Apple, AT&T, Google And The FCC: A Cellular Twist On Network Neutrality

As long-time readers already know, I periodically revisit the topic of network neutrality. Historically, the bulk of my focus has been on wired broadband carriers such as AT&T (DSL), Comcast (cable) and Verizon (fiber), and on their attempts to restrict customers’ service and site accesses (a topic on which I’ll again have more to say, hopefully soon, per recent developments) via schemes such as:

• Port and protocol blocks, and
• Bandwidth throttles, along with per-month bandwidth caps

But if anything, cellular Internet access restrictions are even more egregious. Not only can (and do) the carriers put clamps on the data flowing through the wireless and wired segments of their networks, they and their hardware partners also restrict the types of applications installable on the handsets…thereby making Apple and AT&T’s recent skirmish with the FCC all the more interesting. Background: two-plus years ago, Google acquired GrandCentral, a company that provided a telephone management system.

GrandCentral (now known as Google Voice) provides its users with a phone number akin to that offered by a VoIP provider, although Google doesn’t (yet) offer full VoIP services. When someone calls that number, the action taken by Google Voice varies depending on who that person is…you can configure the service to automatically ring one or multiple of your other phone numbers (mobile, VoIP, POTS, etc), and/or you can route the call directly to the Google Voice answering machine service.

Google Voice also provides incoming and outgoing SMS services. And making outgoing Google Voice calls requires either website access or a dedicated application, since (again, at least at the moment) Google doesn’t have full VoIP capabilities. When you specify a particular person (or alternatively a generic phone number) that you want to contact via your Google Voice phone number, the service first rings you up on one of your phones, then dials the other person and completes the connection.

Last Monday, Apple yanked two previously approved Google Voice-cognizant iPhone utilities from the App Store, GV Mobile and VoiceCentral, for "duplicating features that the iPhone comes with (Dialer, SMS, etc)" (GV Mobile is now up in donation-ware form for jailbroken handsets on Cydia; I’ve tried it, and it works great). Google’s own Voice application, submitted for review six weeks beforehand, was also rejected by Apple in that same timeframe. And for the previously available App Store candidates, the developers got a double-whammy from Apple. Not only were they precluded from garnering more revenue from potential customers (who were also precluded from obtaining future updates to the programs), any refund requests from those customers were completely up to the developers to honor, even though Apple had made the cancellation decision (and had conveniently also taken a cut of the initial sale).

So who was the root culprit in these rejection and about-face cancellation decisions; Apple, or its North American carrier partner, AT&T? Initial cyber-speculation was mixed; some folks pointed out AT&T’s past track record in insisting that (for example) an application only be able to access the Internet via the iPhone’s Wi-Fi facilities (i.e. with Skype and SlingPlayer Mobile). Other folks pointed out Google Voice-supportive programs remained available on other AT&T handset platforms such as the Blackberry, thereby suggesting that Apple was solely pulling the strings (but, IMHO, in the process naively ignoring the comparative impact on AT&T’s network bandwidth caused by iPhone users versus owners of other handsets). And AT&T’s initial response was tactfully vague, thereby not clarifying the situation:

While we’re very proud to offer the iPhone 3GS along with the thousands of apps available through the App Store, AT&T does not manage the App Store – and we are not involved in the approval process for apps in the App Store. I recommend in this particular case that you express your concerns to Apple.

On Friday, the FCC sent letters to Apple, AT&T and Google requesting detailed background info on the situation. Again, AT&T’s one-day-later initial correspondence with the press was skillfully nebulous:

AT&T does not manage or approve applications for the App Store. We have received the letter and will, of course, respond to it.

Assuming that AT&T, while not an approver in the strictest sense of the term, was at minimum a heavy influencer in this decision, the next questions are "what did AT&T object to?" and "what was in the decision for Apple, aside from pacifying its partner?". After all, it was likely (albeit not a guarantee) that any phone call initiated via Google Voice would end up going over AT&T’s cellular voice network, and the initial call setup would require a miniscule amount of data traffic. For AT&T, I suspect the near-term issue involved potential loss of lucrative SMS and voicemail revenue. And for both AT&T and Apple, the longer-term sticking point was probably their shared desire to not enable a looming competitor. To wit, I forecast that Google’s future plans for Voice involve evolving it into a full-blown VoIP product. And, as suggested by Google CEO Eric Schmidt’s recent resignation from Apple’s Board of Directors, the two companies are on a competitive collision course due to Google products such as Android and the Chrome O/S.

Last Friday’s inquiry actually represents an extrapolation of earlier-announced intentions by both the FCC and Department of Justice to investigate such topics as handset exclusivity deals between hardware and service providers. To set the record straight, I have no particular issue with hardware subsidization in exchange for a minimum-required service contract (and as such, I find Verizon’s proffered concession, which might look good on paper but in actually only benefits a slender sliver of the country’s cellular service providers, laughable). Granted, I wish that the service providers also offered lower-cost per-month plans for folks with unsubsidized handsets, although I understand the administrative cost overhead that’d be necessary to roughly double a carrier’s plan portfolio.

But I feel quite strongly that hardware providers (and cellular service providers, for that matter) should not be precluded by the terms of any subsidization contract between them from also offering for sale carrier-unlocked versions of handsets at non-subsidized prices. Also, GSM providers in particular should support customers’ carrier-unlock requests after the contract time limit terms have expired, so that (for example) a handset owner can use the phone overseas. T-Mobile is quite good about doing this, so I’ve both heard and personally experienced, while AT&T is reportedly not near as responsive.

As such, I also strongly urge the Copyright Board to retain the current exception to the DMCA that enables handset owners to carrier-unlock their gear, assuming they can obtain the necessary hardware and/or software from an international source. I frankly find Apple’s attempts to roll back this exemption (PDF), via fear-mongering claims of jailbroken and unlocked handset usage by drug dealers and terrorists, to be pathetic. The Electronic Frontier Foundation agrees.

And what about preventing users’ access to, and installation of, applications that run counter to a hardware and/or service provider’s business objectives? Here’s where I’m really torn. On the one hand, my ‘information should be freely accessible’ idealism is bothered by the removal of GV Mobile and VoiceCentral, along with the rejection of Google Voice for the iPhone. But on the other hand, I realize that ensuring user access to such services will require a tremendous amount of government regulation to counteract corporate self-serving tendencies…heavy-handed political bureaucracy which I find equally unappetizing from a free market capitalism standpoint. There’s probably an ideal middle-ground solution in-between these two extremes, and as I attempt to discern it, I welcome your perspectives.