Lock Down on the Third Screen: How Wireless Carriers Evade Regulation of Their Video Services

Abstract

Wireless handsets increasingly offer subscribers a third screen for accessing the Internet and video programming. The converging technologies and markets that make this possible present a major regulatory quandary, because national regulatory authorities seek to maintain mutual exclusivity between regulated telecommunications services and largely unregulated information services.

Many existing and emerging services do not easily fit into one or the other regulatory classification, nor can the Federal Communications Commission determine the appropriate classification by extrapolating from the regulatory model applied to existing or discontinued services. By failing to specify what model applies to services appearing on cellphone screens, the FCC has failed to remove regulatory uncertainty. Cellular telephone service providers may infer from the Commission's inaction that any convergent service eventually will qualify for the unregulated information service "safe harbor" despite plausible arguments that government oversight remains essential to achieve consumer protection, national security, fair trade practice, and other safeguards.

This essay will examine the regulatory status of wireless carrier-delivered video content with an eye toward determining the necessary scope and nature of government oversight. The essay reports on instances where the FCC deemed it necessary to promote video programming competition and subscriber access to wired cable television content, and concludes that wireless subscribers deserve similar efforts in light of wireless carriers' incentives and abilities to blunt competition. The essay concludes that NRAs must balance the carriers' interests in finding new revenue centers to pay for next generation network upgrades with subscribers' interests in maximizing their freedom to use handsets they own.

Keywords: wireless, next generation networks, telecommunications regulation, information services, handsets

JEL Classification: K23, L43, L82, L96