Peter Suderman | August 7, 2009
How awesome is the iPhone? As a proud owner—I camped out overnight to get 2008's 3G model—I'll vouch for its addictive niftyness, and admit that I often find myself wondering how I ever got through a day without one. Between the intuitive touchscreen interface and the endlessly delightful App Store, in which one can buy everything from games to GPS solutions to dictionaries to softcore porn, the iPhone's made my life richer, more entertaining, and more hassle free.
Others might dissent, but it would be difficult deny that since Apple's entry into the mobile phone market in 2006 the world of wireless networks and gadgetry has become more innovative, more competitive, and way, way more cool.
Naturally, the Federal Communications Commission is worried.
Why? Because the FCC thinks Apple might not be running its business fairly. Last week, Apple officially rejected the Google Voice Application, a widely praised, multi-use calling application that, according to Wired magazine, "lets users route all of their phone calls through a Google number, giving them cheap overseas calls, text translation of voicemail, per contact call routing rules, phone recording and free text messaging, among other features."
Apple, as proprietor of the App Store, made the formal rejection, but it's unknown if the decision was a result of pressure from iPhone carrier AT&T. Given AT&T's interest in protecting the calling side of its business model, as well as the fact that AT&T previously told the Wall Street Journal it feels "no obligation to facilitate or subsidize our competitors' businesses," such pressure is certainly plausible.
Now the FCC wants the whole story. Last week, it sent an abrupt letter to all three companies—Google, Apple, and AT&T—demanding answers. Why the rejection? Was AT&T involved? Is this normal? What are Apple's usual policies for rejecting an app?
A better question, however, might be why the FCC is sticking its nose into this business at all. As Jerry Brito of the Mercatus Center and Adam Thierer of the Progress and Freedom Foundation recently pointed out, it's not clear that the agency has any authority to do so. Not that that's stopped it before: As Thierer notes, the FCC has a long history of overreach. This may simply be a way of flexing its regularity muscle as its defines—and perhaps expands—its territory under the Obama administration.
In particular, this might be a signal that the FCC plans to pursue a more aggressive stance on wireless regulation—or that it may be picking up some ideas that should have long been relegated to the dustbin.
In 2007, Columbia University law professor and tech-theorist Tim Wu, who famously coined the phrase "network neutrality" to describe his vision of an open, equal network, wrote a paper arguing for "increased public scrutiny" of wireless phone networks, implicitly making the case for network neutrality in the wireless phone market. Wu worried over the prospect of a world in which not every wireless device would connect to every wireless network. And with phones as supremely nifty as the iPhone, wasn't that a tragedy?
What Wu missed, of course, was that closed networks would promote competition. Given the iPhone's instant popularity, it seemed likely that Verizon, T-Mobile, and Sprint would all work overtime to create similarly cool, popular devices. And they have. These days, consumers looking for phones with touch screens, or music and video capabilities, or GPS, or a variety of downloadable apps have numerous options on multiple networks. Rather than kill innovation by limiting the iPhone's uses, closed networks have spurred technological developments, with the participants racing to outdo each other.
Wu's paper caused a stir in the tech-policy community, but fell on deaf ears in the Bush administration's FCC. With the change to the more net-neutrality-friendly Obama administration, however, Wu's ideas may gain some currency.
That's too bad: The iPhone, the App Store, and the various eager competitors behind numerous other slick, hand-held wonders have done just fine without the meddling of Washington bureaucrats. When it comes to making the wireless world more awesome, my money's on Apple over the FCC every time.
Peter Suderman is an associate editor at Reason magazine.
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The shenanigans of the apple app store are the reason my wife got a google Android phone instead. There's an app for that.
I read and post online from my iPhone at work so as not to get
fired for excessive personal Internet use.
it feels "no obligation to facilitate or subsidize our competitors'
businesses," such pressure is certainly plausible.
Good for them. What are they, socialists? I hope all three
companies send a letter to the FCC that has two words on it: Fuck
You.
It's funny that way. When I was in Europe a couple years ago I
was at a party in Brussels and got in a spirited debate with some
folks there about the wireless biz.
In Europe, 3G/GSM isn't the dominant tech, its a monopolized
standard. In Europe, everyone's gadgets work on everyone's
network...Mr. Wu's dream I guess. In the USA and Canada, the tech
is balkanized between GSM (AT&T and T-Mobile) and CDMA systems
(everyone else).
I was arguing with my Euro-friends that balkanized was good,
because it promoted competition. They complained they were always
roaming or no bars and such in the USA. They were kind of put off -
in a provincial sort of way - when I told them that no matter the
tech, they would still have low bars because the USA geographically
is a much bigger nut to crack with wireless coverage than Europe
proper. Tee-hee.
But look at what competition has done for us in the States.
Virtually all the most desirable mobile geek-tech originates in US
laboratories now...iPhone, Palm Pre, Google Android platform, etc.
Nokia of Finland is bleeding with no comparable It-factor widgets.
The only handset maker with a bevy of truly desirable equipment?
RIM (Crackberries), in Canada. Ha-ha. And what's the fastest (3G)
implementation of GSM available? A hack-jobbed CDMA layer over the
old TDMA/EDGE schemes of GSM.
So, the perfectly managed (controlled) wireless eco-system of
Europe that everyone loves so much has inadvertently made them the
receiver, and not discoverer, of the next big thing in a business
they used to completely own. Congrats, bureaucrats!
Guess Mr. Jobs did not contribute as much to Obama '08 as he should have.
The FCC's very existence is an overreach of their
authority.
The FCC regulates communication. They regulate AM and FM radio as
well as network TV very heavily. However, cable and premium TV gets
away with more because they are a paid service. Satellite radio and
the internet can do just about anything they want because they are
a paid service. Well, the AppStore should be able to do whatever
they want because it is a paid service.
Then, is the AppStore even the kind of thing the FCC is supposed to
regulate? No. This is more of a monopoly and business issue, not a
communications deal.
I await the impending nerd revolution. Good thing /b/ probably has a low level of patronage of apple iPhones.
Am I supposed to start thinking of Steve Jobs as Hank Rearden?
Who is Ellis Wyat? Dagny? I know who Wesley mouch is. Ok, enough
for the Rand predictions. If they truly want an angry armed mob
then just try to take my iPhone(as in screw with it/apple/app store
in any way) I will make a postal worker look sane and
unarmed.
FREEDOM!!!
I can't help but take a certain amount of smug satisfaction that
somebody somewhere finally noticed that Apple is more like
Microsoft than Microsoft ever was.
Naturally, I would hope that this would cause people in Apple's
management to have that palm-to-the-forehead smacking moment and
realize why it's bad to have government looking over your shoulder
and constantly trumping up 'unfair' business practice
investigations.
But no, they'll compartmentalize and still stand behind the notion
that Microsoft is a 'monopoly' and all evil and must be
scrutinized, but they're just unfairly being targeted based on a
business model that bureaucrats don't understand.
I can't stand it when people insist on telling companies how to
make their products. If Apple comes out with something, you have
two choices:
1. buy it
2. don't buy it
Is that so hard?
"Remember how the left loved MiniTel?"
Wow, I'm surprised someone else remembers MiniTel. I remember a PBS
show in the early 90's talking about how wonderful it was being
able to book an airline ticket (on Air France only, of course)
using MiniTel, and how poor uncoordinated America couldn't pull
that kind of thing off with our fragmented telco world.
This was also at the height of the Japanese bubble, and the other
doomsaying was how the Japanese - with their amazing MITI - we're
going to crush us in semiconductors. The moral of the story was how
all these American inventions (IP protocol stacks, semiconductors)
were being left to others because we didn't have Policy Wonks
implementing all this tech for the unwashed masses.
I still laugh to myself thinking about that show sometimes. I wish
I remembered the name of it, it would be an educational hoot for
many a nubile centralist today.
From the Minitel wiki.
The development of Minitel spawned the creation of many start-up companies in a manner similar to the later dot-com bubble of Internet-related companies. Similarly, many of those small companies floundered and failed because of an overcrowded market or bad business practices (lack of infrastructure for online retailers). The messageries roses ("pink messages", adult chat services) and other pornographic sites were also criticized for their possible use by under-age children. The government chose not to enact coercive measures, however, claiming that the regulation of online activities of children was up to the parents, not the government. The government also enacted a tax on pornographic online services.
In France they agree that porno shouldn't be banned. It should be
taxed.
This is a bit off topic but I hate when people talk about GPS
with phones. It isn't fucking GPS. It is cell tower triangulation.
True GPS doesn't need a phone carrier because it gets it position
from sattelites. The whole point of me using a GPS unit is so I can
go geocaching out in the middle of nowhere which you can't with a
phone...because...it really isn't GPS.
Done with rant.
"In France they agree that porno shouldn't be banned. It should
be taxed."
In the USA we still have on better, no internet tax. Best thing
Bill Clinton did for the US economy as President was to appoint Ira
Magaziner (of all people) for internet stuff when it began taking
off. ICANN was a result, as was the recommendations of Magaziner's
reports etc. to LEAVE THE DAMN INTERNET ALONE when it came to
moralizing and taxing.
Clinton took his advice, and left it alone. The only blight on him
that way is the DMCA, which is definitely a bi-partisan monster at
best (anyone remember that Billy Tauzin guy or whatever his name
was?).
France gets it wrong sometimes as well. I believe they are the
first significant sovereign to pee in Apple's Cheerios and if I
remember, it was over iTunes. So I'll give France a 50/50 on their
tinkering with the internet.
I don't think it's a given that closed networks are better for
competition.
In a closed model, the handset maker and carrier compete with a
total product -- the phone plus the network plus any network
services the phone can access. Add-on applications need to be
tailored to that ecosystem. In theory, the handset and service can
be tailored to work better together.
In an open model, handset makers compete against other handset
makers, so Palm, RIM and Apple all compete from kiosks in the mall.
Any phone works with any network, so users can freely switch
networks. This means the carriers need to compete not on handset
features but on network speed, reliability and price. Users have
greater choice because they get to choose their own handset/carrier
bundle, not just the ones the carriers (or Apple) wants to
offer.
My understanding is Europe and Japan take the open model and it
turns out you get way cheaper, faster and more reliable networks,
and the handsets blow the doors of any handset available in the US
(perhaps excepting the iPhone). That seems like reasonable evidence
that the open model is better for consumers.
I'm not sure if the comparison is fair, but if Microsoft had to
approve every application that could be run on your personal
computer, people would be up in arms, no?
Apple used to be the underdog; now it's the new Microsoft. The
Apple cult will vehemently deny this. I think it's true. Do
you?
"Remember how the left loved MiniTel?"
Wow, I'm surprised someone else remembers MiniTel.
Remembers it? Hell it's indelibly burned into my brain. I'll never
let the MiniTel example go. It's just too good of a cautionary
tale.
How is the FCC authorized to mess around with Apple's conduct of business over the telephone / wireless networks? If you or I use the telephone to conduct our businesses, is the FCC authorized to look into OUR business practices? Unless what Apple is doing is 1) unfairly exploiting a monopoly franchise for telephone or wireless territory; or 2) causing interference on or otherwise misusing the radio frequency spectrum (e.g., in an unlicensed way), then I don't think the FCC has a beef under the rules of its own charter. Of course, I also think the FCC should be drastically downsized or eliminated, as it is largely unnecessary and counterproductive in the modern age. The theory of spectrum scarcity that once helped to justified the FCC's existence is no longer relevant. But that's another discussion for another time. As Mojo Nixon sang, "FCC Crawl In Yer Grave... arrrr!"
Apple used to be the underdog; now it's the new Microsoft.
The Apple cult will vehemently deny this. I think it's true. Do
you?
Tim, see my post above. Apple has always been like this, Microsoft
has never been like this. If your car were made by Apple, it would
only drive to approved locations and the hood and trunk would be
sealed at the factory.
And Apple was never an 'underdog', they just thought they were, and
got some positive press because everyone else thought they were.
Like all technology, Apple has been remarkably smart and has merely
made the desktop more irrelevant. They realized that you don't have
to dominate with your operating system to be a successful computer
company. Microsoft is still playing catch-up on this
thinking.
I mean hell, there are still people that think 'it's about the
browser'.
As far as the Rand/A.S. comparisons, I think people who only
understand Apple from press releases that have been massaged into
"news articles" might be surprised at how much Jobs has in common
with Wesley Mouch and Jim Taggart. Apple's whole push into
education in the late-70s and 80s included a significant
rent-seeking component, in the sense that they worked hard to get
"locked into" the buying habits of (mostly tax-funded) school
districts as a "preferred vendor," and actively lobbied for tax
exemptions and sometimes outright subsidies, which would favor
Apple and its products.
The comparison to Rearden isn't very apt, as Jobs wasn't really
ever the creator of Apple's tech, as Rearden was for his own
Rearden Metal. On the other hand, Rearden was a fairly decent
businessman, and the tech-guys Jobs worked with, from Wozniak on
down, were not so much. Combined into one person, Jobs and Wozniak
might have made one Hank Rearden, in terms of "tech smarts" and
"business smarts," anyway (though the real head for business in the
early years belonged to Mike Markkula). At least that is how it
seems to me, having spent 15 years in the vicinity of Reality
Warping Field, 10 of those years on the inside.
This is a bit off topic but I hate when people talk about
GPS with phones. It isn't fucking GPS.
iPhones have GPS now. The first model didn't.
-jcr
"What Wu missed, of course, was that closed networks would
promote competition."
I call baloney. This argument fallaciously tries to say that the
closed network promoted this competition, and that's total BS. The
iPhone caused this competition, not the network, and yet many
people site that the biggest flaw in the iPhone is that you can
only get it with AT+T. That's closed competition.
AOL was a closed network, so was prodigy, and all those from the
early 90s that tried to make money. Then the internet hit, an
entirely open network. Look at what that has done for our business
and commerce. Look at where the closed networks are.
If the iPhone was network independent, just think about how even
more successful the iPhone would be! Also think about all the apps
that could be approved without AT+T's approval. Think about how the
price of AT+T could be lowered if people were more wiling to go to
a network of more quality?
Just because there is some competition doesn't mean there is enough
competition.
If your car were made by Apple, it would only drive to approved locations and the hood and trunk would be sealed at the factory.
Strange, I have a computer made by Apple and I can install any damn
software I want on it. And if I had an iPhone, I could jailbreak it
and install anything I want on that, too.
This notion of Apple being the "new Microsoft" isn't really a
valid comparison. Microsoft with PC's is a choice on the part of
the PC maker. Microsoft doesn't make the widget. In that sense
Apple's seemingly "brilliant" strategy of proprietary hardware and
software is no different than the original Macintosh. The App Store
is popular because it is convenient, well executed, and a gold mine
for its developers with no capital or marketing costs. Apple keeps
its customers with carrots more than sticks.
Problem for Microsoft these days is the standard is not the
desktop, but the internet. The iPhone is successful not because its
so cool, but because its the first mobile widget that lets me play
on the internet in a coherent, interactive manner. Capacitive
touch-screen and tight interactive code (you should see the patent,
its 300+ pages!)is the trick. Palm Pre is the same deal. If I want
other stuff, iPod Touch + jail-break and Cydia awaits with a VOIP
app. I know this because that's my current situation. iPhone + ATT
rape-contract is for suckers, frankly.
The Microsoft business model in mobile is Android, an OS you can
throw on any hardware...its even open-source and free I think. And
Microsoft has been a corporate fool since Ballmer took over.
Microsoft doesn't make PC's and never tried to dictate how they
should be made, either. But for the past ten years they have been
trying the proprietary hardware and standards control normally left
to the likes of Dell or the IEEE board in the PC biz. The results?
The X-Box, Windows Mobile, .NET, Passport, Windows Live, and Zune.
Check their 10-k's, every one of those has been a money pit for
Microsoft.
Apple does proprietary ecosystem the way Sweden does socialism.
Microsoft does proprietary ecosystem like Russia does socialism,
'nuff said.
Fuck AT&T. Are you kidding? Are they paragons of
competition? Those rent-seeking bastards need to have some
regulatory shit kicked into them. The alternative, an actual free
market in spectrum, isn't going to happen anytime soon.
Each and every one of the wireless carriers has done its damnedest
to ensure that no wireless spectrum falls into the hands of their
upstart competitors. They simultaneously want the government to
protect them from competition, you know because public safety and
telephones and IMPORTANT, while self-righteously cloaking
themselves in the armor of markets when that would serve their
purposes.
Apple has gotten a little too cozy with the coddled telecom
oligarchs. May this serve as a lesson for them.
Re: Apple v. Microsoft. MS fans always think that Apple people
give a shit about "evil practices." Nope, that's what the Linux
people care about.
I'd buy a Mac from Hitler if OS X still had self-contained
application bundles instead of "installers" that puke garbage
nonsense files all over your hard drive.
I thought the anti-trust crap with MS was bullshit, even though
I'm no fan of most of their products. It was certainly
popular.
Now, as the FCC goes further off their rocker, it appears the
popularity will fall with Apple. Once again, more bullshit
interference some federal agency. I'm getting to where I feel some
of these companies are partially getting some of what they deserve.
Not because they are mean, evil profit seekers that need to be
reigned in, but because they enable their own demise by encourage
the government to interfere when it damages their competitors. Not
many of them have the balls to just say 'Fuck you, leave us all
alone!'.
I work for a LARGE computer maker with two initials, and recently
we got some email about our PAC with some bullet points about their
biggest concerns. In the same email there were concerns about
removing tax deferral limits (effectively double taxing US
companies), patent reform, and statements about supporting stimulus
efforts to get the US economy on track keeping an eye for stimulus
related business opportunities. The environment and healthcare were
listed as well--probably ultimately with some reasonable goals, but
also some rent seeking. It's astonishing how conflicted companies
are with respect to government, and continually fail to see how the
all rent seeking empowers those bureaucrats who believe profits are
evil and have little regard for contracts between private
parties.
On the Apple front, the more I learn, the less I like them. I think
owning a miniature computer that can make phone calls, would mean
that you can install any software you can legally obtain for it.
Apple doesn't see it that way. I believe they are entitled to their
ridiculous view, but my free market participation is presently lack
of participation. When I can get a smartphone for the price I'm
willing to pay without heinous restrictions on the type and source
of software installed, I'll bite.
@Rhywun
Since Jailbreaking your iPhone is technically a federal
crime(circumventing Apple's protections to prevent it is a
violation of DMCA), so you can't legally install anything you want
on your iPhone.
I have no sympathy for Apple, if they're going to accept money from
the government, and actively use the patently
immoral/unconstitutional DMCA to support themselves they can go to
hell.
I don't like government intervention, but if you accept their money
or support, and it comes around to bite you, consider it both a
lesson and karma(for AT&T and Apple both).
Appropos: is following story is posted today on PC World Online:
"FCC Begins Latest Probe of Broadband Access."
http://www.pcworld.com/article/169876/fcc_begins_latest_probe_of_broadband_access.html?tk=rss_news
When radio was invented, every government in the world saw it as a
threat to government power generally, and the government post
office monopolies specifically - which is why governments across
the world took steps to nationalize or pervasively regulate radio
as quickly as possible. It has always stunned me that government
has been so slow to do the same with today's information
technology. Are we seeing the beginning moves in that
direction?
After all, Obama used modern information technology to take the
White House. Do you think he's going to let someone use the same
techniques to challenge him?
The funniest thing about all of this over the Google App being
rejected in the App store is that google has now made a Web App
which does the same thing. And the best part is that Apple and ATT
can't stop it!
Hilarious...and good for google.
If the iPhone was network independent, just think about how
even more successful the iPhone would be!
That's only a guess. Remember, the real money is in service after
the sale. Gilette makes more money selling the blades than they do
the razor. Sony makes more money on the games than they do the
playstation. The problem with tying all of your money to the sale
of the hardware is that eventually the market gets saturated and
your revenue trickles off.
By selling the service both AT&T continue to make money from
the iPhone without having to produce or sell new iPhones.
If your car were made by Apple, it would only drive to approved locations and the hood and trunk would be sealed at the factory.
Strange, I have a computer made by Apple and I can install any
damn software I want on it. And if I had an iPhone, I could
jailbreak it and install anything I want on that,
too.
Thank you for making my point.
Apple does proprietary ecosystem the way Sweden does
socialism. Microsoft does proprietary ecosystem like Russia does
socialism, 'nuff said.
Exactly.
Apple is the Cathedral, and Microsoft is the Bazaar.
With any hardware manufacturer on the planet making cards and
add-ins (and drivers) for the PC market, the stability of Microsoft
OS suffers. Microsoft knows this, and Apple knows this. That's why
Apple wants tight control of everything it sells.
But the networks don't create the handsets...
An open network allows handset manufacturers to compete on
handsets, and network operators can compete on tariffs. You can
pick the best handset for you, and combine it with the best network
for you.
I don't understand how that could stifle competition.
closed networks would promote competition
I am sure there are many cogent arguments that could be made
against "net neutrality", but this is certainly not one of
them.
With the current state of affairs, those competing in the services
and equipment market are those who can afford to put together a
wireless network, plus those who work for them. With open networks
(i.e. net neutrality), the market would be opened up to anyone who
can build a small device or can write a bit of software.
The argument that limiting the market to a small percentage of the
potential competitors would increase competition is really
entering into the bridge-for-sale realm.
Networks being what they are, it's better to have one open network than multiple closed ones competing with each other. There's still some room for innovation on the network itself (speed, latency), but it really is key that everyone pick just one, even if it's not ideal, and stick with it.
"How awesome is the iPhone? As a proud owner-I camped out
overnight to get 2008's 3G model.."
That statement is almost enough for me to disregard anything you
write forever in perpetuity. Anyone who camps out for a fucking
phone needs some serious fucking help. Especially when it is made
by APPLE (the P's stand for pretentious). Christ, their products
are fucking junk, and they are made worse by the fact that their
owners think the mere act of owning something made by Apple makes
them among the coolest people on the fucking planet.
"This may simply be a way of flexing its regularity muscle as
its defines-and perhaps expands-its territory under the Obama
administration."
No fucking way. A government bureaucracy attempting to increase its
power under a liberal Democrat? I simply cannot, and will not,
believe it.
Reason's prefered flavor of libertarianism often looks (to me anyhow) like corporate friendly serfdom.
Carterfone 2.0
If Apple Made the call so be it, Just don't buy apple. If AT&T
made the call then there might be a problem, Banning VOIP would be
a big no no.
Competition always benefits the consumer.
"These days, consumers looking for phones with touch screens, or
music and video capabilities, or GPS, or a variety of downloadable
apps have numerous options on multiple networks."
well, there are multiple networks, each of which have one option.
AT&T is notoriously terrible in the corridor of LA where I
spend most of my time, but T-Mobile's option isn't anywhere close
to on par with the iPhone. which is the main reason I'm still using
the little flip phone i've had since 2003. if i could (legally) get
the iPhone with T-Mobile's service, I'd do it in a heartbeat.
Sounds like divestiture all over again. AT&T didn't want
other companies playing on their network. I worked there through
that time, myself. So they broke up the phone company.
As for supplying an ap, why should their ap store stock something
they don't want to stock? It would be like expecting a kosher or
halal butcher to stock pork. Or Best Buy stocking green peas. They
are all stores, but that doesn't mean they have to sell everything
anyone wants.
I don't see how allowing a company to stifle competition, by crippling the functionality of a users device, leads to more competition.
If your automobile was purchased with a mandatory built in map
of places the manufacturer has decided you are not allowed to go
to? Maybe Ford can do a deal with McDonalds where Ford engines will
stall if they are driven onto a Burger King lot. Like that?
You'd know what to do. Make it a cell phone and you waffle...
the iphone and other apple products are overpriced trash for
snobs.
apple invents nothing - the company exists because of human vanity
and state granted privileges - aka patents.
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