Verizon vs Apple: A royal battle
By Aaron Pressman
The opinions expressed are his own.
Last week’s tiff over the Google Wallet app at Verizon Wireless may seem like just another minor dust-up among hardcore phone geeks. But the debate is an opening skirmish in a potentially huge battle, particularly if, as expected, a new iPhone model arrives that runs on Verizon’s high-speed “LTE” Internet service.
At stake is whether seemingly pro-consumer “open platform” rules adopted by the Federal Communications Commission to promote choice and innovation on Verizon’s LTE network have any meaning at all.
The rules were supposed to let customers, not carriers, decide which devices and applications they could use on the LTE network. That would seemingly mean that customers who wanted to use the Google Wallet payment app on the Verizon network via the upcoming Galaxy Nexus phone would be allowed to do so.
After all, the FCC said carriers could not “block, degrade or interfere with the ability of end users to download and utilize applications of their choosing … subject to reasonable network management.” The Wallet app uses a special “near field communication” chip built into the Nexus phone which is designed to talk with the cash register at a local coffee shop, not bring down Verizon’s cellular network.
But, not so fast.
Verizon, which is backing a competing mobile payment service known as Isis, asked Google not to include the app for use on the Nexus phone. Defending the move, Verizon didn’t address the open platform rules directly. Instead, the carrier said the app “needs to be integrated into a new, secure and proprietary hardware element in our phones,” adding that “commercial discussions” with Google on the issue were “continuing.”
It’s hard to see how either rationale addresses the FCC’s requirements. The proprietary hardware element was present in earlier versions of Nexus phones and has nothing to do with managing the wireless network. And the reason the FCC made those requirements is so that carriers can protect their own offerings by blocking services built into phones like the ability to play MP3 ring tones, use Bluetooth for file transfers or connect to the Internet via wi-fi. Mobile payment services seem of the same ilk.
The carrier’s true defense may be mired in the details of the rules, which permit the company to establish its own certification standards for devices and applications and to “ensure the safety and integrity” of the network. Verizon has published exhaustive certification criteria for phones and other devices but has opted not to offer any guidelines for apps thus far.
A few months back, after similar complaints arose about Verizon receiving tethering apps dumped from Google’s app store, the carrier made even broader assertions.
The tethering apps let consumers connect laptops or other devices to the Internet via their smart phone connections while avoiding an additional tethering fee that Verizon charges. Verizon asked Google to remove the apps, saying they violated Verizon’s terms of service.
Free Press, a non-profit advocacy group in Washington, D.C., filed a complaint with the FCC contending that Verizon had no right to have the tethering apps booted because of the open platform rules.
Verizon responded by saying it was not blocking anyone from using the apps on its network. The wireless carrier pointed out that it had asked a third party, Google, to remove the apps from an app store. The rules “do not apply to the actions of third party app store providers,” Verizon argued.
And that’s why the openness issue will get much more heated next year when the “iPhone 6” arrives, likely with LTE capability.
Apple’s phone is far more popular than any individual LTE-capable phone offered by Verizon thus far and even the whiff of an iPhone controversy generates headlines around the globe. Already, a few legal proponents of the open platform rules have argued that the iPhone and Apple’s app store would need to open up to be allowed onto the LTE service.
Unlike Google, Apple runs a far more controlled and locked-down app store. Apps that compete with Apple’s own offerings have faced long delays for unknown reasons or never shown up at all. Phones running Google’s Android operating system can load apps directly from a PC without using an app store, while the iPhone lacks this so-called side-loading ability.
The problem for regulators is if they adopt Verizon’s interpretation of the rules, then the rules could become meaningless. Verizon could ask Apple to turn off any feature or remove any app at any time. And if regulators go the other way, they’ll be monkeying with the most successful new retail venture in the history of wireless: Apple’s billion-apps-a-month store.
Either way, it’s likely to be a royal battle.