Regulatory authorities in the United States are taking a closer look at anti-competitive business practices. Mobile operators now find themselves being scrutinized for practices involving exclusivity arrangements signed with phone manufacturers. Also coming under examination are roaming and interconnection arrangements for data services. Operators like AT&T and Verizon own considerable segments of land-line networks and it is widely felt that this creates a conflict-of-interest, delaying the wider rollout of mobile Internet services.

From a NY Times editorial, a look at exclusive arrangements with phone manufacturers:

With the pattern of exclusive deals extending to new netbooks, smaller companies warn that mobile Web access could be tied up entirely. In the past 10 years, the big cellphone companies have gobbled up smaller ones while regulators looked on. The Big Four — Verizon, AT&T, Sprint and T-Mobile — account for 90 percent of cellphone subscribers. Verizon and AT&T alone have 60 percent. Dozens of areas have but one wireless provider.

Regulators intend to also focus on how data service arrangements between operators:

And they haven’t been shy about using that power. The F.C.C. mandates carriers, for example, to sign roaming contracts for voice services. But data, the fastest-growing and most innovative segment of telecommunications, isn’t covered. Small carriers complain that the big ones won’t enter into data roaming contracts.

Already, just the suggestion of a review by regulators has forced one operator to shorten the length of exclusivity arrangements with manufacturers. Again, this demonstrates the power regulatory authorities should be able to exercise. As mobile phones become an increasingly popular option for users to get online, authorities must take a closer look to ensure policies that foster competition are in place.

In recent weeks, this site has focused a great deal on the situation with Telstra in Australia. It’s because this drama has so many dimensions worth analyzing. A key development was the court ruling against Telstra on the improper use of Optus client information. Telstra used information it had access to as wholesale service provider to assist its own retail unit in targetting Optus customers.

These smaller developments are contributing to what is going to be a very dramatic overhaul of telecommunications policy down under.

Optus Chief Paul O’Sullivan on why he thinks Telstra will try to delay roll-out of the new broadband network proposed by the Government:

“The incentives for Telstra to delay a roll-out of a new high-speed broadband network or to try to re-monopolise a high-speed broadband network remains,” he said.

“The fundamental drivers of most companies’ behaviour lie in their underlying economics and in their competitive position. In Telstra’s case that drives them to very notable characteristics.

“First of all, they have a very strong incentive to delay the roll-out of any competitive infrastructure which levels the playing field in services to the home.”

The news from Australia should only make us wary of FINTEL. Is the upcoming announcement in July merely rhetoric of change from their part, when all that’s really being done is securing FINTEL’s competitive position? As wholesale provider of bandwidth to Vodafone, Digicel, Kidanet, etc. they say that market forces and competition will drive down prices. But, looking at what the Optus CEO is saying and the court ruling on the improper use of customer information, it is becoming harder and harder to believe FINTEL.

As developments in Australia prove, without competition in the operation of the underlying network, pricing of services will remain high.

In developed countries with high rates of broadband Internet usage in homes, mobile Internet will be seen as a separate category from fixed broadband offerings. In the UK, incumbent operator BT is adding mobile broadband to its consumer packages, positioning the technology as a complement to fixed broadband:

BT Total Broadband customers can now get up to 8Mbps cellular broadband including 1GB of monthly data usage. The lowest option costs £15.65 per month over 18 months for both fixed and mobile broadband, with BT claiming HSDPA download speeds of 7.2Mbps.

In developing/majority world countries, where broadband Internet usage rates are low, consumers are less likely to see the services as complementary. As speeds on next-generation wireless networks catch up to what is typically expected of wired connections like cable, there will be less of a distinction between the two types of service. Already there are devices on the market that blur the distinction between fixed and mobile Internet service and hint at the exciting possibilities convergence will offer down the road.

The New York Times recently covered the Novatel MiFi 2200, a device that will be made available from Verizon in North America in mid-May.  It is a new take on existing cellular-modems as  the device uses a cellular 3g signal from a mobile network to create a portable Wi-Fi hotspot anywhere you take the device. The Wi-Fi signal covers about a 30ft. radius and can be shared with up to 5 users.

What is incredible about this device is that Verizon even suggests that the MiFi device could be used as a primary family Internet service at home. Just two short years ago, sharing a cellular-modem account was discouraged by the same provider–a real sign of the maturation of the ability of 3g networks to carry greater traffic.

Mobile Internet offerings from operators like Vodafone and Digicel are to be expected and do not come as a surprise for anyone. Leadership at TFL should take notice of the BT case. Combining mobile Internet, fixed Internet, voice, and IPTV in a consumer package could make TFL Fiji’s first triple-play or quad-play threat.

What are the benefits of deregulation and increased competition?  From a New York Times article, here is what it has meant for Europe:

Half of the European Union countries could match the United States in broadband use by 2010, Ms. Reding said, if regulators take a tough stance to pry markets open. European Union broadband rates vary from 35.6 percent in Denmark to 7.6 percent in Bulgaria. The United States level was 22.1 percent as of July 2007, according to the Organization for Economic Cooperation and Development.

Ms. Reding emphasized her determination to encourage greater competition in the market and to give regulators the power to force “functional separation” — obliging the owners of telecommunications networks to free the networks from their operating divisions.

In seven member states, more than 60 percent of the broadband market is in the hands of incumbents, she said.

Ms. Reding adds, “The dynamic market force is new entrants”. 

Improving rates of broadband usage indicate many things, but as the article shows, it is increasingly a mark of how well-suited a country is as an investment destination.  Definitely something for policy makers to take note of in Fiji.  Higher levels of broadband internet usage are signs of an educated population with a sophisticated understanding of technology–very important to drawing overseas investment capital in today’s global economy.

The second article is also from the New York Times and deals with the setbacks cities in the US have faced in trying to set up free and/or subsidized municpal wifi networks.  The failure to get these networks up is an indicator of how it is important to have a clear business plan mapped out before deploying such networks.  Yet again, it is a call for business leaders and policy makers to sit down and really think about what deregulation and broadening access to technology means for Fiji.  It is also important to note that these efforts precluded use of WiMAX technology–something that gives Fiji a considerable advantage.

Currently, FINTEL is acting very much in the manner of the European monopolies.  Widening access to the internet, especially how it has been described on this blog means that policymakers will to pull themselves together and challenge the way things are being done.

What these articles have in common is growing acceptance of the idea that high levels of internet usage are good for a society.  Improved education levels, quality of life gains, increased suitability as an investment destination, and improved emergency communications are just some of the benefits of wider broadband internet usage by a population.