No. 1] Mobile Misperceptions 71
But the balance of power is shifting.
94
Handset brands and models
are an increasingly important determinant of a consumer’s choice of
service provider.
95
Apple’s launch of the iPhone represents a rare but
significant example of a handset manufacturer successfully overcom-
ing carrier pressure.
96
In addition, the open-access trend is starting to
limit carriers’ control over the handset market.
97
Regulation is playing
an important role: one third of the recently auctioned spectrum comes
with a requirement that “cellular networks allow customers to use any
phone they want on whatever network they prefer, and be able to run
on it any software they want.”
98
And, perhaps sensing the inevitable,
carriers are beginning to embrace the new open-access business
model, reasoning that they can cut costs by eliminating handset subsi-
dies and letting handset manufacturers bear most of the development
and customer service costs.
99
patibility between devices and networks, and networks must be able to communicate with
handsets for a variety of service related purposes. Id. at 19–20.
94. On power struggles between carriers and handset manufacturers, as well as with ap-
plication developers, see generally Jessica E. Vascellaro, Air War: A Fight Over What You
Can Do on a Cellphone, W
ALL ST. J., June 14, 2007, at A1; see also Miguel Helft &
Stephen Labaton, Google Pushes for Rules to Aid Wireless Plans, N.Y.
TIMES, July 21,
2007, at A1.
95. See Rita Chang, Proof that Handset Brands Help Sell Wireless Plans, RCR
WIRELESS, Oct. 28, 2008, http://www.rcrwireless.com/article/20081028/WIRELESS/
810289995/1081/proof-that-handset-brands-help-sell-wireless-plans#.
96
. See John Markoff, Apple Tops Expectations as iPhone Use Spreads, N.Y. TIMES,
Oct. 22, 2008, at B3 (“Apple has already surpassed its goal of selling 10 million iPhones
during 2008”).
97. See George S. Ford, Thomas M. Koutsky & Lawrence J. Spiwak, Wireless Net Neu-
trality: From Carterfone to Cable Boxes,
PHOENIX CTR. POL’Y BULL. No. 17, Apr. 2, 2007,
at 2, http://phoenix-center.org/PolicyBulletin/PCPB21Final.pdf.
98. Editorial, A Half-Win for Cellphone Users, N.Y.
TIMES, Aug. 6, 2007, at A18; see al-
so In re Service Rules for the 698–746, 747–762, and 777–792 MHz Bands, 22 F.C.C.R.
15289, 15367, 15370–71 (2007) (second report and order) [hereinafter Service Rules Sec-
ond Report and Order]. More generally, in 2005, the FCC released a policy statement indi-
cating that it was committed to promoting network neutrality. In re Appropriate Framework
for Broadband Access to the Internet over Wireline Facilities, 20 F.C.C.R. 14986 (2005)
(policy statement); see Richard E. Wiley, “A New Telecom Act” — Remarks, 31 S.
ILL. U.
L.J. 17, 28 (2006) (noting that “various versions of net neutrality language have been in-
cluded in draft telecom reform bills”); see also In re Petition to Confirm a Consumer’s
Right to Use Internet Communications Software and Attach Devices to Wireless Networks,
22 F.C.C.R. 5042 (2007) (recognizing a petition to the FCC for a declaratory ruling that the
Commission’s Carterphone rules, which give consumers freedom to attach devices of their
choosing to their phone lines applies to wireless networks).
99. See Ante, supra note 74; see also Sharma & Searcy, supra note 75. Nevertheless, it is
likely that at least the involuntary imposition of open-access requirements will reduce the
profitability of spectrum to service providers. Analysts have estimated that the open access
requirements imposed in the recent auction resulted in $3.1 billion in lost auction revenues
from sales of encumbered spectrum and a 32% reduction in profitability of the purchasing
wireless provider. George S. Ford, Thomas M. Koutsky & Lawrence J. Spiwak, Using Auc-
tion Results to Forecast the Impact of Wireless Caterfone Regulation on Wireless Networks,
P
HOENIX CTR. POL’Y BULL. No. 20, May 2008, at 3, http://www.phoenix-center.org/
PolicyBulletin/PCPB20Final2ndEdition.pdf.