

Federal Communications Commission (FCC) Chairman Tom Wheeler testifies during a hearing on Capitol Hill in Washington, before the House Energy and Commerce Committee. (AP Photo/Susan Walsh, File)

The head of the Federal Communications Commission is hinting that wireless carriers may soon have to obey the agency's proposed rules on net neutrality.

Cellular operators like Verizon, AT&T, Sprint and T-Mobile have thus far been largely exempted from rules meant to ensure that consumers' Internet traffic isn't slowed, blocked or manipulated, though the carriers are subject to a no-blocking rule as well as a transparency rule. But as part of an ongoing FCC effort to draw up new rules for broadband providers, chairman Tom Wheeler has asked whether that policy should be revised.

"There have been significant changes in the mobile marketplace since 2010," Wheeler told a wireless industry conference in Las Vegas Tuesday. "The basic issue that is raised is whether the old assumptions upon which the 2010 rules were based match new realities."

Those realities are reflected in the massive increase in demand for mobile data. Cisco estimates that last year alone, mobile data traffic grew worldwide by 81 percent. Data speeds have gotten faster, allowing for new capabilities and applications. In some circumstances, wireless data now offers an alternative to fixed broadband. That has federal regulators wondering whether the wireless industry still deserves special treatment.

The wireless industry argues it's different from more traditional broadband providers like cable and landline phone companies. For one thing, cellular carriers must pay for the airwaves that carry phone calls and Internet traffic. The capacity of those airwaves is dictated by the laws of physics, meaning that congestion is a much bigger problem for wireless operators than it is for companies that, for example, offer fiber optic Internet, whose capacity is far greater.

"We are told wireless is too important not to apply every potential rule to it," said Meredith Atwell Baker, who leads CTIA — the nation's top wireless industry association — in remarks in Las Vegas Wednesday. "The opposite is true. Ours is too important a platform for rules designed for a different technology and a different competitive landscape."

As a result of these physical constraints, some companies have taken to slowing down their heaviest mobile data users to preserve a smooth experience. Verizon announced earlier this year that it would soon be throttling the top 5 percent of data users on unlimited plans during times of peak demand.

While Wheeler has acknowledged that the wireless industry differs from other broadband providers in important respects, he views Verizon's policy as an unfair form of customer targeting. Those on unlimited data plans have already paid for unlimited service, he said, and that's what they should get. Some consumers may even be purchasing expensive new devices under the mistaken impression that they'll be able to take full advantage of the data network.

"I am hard pressed to understand how either practice, much less the two together, could be a reasonable way to manage a network," Wheeler said Tuesday.

To help customers manage their data use, some companies — such as AT&T and T-Mobile — exempt certain applications from customers' monthly data caps. AT&T's Sponsored Data program allows companies to pay a fee to receive the benefit. Customers on T-Mobile who use preferred music services won't have that usage counted against their data allowance.

These programs have raised net neutrality concerns among critics who say giving preferential treatment to some companies and not others, or selling special access to consumers, amounts to the same practices that the FCC is so concerned about in the fixed broadband industry — just migrated to the wireless space.

So should the FCC extend its net neutrality rules to cover wireless providers? Some advocates, such as House Minority Leader Nancy Pelosi (D-Calif.), say yes. And the FCC appears poised to agree.