Letters sent to Apple, AT&T in expansion of “network neutrality” inquiry

The FCC recently expanded its “network neutrality” inquiries into an ongoing contretemps among three giants of consumer technology: Google, Apple, and AT&T. The dispute follows Apple’s disallowing Google Voice service on its iPhone handsets, possibly at the request of AT&T, the carrier having exclusive rights to the iPhone.

Network neutrality is the idea that communications customers, such as Internet and cell phone subscribers, should be able to use all lawful services and hardware without interference from the provider. It sounds simple enough, but in practice the issues get a little complicated. See here and here and here. Back in 2005, the FCC enunciated four “principles” of network neutrality, but has not adopted actual rules on the subject.

Wireless phone providers have traditionally favored the opposite of neutrality: a “closed” model in which the same company supplies over-the-air service, sells the handsets, and picks the services users can access. If you obtain cell phone service through one of the major carriers – Sprint, AT&T, Verizon, or T-Mobile – you probably bought your phone from them, too. And if you use the phone for on-line banking and certain other lucrative services, chances are the company you’re dealing with pays the carrier for the privilege of having your business.

The FCC has two proceedings underway that could eventually challenge this kind of arrangement.

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.