Subcommittee ranking Republican Fred Upton of Michigan and other GOP members, meanwhile, warned against imposing burdensome restrictions on an industry they already consider competitive and innovative.

Markey praised Apple's iPhone as a brilliant new technology but complained that it only operates on AT&T's network, which doesn't reach some pockets of the country. "I don't know if it's iPhone, or i-phony," quipped Columbia University Law Professor Tim Wu, a witness. Upton downplayed the concerns, noting that roughly 400,000 consumers easily switched carriers to purchase iPhones.

Over the next few weeks, the FCC's three Republican and two Democratic regulators will negotiate the parameters for bidding on frequencies to become available as analog television broadcasters shift to digital signals in early 2009. The agency has been under close scrutiny from congressional Democrats for months and is increasingly being prodded by Republicans.

On Tuesday night, Martin, a Republican, began circulating to his colleagues a proposal recommending that some winning spectrum licensees allow unaffiliated devices and software applications to operate on their networks. The FCC may vote on final guidelines in late July or early August, with the bidding to commence by Jan. 28.

"The FCC has a rare chance to foster similar innovations [to those available for traditional telephones] in the upcoming auctions," Markey said. "The freedom to innovate in the wireless marketplace for gadgets and applications could unleash hundreds of millions of dollars in investment and create new jobs."

But Dingell warned that the agency has a spotty record on consumer protection. "In the past, even the FCC's most well-intentioned initiatives have not always resulted in solid consumer benefits," he said.

Subcommittee Vice Chairman Mike Doyle, D-Pa., added, "I think it's time for the consumer to become the decider of what their cell phones do -- not the cell-phone companies."

Upton countered that the wireless market, with four major nationwide carriers, is "vigorously" competitive. "No matter how you slice it, forced network neutrality smothers investment in a competitive market" and could harm consumers, he said. The reference was to efforts to mandate "open" systems that accommodate gadgets and software unaffiliated with spectrum licensees.

"I'm an entrepreneur and I'm mad as hell that I have to ask for permission to innovate," said Jason Devitt, a Silicon Valley entrepreneur who said he donned a suit for the first time in 18 months to share his concerns with Congress. He said "hundreds" of technologies are not reaching consumers because wireless carriers operate proprietary networks.

"There are reasons to be concerned about the direction this industry is headed," Wu said. He considers it "unacceptable" that consumers can't use their wireless phones on competing networks.

Steven Zipperstein, general counsel at Verizon Wireless, said customers are not clamoring to use affiliated devices on the company's infrastructure and insisted that the marketplace is responding to consumer demands.