Is Verizon Wireless Violating Its Promise To Be Open By Blocking Google Wallet?

from the openness-in-name-only dept

Thu, Dec 22nd 2011 8:01pm — Mike Masnick

You may recall that, back in 2007, Verizon Wireless promised to be more open with its network. In 2008, it made that commitment a bit more forcefully under the law, when it won the C-block auction for 700 Mhz spectrum. Part of the rules of that auction were that if the bidding reached a certain level (a level that Google bid to exactly), then there would be openness requirements on the network. Of course, over the years, people have watched Verizon Wireless and suggested that its promises of openness have been empty promises. But are those promises violating the law?

There was some news a few weeks ago saying that Verizon Wireless was blocking Google's mobile payment offering, Google Wallet, on its Galaxy Nexus phones, and that's prompted Stanford professor Barbara van Schewick to ask the FCC to investigate if Verizon Wireless is breaking the law.

Verizon�s conduct undermines the Commission�s general approach towards mobile Internet openness by dismantling the protections for one part of the spectrum on which the FCC�s �incremental� approach to regulation in this space is built. Without enforcement, the openness conditions are effectively moot. Verizon violated these conditions earlier this year when it blocked tethering applications. Now it is blocking Google Wallet. This emerging pattern of disregard for its license conditions challenges the FCC to follow through on its pledges in the Open Internet Order to enforce the openness conditions in the 700 MHz band and to monitor the mobile Internet space for abuses by licensees.

While I agree that this is a bad move for consumers, I'm wondering if it really makes sense for the FCC to be involved here. The FCC has always been pretty weak in sanctioning telcos for doing anything wrong and I'm not sure much would really happen here either. The more effective thing is to watch what the market is already doing -- including quickly figuring out a way to hack Google Wallet back on to the phone. On top of that, this story reflects extremely poorly on Verizon Wireless and would make me question if I'd continue to use them (if I did today, which I don't). So while I agree it's a dumb move on VZW's part, I'm not sure it's dumb enough to reach the level that the FCC should be involved.

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Filed Under: android, fcc, galaxy nexus, google wallet, openness, wireless
Companies: verizon wireless

21 Comments

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nasch (profile), 22 Dec 2011 @ 8:13pm

Not enough competition
There isn't enough competition to rest assured that the market will resolve this issue. The problem is the FCC is so captured they're not going to do anything significant about it. They really should set up the regulations to ensure competition, and then they wouldn't have to worry so much about specific issues like this.
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dano (profile), 22 Dec 2011 @ 8:21pm

Onto the soapbox...
1) The government should never have SOLD the spectrum. It should always be leased and for a fairly short term, say 5 years. That would give the FCC the leverage they need to bring the carriers in line.

2) Phone should be sold separately, never bundled with service. The Carterfone decision should should apply to the mobile carriers, too. A little FCC/Verizon history:
http://arstechnica.com/old/content/2008/04/fcc-boss-says-no-to-skypes-desire-for-open-cell -networks.ars
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Larry, 22 Dec 2011 @ 9:00pm

Re: Not enough competition
Dammit! Too true. I AM a VZW customer and have been for years. The reason that I am is that ATT sucks for coverage and are still just re-labeled SBC which = the worst US corp ever.

I've considered other carriers but I actually need my cell coverage for work and continue to hear tmob and sprint horror stories...

So, I don't feel like I have a "real" alternative and I guess I'm willing to forgo Gwallet to keep the service...

Also, I don't have the Nexus, but a different droid (and yes, it is rooted).
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Steve, 22 Dec 2011 @ 9:48pm

They didn't actually "block" it
Verizon asked Google not to include it and Google caved, probably because Verizon would play hardball and not release the Galaxy Nexus if it was included. This means it wasn't "blocked", just an agreement so it doesn't violate anything - unfortunately.
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Christopher, 22 Dec 2011 @ 10:23pm

FCC should act
The FCC shold act because VZW violated the terms of its licence. It's a simple open-and-shut case, and the FCC probably will act, albeit not with a gnashing of teeth as some people might wish. It is my considered opionion that someone in Verizon Wireless has made a decision that will lose them their job, but the FCC needs to occasionally demonstrate its abilities in enforcing the terms of licence, and it is likely to act in this case.
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cg15 (profile), 23 Dec 2011 @ 12:47am

They haven't blocked all
Verizon asked Google not to include it and Google caved,just because Verizon would play hardball and not release the Galaxy Nexus if it was included. This means it wasn't "blocked",just an agreement so it doesn't violate
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Anonymous Coward, 23 Dec 2011 @ 3:59am

I firmly believe that hackers will find a way around Verizon.
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Machin Shin, 23 Dec 2011 @ 5:17am

Re: Not enough competition
You are quite correct there. I use Verizon because no one else had good coverage around here. Sure I could change to different cell company but not if I wanted to be able to use my phone outside of town. Verizon is the only one that even gets a signal at my house. So I guess option we will see happening a lot is people hacking the phones. I just really question following online instructions for hacking your phone to get google wallet on it. You might as well just walk up to a bum on the street and hand him your wallet, it is easier.
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Anonymous Coward, 23 Dec 2011 @ 6:33am

I haven't looked into it much, but do we know why verizon even cares?

With smartphones taking over, the best business model for the cell carriers IMO will be to embrace being the "dumb pipe" and then build up other services around that...very much like themes on this blog. Charging for tethering, not providing software updates for phones, BLOCKING FEATURES, gouging for text messaging...seems very much like gatekeeper roles to me.
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nasch (profile), 23 Dec 2011 @ 6:52am

Re: Onto the soapbox...
Phone should be sold separately, never bundled with service.

Wouldn't it be better to ensure healthy competition, and then let everyone choose how they want to buy and sell? If some people like the discount you can get with bundling, let them have it. If hardly anybody wants to buy that way, the practice will go away.
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flerchin, 23 Dec 2011 @ 7:03am

Keep them in line
An FCC slap on the wrist for this easily-bypassed unnecessary restriction will cause VZW to think carefully before trying this type of shenanigans with an application that is not so trivial.
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dano (profile), 23 Dec 2011 @ 7:32am

Re: Re: Onto the soapbox...
Ensuring healthy competition is the goal of my suggestion.

I contend it is the lock-in with subsidized phones and 2-year contracts that reduces the healthy competition.

But I'm the curious sort...what do you think would increase/ensure a more healthy competition?
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Alvin Phee Wilson, 23 Dec 2011 @ 8:25am

Alvin Phee Wilson
Someone has to hold them accountable.
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BentFranklin (profile), 23 Dec 2011 @ 8:44am

I would not characterize hacks, rooting, etc. as market solutions. They are really only possible or useful to a small minority of users.
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tsavory (profile), 23 Dec 2011 @ 9:05am

Re: Re: Not enough competition
wI can't speak on this wallet thing as I never use it but I thought I might make a point about the way people here down AT&T I agree they suck in the customer support area I started my service with Cingular and was happy but as we know they sold out to at&t. But as far as service goes both at&t and Verizon have their down spots I travel all across the US and I have to keep both services though I use the Verizon as a pre-paid option.
At my house I can't get Verizon signal anywhere but At&t is full bars ahead. Just a while back I was on a job site and could not get At&t signal within a 10 mile area I was working but Verizon was full bars ahead.
Now the point is you have to find out what works for where you are at and where you plan on going.
It is an inconvenient fact that no service works everywhere but of the two sorry to say but at&t seems to have less dead areas than Verizon but that's just an observation from one that works in multiple states
As a side note just thought I would say that is seems the straight talk seems to work in both places but has far more dropped calls and does not work in a some areas that both the Big names do work.
/Rant
Now if any company is breaking the law in their business practice sorry but they need to answer to someone.
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nasch (profile), 23 Dec 2011 @ 9:28am

Re: Re: Re: Onto the soapbox...
But I'm the curious sort...what do you think would increase/ensure a more healthy competition?

I'm not sure exactly, I haven't looked into it. Generally speaking, removing barriers to entry. My impression is it's difficult, time-consuming and expensive to get any wireless spectrum. If it was really easy to do, that would help. Also perhaps (I don't totally know what I'm talking about here) set up the backhaul systems so wholesalers run those and have to sell to everyone equally, rather than carriers owning their own. Then anyone can get in without billions of dollars of network investment.

I'm not sure if the contract lock-in is a cause of lack of competition or an effect. I suspect the latter. When there are only two carriers serving your area and they're equally good or bad, signing a contract is not a big deal because switching wouldn't help you anyway. It used to be possible to get service without a contract, you just didn't get a discounted phone. I assume that's still the case but I've been on prepaid for a while (another way to not have a contract).
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Franklin G Ryzzo (profile), 23 Dec 2011 @ 10:25am

Re:
I would tend to agree with you, but I don't see Verizon going that route. Although they should embrace openness and all of the benefits that will come with it, they seem too stuck in the gatekeeper roll and appear to enjoy the profits from nickel and diming. If they would stop trying to charge for tethering, provide unlimited data, and more flexibility in allowing consumers to customize their plans, I can't even imagine how many people would switch over to them. It seems like the entire cell industry got together and came to a mutual agreement on how to screw their customers.

This whole google wallet thing is pretty pathetic. It is speculated that Verizon is trying to set up a competitive service but since it isn't ready yet it seems that Verizon doesn't want to contribute to google getting ahead in market share. I can't understand why they make decisions that lose them so much goodwill for the possibility of future profits.
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Dan, 23 Dec 2011 @ 3:33pm

Of course
These guys just use the government influence to fleece consumers. Always have. Always will (or they'll try).
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Anonymous Coward, 24 Dec 2011 @ 1:41pm

Mike,

I don't always agree with you but normally I think your on track. In this case though you need to think this over. The FCC may lack muscle but that results from the mindset that this isn't important enough to get involved in. Perhaps they should set a new precedent for openness and show the country they have the steel to penalize companies who try to ignore contractual obligations. I say revoke their use of 700MHz for a minimum of a week or longer until they fulfill the obligations. If they fail again make it a month. Include a requirement that allows customers affected by the outage to switch companies at no penalty. That ought to fix the problem.
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Anonymous Coward, 24 Dec 2011 @ 1:41pm

Mike,

I don't always agree with you but normally I think your on track. In this case though you need to think this over. The FCC may lack muscle but that results from the mindset that this isn't important enough to get involved in. Perhaps they should set a new precedent for openness and show the country they have the steel to penalize companies who try to ignore contractual obligations. I say revoke their use of 700MHz for a minimum of a week or longer until they fulfill the obligations. If they fail again make it a month. Include a requirement that allows customers affected by the outage to switch companies at no penalty. That ought to fix the problem.
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nasch (profile), 24 Dec 2011 @ 6:59pm

Re:
I say revoke their use of 700MHz for a minimum of a week or longer until they fulfill the obligations. If they fail again make it a month. Include a requirement that allows customers affected by the outage to switch companies at no penalty. That ought to fix the problem.

I think the regulatory capture will get in the way, but I like your idea.
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