroversial.  Quite the opposite.  Critics rushed to tell me that
third-party handsets just wouldn't work for wireless---they would lead
to more dropped calls, less spectral efficiency, and maybe even bring
down whole cellular networks.  (Sound familiar?  These are variations on
the very arguments raised 40 years ago to *Carterfone* itself.)  Critics
also argued consumers didn't want network openness---they were more than
happy with the services they had, and additional choices would just
confuse them. 

             That didn't sound quite right to me and, as it turns out,
it didn't sound right to some of the nation's leading consumer
technology columnists either.  Even though we inhabit very different
ecosystems, they were---quite separately---concluding that the cell
phone market looks a lot worse than other parts of the personal
electronics market.  And, boy, were they right!  When I buy a new
computer, I get to choose exactly what I want: a personalized bundle of
processor, hard drive, video card, display, networking device and so
forth, plus whatever software I wish to load.  Wherever I can get a
Wi-Fi or Ethernet connection, I can reach the content I want: *Business
Week*, the *Wall Street Journal*, the FCC's homepage, or the millions of
videos on YouTube.  It's a fantastic world of choice---and we need to
keep it this way. 

            Now let's look at the cell phone market.  For the most part,
we're limited to the handful of phones that our particular carriers have
selected for us.  Most of those devices offer precious little choice
over applications or content.  And, even more amazing, though my device
may be branded Nokia, Motorola, LG or whatever---it's the ***carrier***
(not the handset manufacturer) that has the final say on its features. 
That is why, as Chairman Martin demonstrated at an FCC open meeting, the
European version of a leading manufacturer's popular phone comes
***with*** Wi-Fi, yet the identical model here in the U.S. comes
***without*** Wi-Fi---simply because the U.S. carrier wanted to protect
its business model.  How on earth do American consumers benefit when a
perfectly good feature is disabled so their carrier can protect its
revenue stream?    

            In addition to the downsides for consumers, the carrier veto
handicaps entrepreneurs (which then in turn further harms consumers). 
When Google's founders had an idea about how to build a search engine,
they bought some server space literally using their credit cards (this
was in 1998), put their product on the Web, and you all know the rest. 
When a wireless entrepreneur has a great idea, he or she has to pitch it
to the handful of carriers---and if they say no, it never leaves the
ground.  The *New York Times* reports that European wireless designers
think our system is nuts.  Maybe they're right.

             Now let's fast forward a few months from early 2007, when
talk of wireless *Carterfone* first hit Washington.  All of a sudden,
the rhetoric shifted 180 degrees.  It was downright seismic.  In
Congressional hearings, the FCC's own 700 MHz auction rules, and the
front pages of many of the nation's leading newspapers---all the talk
was about a new wireless *Carterfone* world.  And the latest shoe to
drop is that most major carriers have publicly stated that open
platforms and open access are, in fact, the models of the future.  No
longer do we hear about awful harms to networks, gone are the
predictions of consumer indifference.  Instead, we now have industry-led
efforts to create open platform standards.  We have leading carriers
adopting open access programs---and even asserting that they have been
pro-open access for years. 

            Sounds good.  I hope it is as good as it sounds.  But we
have to ask: has the reality shifted as much as the rhetoric?  In 2009,
we will start doing case-by-case review of complaints about the 22 MHz
of "open platform" 700 MHz spectrum.  That will be a good opportunity
for the FCC to start looking at the details of these issues.  Better
yet, we could also act at any time to declare general principles for
open wireless platforms in response to a petition for rulemaking pending
at the Commission right now---something I would enthusiastically
support.  But if we're talking real-world and what is most likely for
2008, it's that most of the action will be in voluntary industry-led
initiatives.

             And I won't object strongly to that---at least for now. 
We've seen with Wi-Fi, for example, that enlightened FCC spectrum
policies and industry-led product development can deliver enormous
benefits to consumers without too much regulation. But I (and I hope
others) will certainly be watching carefully to see how the market
develops.  I would also like to see the FCC staff watching
closely---monitoring is a better word.  Not many people categorize me as
a Reaganite, but I always liked the sage counsel he gave us when he
said, "Trust but verify."  The real proof will be in the pudding.  If
voluntary initiatives bring consumers the kind of choice and freedom
that they've come to expect in other parts of the technology
marketplace, then I will be fully supportive.  If not, then I see and
will push for a greater Commission role in protecting consumers and
entrepreneurs from the power of the giant telecom providers that now
dominate the wireless market.

             In particular, I will be looking at a few key areas. 

             First is price. There are a thousand different ways that a
carrier can use pricing plans to discourage consumers from using
third-party devices and software. The only limit is the creativity of
its marketing department.  The simplest example is, of course, a
connection charge for bringing your own handset to the carrier.  But
there are also more subtle ways.  If I want a data-only plan because I
intend to use VoIP, I shouldn't have to pay a price close to that for
traditional voice-plus-data.  That's what happened at times in the
wireline world with standalone DSL---and we must not let this
anti-consumer tactic infect the wireless world.

And then there's the issue of handset subsidization.  If a carrier
charges \$50 per month for service (based on a 2 year contract with a
huge early termination fee) to recover the cost of subsidizing a
handset, then I should get a ***better*** rate if I bring my own phone. 
And I shouldn't have to accept an early termination fee, either.  While
I certainly cannot enumerate today every pricing tactic that would cause
me concern, I hope these examples give an idea of how I will approach
this issue.  

             Second is consumers' freedom to take the phone from carrier
to carrier and to access the applications and legal content of their
choosing. This is especially important as mobile handsets become
platforms for all sorts of IP-based services.  At home, using my PC, I
get to choose between iTunes and Amazon.com, Google Maps and Mapquest,
and Flickr and Shutterfly.  I should have that same freedom of choice on
my wireless handset, too---that's good for consumers and good for
entrepreneurs.  In fact, it is precisely this layered model that has
made the Internet so great.  When I switch my broadband provider at
home, I don't have to buy a new computer.  I get to use all my old
software, and I can still access the same content on the Internet.  It
is high time wireless users and entrepreneurs get to take advantage of
this freedom, too.

             In other words: no blocking, no locking, and no
discriminatory degradation of service.  This last point is worth
emphasizing.  It's easy to see why blocking a particular application is
bad for consumers, but carriers can also achieve the same result more
stealthily, *i.e.*, by using their control over the network to
selectively degrade the consumer experience for particular
applications.  If carriers start unreasonably discriminating between IP
packets in order to steer me towards or away from a particular VoIP,
mapping or photosharing application, for example, that would be a
serious departure from my definition of openness.  Carriers can't reduce
the sound quality of my voice call to L. L. Bean as opposed to Land's
End right now, and I see no reason why they should gain a comparable
ability as we move to an IP-based world.

  Third is the question of equipment and software certification and
industry standard-setting.  Entrepreneurs need freedom to innovate
without permission.  Certification should be quick, inexpensive and
preferably performed by an independent lab---no one carrier or
manufacturer should have undue influence over the process.  That's how
Wi-Fi works, and it's been a big success.  Carriers and manufacturers
should also strive to avoid proprietary formats and interfaces, in favor
of using industry-wide standards.  I recognize, of course, that there
may be other models for making the process work well.  But the further
you get from the independent, standards-based model---which we know
works---the more concern there is likely to be, and more scrutiny, too.

             Fourth is the wholesale market.  As many of you know, I
would have favored a condition in the 700 MHz auction to mandate
wholesale access.  This would allow entrepreneurs to sell wireless
devices ***and*** service directly to the public, without first
requiring customers to "bring their own access."  I believe that a
mandate in this direction could have kick-started a more vigorous
wholesale model, with great benefits for consumers and entrepreneurs
alike.  I was told in response that carriers could, and would, do so on
their own.  Well, in 2008, I'd like to see that happen.  Already, with
Amazon.com's Kindle device, we may be seeing movement in that
direction.  I'd like to see more.  And I would also like to see some
rigorous FCC investigation of just how well the wholesale market is
functioning.

             This is an exciting time in the wireless market and
consumers have a lot to be looking forward to in 2008.  Cell phones
allow us to leave our offices and our homes and still be in voice
contact with people who need us. The next generation of wireless
handsets should let us put the entire functionality of the modern office
or home office in our pockets.  I really hope that, when I open my *Wall
Street Journal* and *Business Week* in 2009, our next panelists will be
telling me that the wireless marketplace is every bit as vibrant as the
rest of the consumer electronics marketplace.  But it will take work
from all of us here---industry, legislators, government, academics, and
journalists---to reach that happy place.  Like all of you, I am excited
to be part of the journey 

             Thank you.