Carriers Begin Neutralizing the Wireless World

The specter of the FCC’s “Net neutrality” regulations looming over the wireless Internet are shaping events unfolding this week.

On Tuesday, in a turnabout, AT&T said it would allow iPhone owners to use Internet telephone services such as Skype via its 3G wireless network instead of just Wi-Fi. This means that people with Internet data plans can cut back on phone minutes and make near-free international calls via the wireless Internet.

Then, today, Google and Verizon Wireless agreed to collaborate on phones, PDAs, and netbooks, creating a mobile-Internet juggernaut based on Google’s open-source Android mobile operating system. This will pose another big challenge to AT&T and Apple, which have sold more than 50 million iPhone and iPod Touch gadgets. Verizon has more than 87 million customers.

Interestingly, AT&T’s turnabout came amid an FCC investigation into why Apple rejected Google Voice, telephony software for the iPhone. But the context is broader than that: the FCC’s chairman–Obama appointee Julius Genachowski–announced in a recent speech that he would propose Net neutrality regulations that would force Internet services providers to offer equal access to the Web and all of its services and applications to all customers. Importantly, he made it clear that these proposed rules would also apply to wireless Internet access. (The actual draft regulations are due later this month.)

Skype complained to the FCC two years ago about AT&T blocking its software on iPhones. The impact could be huge: Skype says its iPhone and iPod Touch applications have been downloaded six million times.

“These two recent developments show that the devices are becoming less of a bottleneck to choosing carriers and applications, meaning that there’s healthy competition even in the wireless arena,” says Mung Chiang, a Princeton electrical engineering professor who is working on broadband access algorithms.

Today Genachowski hailed AT&T’s move as “a decision I commend.” Also citing Verizon’s announcement, he added: “These are both wins for consumers.”