The FCC's reaction to the Google Voice banning looks like a new
chairman wanting to establish himself. What better way to show the
difference with the previous administration than this quick take-up of
an issue generating noise on the Internet?
Unfortunately, in the rush to question and demand answers by the end
of August, some fundamental issues were overlooked or ignored.
Apple vs. Google Voice
Google Voice would be a new service on the iPhone, as it is
on other cellphones. It is not a 911 or other emergency service. There
is no urgency to see it available everywhere.
The millions of iPhone users don't have a long-standing right to
Google Voice and didn't sign contracts because it was available.
It is available on the other major smartphones. Why not let the
market decide how many people want Google Voice? If there are enough,
AT&T and Apple will start losing customers, and it will quickly
become available.
Google responded appropriately to the banning. It will make Google
Voice available to iPhone users as a web app. So iPhone users who want
Google Voice won't lose out, they just won't have the ease of use of an
installed app. Since Google's future is cloud-based, it is arguable
that it should have made Google Voice available like this in the first
place, but Google wanted the exposure from being in the App Store and
was rejected.
Google Voice vs. AT&T
If Google Voice had been split into a VoIP app for international
calls, which only worked over WiFi, and a switch app on the iPhone to
ring the telephone you want, then both would probably be in the App
Store now along with Skype, TruPhone, and Fring. Since Google Voice is
an attack on AT&T's business (covered in The Unwritten Rule behind
Apple's App Store Rejections), maybe Google thought its partnership
with Apple through Eric Schmidt, Al Gore, Arthur Levinson, etc. was
more important than Apple's business relationship with AT&T.
From Apple's point of view, the risk is that developers who use or
could use Google Voice will move to other platforms. Since Google is
trying to build up Android to make sure that Windows Mobile fails,
whatever happens is a win for Google.
FCC vs. Apple and AT&T
Apart from this, the noise about Google Voice is unlikely to bother
Apple. The banning, if not AT&T inspired, could have been Apple
showing separation from Google despite Eric Schmidt being on the board.
The worst that is likely to happen: The FCC will try to tear up the
Apple/AT&T iPhone exclusive and give a present to T-Mobile, the
other US GSM operator. That, if anything, will increase iPhone sales in
AT&T bottlenecks like the Bay area.
The big problem is AT&T's monetizing and investing in a network
that in a few years risks being just another data pipe. Naturally,
AT&T wants to put off turning into a mobile ISP for as long as
possible, and the exclusive iPhone contract is one of the ways. Keeping
up network investment in the current slowdown so the US doesn't fall
further behind more densely populated countries, like Japan and South
Korea, should also be a more pressing problem for the FCC than Google
Voice.
Apple Values Partnership
Even though AT&T has been slow in adding support for tethering
and MMS and Apple would probably gain from an end to the agreement, it
will support AT&T as it did Orange when the French courts ruled
against the exclusive contract. This is because Apple needs to show
carrier partners that it will live up to the agreements in place and
back them when there are any regulatory problems.
Other cultures value partnership much more. It is looked on as more
than a pure short-term business relationship. Good partnerships let
both sides plan for the long term, which means both sides can make
investments that need time for payback. If Apple is to keep growing in
smartphones, it needs these relationships.
FCC Flexing Its Muscles
The real issue here is the FCC trying to use its powers to regulate
the physical communications infrastructure to move into new areas. It
is the usual bureaucratic land grab. The FCC is trying to set precedent
so it can show the other bureaucracies it is responsible in this
area.
The FCC can't pretend that it is looking into VoIP as part of the
Senate requested inquiry into cellphone exclusives. If it were, similar
questionnaires would have been sent to other carriers. Apple could
reasonably ask why the FCC believes Congress granted it the powers to
demand a reply to questions like these. The situation is akin to the
Federal Highway Administration asserting authority over
bricks-and-mortar stores because people use roads to get there and then
sending a questionnaire to Walmart asking why their stores don't stock
Target brand goods.
Blatant Intervention
The FCC questions below could be seen as a blatant intervention on
behalf of Google, a company which will be one of the cloud shapers for
years to come.
2. Did Apple act alone, or in consultation with
AT&T, in deciding to reject the Google Voice application and
related applications?
4. Please explain any differences between the Google
Voice iPhone application and any Voice over Internet Protocol (VoIP)
applications that Apple has approved for the iPhone. Are any of the
approved VoIP applications allowed to operate on AT&T's 3G
network?
It is not that the questions are unreasonable. After all, bloggers
and other journalists had already asked similar questions. Apple,
however, can choose if it answers journalists.
What is unreasonable is the demand for answers by August 31 when the
FCC knows it lacks the authority but does have the power to delay
approval for a new iPhone, iPod touch etc.
Authority
When the FCC Chairman was
interviewed by Ars Technica and asked if he thought that the FCC
has the statutory authority to tell Apple to allow Google Voice on the
iPhone, Genachowski said,
"At this point we're trying to understand the
situation. What we read about in the last week or so is relevant to
some proceedings at the FCC. The agency is the country's expert agency
on communications. And it needs to be proactive to understand what's
going on in the marketplace that's relevant to its proceedings."
In other words, as a lawyer who clerked for Supreme Court Justices
Brennan and Souter, he knows he doesn't.
In another interview, this time
with Om Malik, Genachowski said,
"In 1996, when Congress passed the
Telecommunications Act, the law did not have the word Internet in it.
So the governing statute that lays out the regulatory landscape was
written just before the Internet really took off. And that regulatory
structure is what continues to govern. It has a lot of room in it for
the FCC to apply the language of the Communications Act as amended by
the 1996 Act to ongoing facts and circumstances. But I think a lot of
people would say that the changes in the industry and changes in
technology have moved faster than the changes in the regulatory
landscape."
Net Neutrality
Comcast has already
appealed the ruling on net neutrality because it believes the FCC's
order falls outside its "statutorily mandated responsibilities".
Following the FCC's order, Comcast changed its network management
procedures, and regardless of the success of the appeal, they will stay
the same. So at least part of the reason for the appeal must be knowing
that sooner or later the FCC will issue an order that seriously affects
Comcast's business model, and when Comcast refuses to comply, there is
a risk Congress will pass enabling legislation without proper
debate.
The oral arguments for the appeal won't be heard until next year,
but the FCC net neutrality ruling is certainly closer to its
responsibilities than the questionnaire sent to Apple.
The timing of the questionnaire too is so poor. Sending it out in
August, when there is less political news to drown it. It's not as if
the Web goes into recess like Congress.
Scandal
The Republicans are in retreat and looking less and less relevant.
They are desperate for issues to motivate their base. A government
agency over-stretching like this, exceeding its authority, is perfect.
They will trumpet any FCC ruling against Apple and AT&T as more
government interference in a free market, and this risks becoming a
full blown political scandal if they can tie it to campaign
contributions solicited by Genachowski.
The Obama administration and America have deeper concerns, like the
economy, getting more people back to work, and the reform of
healthcare, so the FCC Chairman should find a way to sideline the
Google Voice inquiry.
Now that Eric Schmidt has resigned from the Apple board, Google and
Apple are shaping up as competitors, even though they will continue to
cooperate in areas like WebKit for their browsers. Google Voice will be
on the Web for iPhone users.
This is how a market that works operates.
Julius Genachowski, with a display of political ineptness, has put
himself and the FCC in the crosshairs. Will the Republicans pull the
trigger? Are the Democrats and the President - his friend since Harvard
Law School - willing to spend political capital to defend him?
Two questions certainly not in the published FCC questionnaire.
