CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

It will allow VoIP on the iPhone 3G channel after all. If you hear loud cheers from the general direction of Mountain View, CA, that’s the Google folks breaking out the Red Bull. Apple still has not formally approved the Google Voice app, but a big obstacle is now out of the way.

The coincidence? Exactly one day before AT&T’s about face, the FCC announced the date, two weeks from now, on which it will formally propose its network neutrality rules. One of the key factors that precipitated the current surge of interest in network neutrality was a 2007 request from Skype, a VoIP company, asking the FCC to prohibit wireless companies (like AT&T) from blocking VoIP service. So the rules that might eventually be adopted, a year or two from now, may require action along the lines that AT&T took today.

Down here in the bunker we are a little surprised at the news. The wireless carriers have been erecting a protective wall of press releases that say network neutrality rules will bring about the end of technical innovation, social progress, and cheap cell phones. And AT&T’s decision may fundamentally change the economics of wireless phone service. We can expect vigorous marketing of VoIP services to iPhone users. That will probably cause a significant drop in paid-for voice minutes. Will AT&T start charging more for its data plan? Will Apple abandon the subsidy on the iPhone and start charging customers what the phone actually costs? AT&T may have brought us a little closer to a system in which customers have free choice and pay only for what they choose.

Sometimes the FCC can get the results it wants without actually regulating. Sometimes just announcing the date on which it plans to begin to consider regulating is enough.

While it makes up its mind, Apple generously invites Google to put the application on other, non-iPhone platforms “and let consumers make their choices.” Apple apparently misses the irony. If it truly favored consumer freedom, it would let customers include Google Voice in their choice of user experiences on the iPhone.

AT&T, for its part, claims no involvement in Apple’s decision (or failure to make one) regarding Google Voice. But AT&T is equally irony-challenged. Much of its response (a) touts the benefits of wireless competition, while (b) defending AT&T’s arguably anticompetitive policy of blocking VoIP services on its broadband network. The response is surprisingly frank about the rationale. VoIP users run up fewer minutes of voice service. AT&T needs the revenues from voice minutes to pay back the subsidy that lets consumers buy the iPhone at an artificially low price, which in turn has attracted many new customers to AT&T’s network (and billings for voice minutes).

Here’s an idea: a wireless network that offers its users maximum choice, and charges only for services actually selected and delivered. No limitations on handset applications; no handset “subsidies” recovered through excessive monthly charges. The wired phone system once had carrier-imposed equipment subsidies and service restrictions. Their removal by the FCC triggered the current telecommunications revolution and helped to produce the Internet. Maybe it’s time to try the same approach for wireless services as well.

Google’s response to the FCC on Google Voice might be interesting and helpful, but we will never know. Except for a glowing account of the advantages of Google Voice and Android, a Google-supported operating system for wireless phones, public copies of the response are heavily redacted, especially as to communications between Google and Apple about getting Google Voice approved. Again, the irony is hard to miss. Google has the legal right to redact information that it thinks might unfairly help its competitors. But as a company that has long championed openness on the Internet, it might have been more open with information that affects not only Google and Apple, but all of us interested in making the best use of communications resources.

One started with a petition from Skype, which provides free or inexpensive phone service over the Internet.  Most wireless carriers do not allow access to Skype over their handsets, because the customer could call via Skype instead of running up expensive minutes. The other proceeding began with a group of small rural cell companies asking the FCC to ban exclusive arrangements for handsets. Because such deals limit the most desirable handsets to the majors, the small carriers lose business to customers who want the latest in hardware. So far, though, the FCC has only invited public comment on these requests, with no hint as to whether it might act.

The newest wrinkle comes out of Apple’s decision against Google Voice.

Broadly speaking, Google Voice brings phone service into the Internet Age. A subscriber receives a new phone number, local in any region of the subscriber’s choosing. Calling that number rings all the customer’s phones, wherever they are: office, home, cell, etc. Different callers can be automatically routed to different phones, or forwarded selectively to still other phones, or fed different voice mail greetings, or given different rings, or blocked altogether. All the voice mails from all the phones end up in one place, where they can be read in printed form, like emails, or listened to online from anywhere. There are provisions for setting up conference calls, and for recording phone conversations for online storage. Parallel features cover SMS messaging.

And calling anywhere in the United States is free.

Apple rejected Google’s application to sell Google Voice through the App Store, the only legal source of iPhone software. And Apple revoked previous App Store approvals for third-party software intended to work with Google Voice. Early speculation supposed that Apple had acted at the request of AT&T, whose network uses the iPhone, but press reports say that AT&T has denied any involvement. Apple’s motivation for stirring up its customers remains unknown.

Now the FCC has sent letters to all three companies: Google, Apple, and AT&T, asking Apple and AT&T which one of them made the decision to bar Google Voice, and why, and whether Apple and AT&T offer competing applications. The letter to Google asks for details on how Google Voice works, and for a summary of the discussions with Apple and AT&T.

What the FCC will do with this information is not clear. Also not clear is whether it will even get the information. Or whether it has the authority to ask. Back in the 1976 Computer II proceeding, the FCC relinquished jurisdiction over information flowing through communications systems. It would regulate the lines, it then decided, but not the bits and bytes moving over them. (In the broadband environment, it has since deregulated even the lines.) With only limited exceptions for certain forms of VoIP , the FCC has indeed kept its hands off Internet applications. Apple and AT&T have to concede the FCC’s authority over wireless voice service, and may even acknowledge some control over handsets, but may well argue that Computer II put optional software applications beyond Commission reach.

For those of us who enjoy corporate conflict as a spectator sport – over-muscled, over-equipped gladiators struggling in the arena – the Google-Apple-AT&T spat is a welcome addition to the long-running Google-Microsoft and Apple-Microsoft events. “The enemy of my enemy is my friend,” the saying goes. But now the two biggest enemies of Microsoft have become enemies themselves.

Pass the popcorn, and keep your scorecard ready.