Even as the wireless industry chants a new gospel about opening mobile-phone networks to outside devices and applications, some of the biggest U.S. carriers are quietly blocking new services that would compete with their own.
Would-be mobile-service providers, ranging from startups to major banks to eBay's (EBAY) PayPal have encountered these roadblocks, erected by the likes of AT&T (T) and Verizon Wireless. In some cases, cellular carriers have backed down, but only after inflicting costly delays on the new services.
At issue is a type of mobile text message known as a short code, essentially a shortcut that lets cell-phone users access an array of services—say, getting sports scores or voting for a contestant on American Idol—by punching in five or six digits instead of the usual seven plus area code. ...
The Federal Communications Commission, which has never conducted proceedings or issued rulings concerning short codes, declined to comment for this article. Some industry experts say there's no clear-cut law being violated but suggest that legal precedents set in other areas of telecommunications may be applicable to short codes.
There's no question that this sounds anticompetitive, but that doesn't mean it's illegal," says Michael Salsbury, a partner at law firm Chadbourne & Parke and former general counsel for MCI, the long-distance carrier purchased by Verizon Communications (VZ). "It's definitely improper, because I think from a consumer perspective [a phone company] should have its service compete on the merits of features and cost. It shouldn't be blocking someone else." But, Salsbury adds, if it's still possible to provide a service via text message rather than a short code, then the carriers may be acting within their rights.
The FCC may need to deal with the issue sooner rather than later. On Dec. 11, Public Knowledge and seven other consumer advocacy groups [one being the New America Foundation] filed a petition with the FCC, calling carrier interference in text messaging a threat to free speech. The groups also asked the regulator to ban the practice. The petition cites the September refusal by Verizon Wireless to allow a short code for NARAL Pro-Choice America. Verizon Wireless quickly reversed the decision and apologized. Petitioners also refer to the Rebtel matter. ...
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