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Political & Legal Factors Surround the Cell Phone

April 20, 2010

Political & Legal Factors Surround the Cell Phone

Any essay pertaining to the political and legal factors surrounding the cell phone industry must focus on the Federal Communications Commission (FCC), “an independent United States government agency. The FCC was established by the Communications Act of 1934 and is charged with regulating interstate and international communications by radio, television, wire, satellite and cable” (Author unknown 7, 2010). And any conversation relating to the FCC’s governing of this industry will find both supporters and critics.

It is difficult to argue against the need for an agency like the FCC back in 1934. Radio was a huge success and our airwaves were being filled with broadcasts, both professional and amateur, that continually interfered with one another. Agencies such as the FCC are very necessary to allocate frequencies and monitor our airwaves. But one could argue that the a slow moving government bureaucracy is not always the most appropriate means by which to “keep up with” technologies that have taken us from radio to TV, car phones to cellular technology, the internet and satellite communications all in the span of 75 years. Such may be the case when it comes to the FCC’s dealing with cell phone technology.

The concept for the first cell phone system dates back to 1947. That year, AT&T asked the FCC allocate a large number of radio-spectrum frequencies so that widespread mobile telephone service could become feasible. Without such a ruling by the FCC, AT&T would not have the necessary incentive to research this new technology. But the FCC did not see it that way. They believed that “if the technology to build a better mobile phone service works, we will increase the cellular phone frequencies allocation, freeing the airwaves for more mobile phones”. Thus placing the burden squarely back on AT&T’s shoulders (Author unknown 9, 2009). “We can partially blame the FCC for the gap between the initial concept of cellular service and its availability to the public.”  The FCC chose to limit the number of frequencies available in 1947 to the point where only twenty-three phone conversations could possibly be held at any one time in any given market. Is that what the FCC called an incentive? (Belis, 2010). Needless to say, the concept of the first cell phone system was placed on hold thanks in large part to the short-sidedness of the FCC.

We discussed in the “History of the Cell Phone”, how Mr. Engel and his team at Bell Labs were working on the design that would become today’s cell phone system in the late 1960’s. In fact, they turned their work into a proposal to the Federal Communications Commission in December 1971. The FCC did not know what to make of this. They were concerned about the airwaves, they were concerned about the design and convinced it would never work, and they basically did nothing for 7 years!  That is how long it took before the FCC finally approved the overall concept. One website, outlining the timeline for the history of the cell phone, cites that in 1970 the FCC finally realized the potential of the industry and “can not ignore it any longer” (Keith, History, 2004). Which begs the question, why were they ignoring it in the first place? And then, after seven years, the FCC chose not to license the system’s creators, ATT & Bell Labs, choosing instead to license two competing systems in each city so as to avoid any type of monopoly.

Still, after seven years of waiting for approval, AT&T conducted FCC-authorized field trials in Chicago and Newark, N.J. And it took another four years before the FCC would grant commercial licenses to an AT&T subsidiary, Advanced Mobile Phone Service Inc. In fact, in an effort to control any form of monopoly, the FCC played a key role in delaying the first commercial cellular system in until October 1983, a full 12 years after AT&T submitted their original request. (Author unknown 4, 2010).

It took only four years before consumer demand outstripped the cellular phone system’s 1983 standards. By 1987, cell phone subscribers surpassed one million, and the airways were very, very crowded. One way to improve the service was for the FCC to issue more bandwidth…they refused. Instead, they approved a plan that would allow cellular phone licensees to pursue new technologies that could be used in the 800 MHz band. Once again, the burden was placed on the entrepreneurs (Author unknown 9, 2009).

It would seem clear that the FCC did not make the formation of our cell phone industry an easy one. But such problems continue today. We discussed in the “How It Works” essay the wonderful benefits derived by today’s standard 3G technology. But in 2001, the FCC fought its creation as well. “The FCC ruling is the industry’s second setback this month in a four-year quest to roll out “third-generation,” or 3G, wireless phones” was the highlight of a 2001 article in the L.A. Times. This prompted a Verizon spokesperson to repeat once more,  “The FCC and the government still need to identify and bring into the marketplace . . . airwaves specifically for 3G wireless” (Jube, 2001).

The FCC has done some good in regards to our cell phone system. When Congress said in 1996 that people must be allowed to keep their phone numbers when they change phone companies, the FCC said that wireless carriers would have to comply as well and offer “number portability.” And that’s a good thing (Author unknown 8, 2002). Since 2004, they have been re-considering the ban on cell phone use in planes (Bloomberg, 2004). In 2005, they sought to “clarify confusing and misleading charges on cell phone bills” (Dunbar, 2008). Yet, the FCC still “interferes” when the word monopoly is brought up in any fashion. In 2009, they decided to “launch a review of cellular phone exclusivity deals – like the lucrative and longstanding arrangement between Apple and AT&T” (Shaer, 2009).  For centuries the government has fought to prevent large companies from getting “too big”. There is good reason for that, particularly from a competition point of view. But I really do not see the harm in a consumer who chooses to purchase a cell phone and a bundled service so long as the consumer fully understands the deal. What’s the harm?

As with any multi-billion dollar industries, legal issues abound in the cell phone world. While most companies do everything in their power to patent their creations, there seems to be a great deal of gray area in the hardware and software that the many cell phone manufacturer’s provide. Lawsuits involving patent infringement abound. For brevity’s sake, I will mention only a few: Apple is suing the Finnish company Nokia for violating one of its patents, ironic, as a result of  Nokia recent suit against Apple on the same grounds(Monfort, 2010) . Recently, Samsung submitted a complaint against Kodak over mobile phone camera technology (Sood, 2009).  Apple has filed suit against cell phone manufacturer HTC for patent infringement involving Android handsets (Schonfeld, 2010). Taiwanese Elan Microelectronics, filed a lawsuit against Apple dealing with their multitouch products such as iPad, iPhone, iPod touch, MacBook and Magic Mouse (Newman, 2010).  In fact, there are countless lawsuits between cell phone technology firms (see chart). A pretty safe bet where there’s billions of dollars at stake.

Another legal issue that I feel most offended by has to do with the huge amount of piracy and copyright infringement that exists in today’s digital world. And although I fully understand that the cell phone is not the culprit when it comes to this topic (the internet has made it all possible) I do not want to give the cell phone a complete pass in this regard. The cell phone has now become a conduit to the Internet. And this conduit has opened the floodgates to downloaded music, video, data, books, artwork and photos much of which does not belong to the person doing the downloading. Heck, students are downloading term papers done by others with some websites charging for the “privilege”. I am at a loss as to where we believe we gained that right. Is it that the down-loader does not really know that he or she is doing something illegal? Or is it that they do not care? I cannot excuse the ignorance of the first no more than I can excuse the flagrant disregard for the law displayed by he second. The internet, and now it is associated technologies such as the cell phone, have made it all too simple to download a song, as an example, that an artist deserves to be compensated for. It is made it far to easy to download a movie that studios have the right to be paid for. Perhaps we feel that the big bad movie companies and record labels deserve such treatment. They are multi-billion dollar industries and can “afford” to lose a couple of dollars in profit. And the way the music labels treat their artists..they deserve it as well. But does the downloader not realize that they are hurting the starving artist more than the label?

In class the topic of music companies-artist relationships came up as it pertains to this subject. Firstly, the record label-artist relationship has been a poor one for the artist since records were first made and I do not like it. It is not fair to the artist and I would favor anything that would address it in a more equitable way. I also admire those artists who have taken advantage of today’s technologies in regards to creating music and distributing it on the Internet. Artists such as Phish allow their fans to download their music for free in an effort to promote their concert tours, which generates real profits. But if you download/pirate their music for free, you may be putting a little kink in the record label’s profits but you are most certainly hurting the artist even more. What little pittance they would get from the record label is now gone and what they may have earned on their own via legitimate music download sites is gone as well. So when you think you are hurting the big corporation and not the artist…think again.

I have another question for those who believe it is OK to pirate from big companies…when does a starving artist become big enough to steal from? When your favorite, but struggling artist sells his music on the Internet and you purchase it…what happens when he becomes a big star and multi-millionaire? Is it OK to steal from him then? I am not so naive as to believe that piracy can ever be eliminated…but the Internet, and now the cell phone, has made it so prevalent, so accessible, so easy and so shameless that something must be done.

So it should be clear that the cell phone industry, like so many multi-billion dollar industries, is not without its legal and political issues. It should also be clear that as the industry grows and new features are added to our cell phones, and new firms enter the marketplace, that the questions of who created what first and what makes one product substantially different from another (in the eyes of the law) will be further complicated. And it should also be clear that the FCC, in its own way, will continue to play a key role in the industry’s future.

References

Author unknown 4. 1946: First Mobile Telephone Call. AT&T Enterprise, 2010.

http://www.corp.att.com/attlabs/reputation/timeline/46mobile.html April 13, 2010.

Author unknown 7. About the FCC. The Federal Communications Commission. April 9,

2010. http://www.fcc.gov/aboutus.html. April 13, 2010.

Author unknown 8. FCC Delay Cell Phone Number Deadline .USA Today. July 17,

2002. http://www.usatoday.com/tech/news/2002/07/16/fcc-cell-phones.htm. April 13, 2010.

Author unknown 9. History Of Cellular Phones. Phone Warehouse. March 10, 2009.

http://affordablephones.net/HistoryCellular.htm. April 13, 2010.

Bellis, Mary. Selling The Cell Phone- Part 1: History Of Cell Phones. The New York

Times Company. 2010. http://inventors.about.com/library/weekly/aa070899.htm. April 13, 2010.

Bloomberg News. FCC Reviewing Flight Cell Phone Use. The New York Times.

December 9, 2004. http://www.nytimes.com/2004/12/09/technology/09fcc.html?fta=y&pagewanted=print&position=. April 13, 2010.

Dunbar, John. FCC Chief Wants Cell Phone Cancellation Fees Regulated. USA Today.

March 23, 2008. http://www.usatoday.com/money/economy/2008-05-23-1715105189_x.htm. April 13, 2010.

Keith, Robert D.. History Of the Cell Phone. In The Name of Telephone The Cell Phone

Is The King. 2004. http://iml.jou.ufl.edu/projects/fall04/keith/history1.htm. April 13, 2010.

Monfort, Steve. Nokia and Apple Spar Over Patent Issues. NASDAQ.

April 12, 2010. http://www.nasdaq.com/newscontent/20100222/Nokia-and-Apple-spar-over-patent-issues.aspx. April 13, 2010.

Newman, Jared. Apple iPad, iPhone Hit With Multitouch Patent Lawsuit.  PC World.

March 30, 2010. http://www.pcworld.com/article/192904/apple_ipad_iphone_hit_with_multitouch_patent_lawsuit.html. April 13, 20

Schonfeld, Erick. The Complaint: Apple’s Patent Lawsuit Against HTC Is All

About Android. Tech Chrunch. March 2, 2010. http://techcrunch.com/2010/03/02/the-complaint-apples-patent-lawsuit-against-htc-is-all-about-android/. April 13, 2010.

Shaer, Matthew. Heeding Kerry’s call, FCC Will Investigate Exclusive Cell Phone Deals.

The Christian Science Monitor. June 19, 2009. http://www.csmonitor.com/Innovation/Horizons/2009/0619/heeding-kerrys-call-fcc-will-investigate-exclusive-cell-phone-deals. April 13, 2010.

Shiver, Jube Jr. Ruling Sets Back 3G Airwaves Plan; Wireless: FCC action prevents cell

phone industry from ‘third generation’ upgrade. http://pqasb.pqarchiver.com/latimes/access/82049289.html?dids=82049289:82049289&FMT=ABS&FMTS=ABS:FT&type=current&date=Sep+25%2C+2001&author=JUBE+SHIVER+Jr.&pub=Los+Angeles+Times&desc=Ruling+Sets+Back+3G+Airwaves+Plan%3B+Wireless%3A+FCC+action+prev. April 13, 2010.

Sood, Natesh. Samsung and Kodak Fight Again Over Patent Issues. Gadgetell. Febuary

21, 2009. http://www.gadgetell.com/tech/comment/samsung-and-kodak-fight-again-over-patent-issues/. April 13, 2010.

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