If you live in a rural area of the U.S. and desperately want an iPhone, you are out of luck.  At least for now.

AT&T, the exclusive carrier of the iPhone in the U.S. is under fire from the Federal Communications Commission over the concept of “net neutrality”, or lack thereof in this case. At the request of some members of the U.S. Senate, exclusive agreements like the one between AT&T and Apple for the iPhone are now coming into question.

The FCC’s concern in the matter has been with some smaller markets where major carriers do not offer service.  Because the iPhone is exclusive to AT&T, a customer that lives outside the AT&T coverage area, would be unable to use an iPhone - one of the most popular wireless devices ever.

Lobbying for the cause is - you guessed it - the Rural Cellular Association.  The RCA is a group of smaller tier II and tier III wireless carriers.  Their beef with this whole issue lies in the fact that they are unable to provide their customers with some of the most popular mobile handsets and smartphones - especially in markets where their coverage does overlap with some of the big tier I operators.

The FCC claims it only wants to increase competition, innovation and consumer protections in the market.  In August, the FCC released a number of official notices of inquiry, announcing investigations designed to look into wireless innovation and investment, mobile wireless competition, and additional opportunities to protect and empower consumers in the communications marketplace.

AT&T and Verizon, two of the biggest carriers in the U.S., have raised serious concerns however. “We are concerned… that the FCC appears ready to extend the entire array of Net neutrality requirements to what is perhaps the most competitive consumer market in America: wireless services,” Jim Cicconi, AT&T’s senior vice president of external and legislative affairs, reportedly said.  A company spokesperson for Verizon said some of the goals outlined in the FCC chairman’s remarks could have “unintended consequences.”

FCC Chairman Julius Genachowski recently outlined six principles he would like to see implemented in support of Net neutrality. They include freedom to access legal content and to use applications of the users’ choice. The goal is to keep the Internet a free and open place, and prevent Internet service providers from selectively blocking or limiting access to specific services, like Voice Over IP services and peer-to-peer downloading software.

This issue seems to be just one more area in which the government is getting involved in the free market.  No one argues that the internet should not be kept a free and open place, but the frequency in which the government is getting involved in business and industry in the name of promoting competition and innovation is cause for concern.   Isn’t this the same government that a few years back proposed a tax on email?  Competition and innovation should be left to free market principles, not the strong arm of the federal government.