Judge Says 'There's An Ad For That...' And It's Ok For Now

from the let-it-play dept

Recently, AT&T sued Verizon over its "There's A Map For That" ad, that mocked AT&T's 3G network coverage, while playing on the Apple iPhone slogan of "there's an app for that." It seemed like an odd thing for AT&T to do, as it really just called more attention to the ad and the differences in 3G networks. Now, to make matters even worse, a judge has refused to issue an injunction stopping the ad. That doesn't stop the lawsuit, though, and the ad might still get taken down if AT&T wins, but it's unlikely Verizon's ad campaign is going to last until the lawsuit is finally decided, anyway. So for now, all it's done is driven a lot more attention to the ad, in which Verizon comes out favorably.

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Canada Decides That Canadian Ownership Is More Important Than Real Telco Competition

from the regulatory-failure dept

The biggest problem in the telco world is the lack of competition. Most of the worst abuses by various telecom providers is because there really isn't enough competition to make it worthwhile to treat customers better. The best thing that governments can do to encourage better broadband/telco services is to encourage competition. Apparently, Canada has different priorities. A new mobile firm was set to open up shop in Canada, called Globalive. However, Canada apparently has some rules about how telcos need to have Canadian ownership. And while Globalive was originally judged to meet the criteria in bidding on spectrum, a different government bureaucracy has now said that it doesn't meet the Canadian ownership requirements. In other words, to the Canadian government, having local ownership is more important than real competition. This is basically a form of protectionism that (like most forms of protectionism) ends up harming consumers.

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iPhone To Be Offered From Multiple Carriers, eh

from the in-God-Phone-We-Anti-Trust dept

Given all the talk in DC lately about anti-competitive exclusive cellphone distribution arrangements, it's very interesting to see a rumor broken by the Globe and Mail about the iPhone in Canada. According to The Globe, Rogers will soon lose its iPhone exclusive as both TELUS and Bell Mobility add the iconic device to their Christmas line-up. Bell and TELUS are migrating away from the CDMA technology they have used up to 3G, towards the more globally compatible GSM evolutions. To minimize costs, the two carriers are building a single shared-infrastructure network, on which they will both sell services. While Rogers, the long-time GSM user, will have the wider network footprint and offer iPhones fall-back to their 2G data networks when out of 3G coverage, that advantage is countered by TELUS and Bell offering 3.5G HSPA+ speeds to Rogers' 3G. Under current coverage conditions, iPhone urbanites might prefer the new entrants, while sub-urbanites may prefer Rogers.

What is most interesting here is the break from Apple's conventional one-country-one-carrier strategy, which has attracted the attention of more than a few countries' regulators. The Canadian case will be the first market where competing carriers offer the iPhone, without a regulator forcing Apple's hand. Perhaps Germany will follow Canada: there are rumors that T-Mobile will lose their exclusive deal with Apple by year's end, and British/Spanish carrier O2 will enter the market with preferable iPhone plans. In the USA, most of the hot water Apple is swimming in is because the FTC isn't happy with the iPhone app approval process, which nixed the Google voice app. But while the FTC branch is focused on the App Store, some Congressional Reps are voicing their displeasure at the exclusive iPhone deal with AT&T. Governments around the world aren't sure what to make of exclusive phone distribution deals - which, strangely, never seemed to raise an eyebrow until the iPhone. In France, the Orange-Apple 5-yr exclusive was smacked down by the feds who argued that an exclusive arrangement would add "a new element of rigidity in the sector which is already suffering from a lack of competition." But here's where I'm not so clear.

I agree that exclusives, when examined in isolation, are anti-competitive. But overall, I'm not clear on how a 2007 new entrant (Apple), with a disruptive device that lit a fire under the incumbent vendors, could be perceived as "anti-competitive" in terms of net results. In fact, the exclusivity has undeniably forced the competing carriers to work their butts off to come up with a comparable device, seeking it from the likes of Nokia, Samsung (which are scrambling to respond, though they'd never admit it), or newer players like HTC or INQ. The exclusive deals seem to be spurring competition. In contrast, in a world where every telco carries the iPhone, the telcos actually can worry less about offering something else that's equal or better. I suppose someday it could make sense to go after Apple exclusives, but why not wait until the net effect on society is actually negative in some measurable way? A good rule for government should be, "When in doubt, leave it alone."

Meanwhile, the Canadian case will certainly offer Canadians more choice among iPhone providers, and most notably iPhone plans. Canadians tasted the bitter flavor of inadequate competition when iPhone data plans were first announced there in mid 2008. Three-year contracts, no unlimited data plan, high per-MB pricing, and a triple lock-in. Yes, Canada may soon see more service competition around the iPhone -- but will Canada see more or less device competition?

Derek Kerton is an expert at the Insight Community. To get insight and analysis from Derek Kerton and other experts on challenges your company faces, click here.

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Telcos Resisting Broadband Stimulus Because They're Worried It Might Force Them To Compete

from the if-they're-all-upset,-that's-a-sign dept

We've had a lot of concerns about the broadband stimulus package, since it was shaping up to look like little more than a handout to incumbent operators who have a long history of grabbing public money, then not living up to the promises they made to get it. The real problem underlying most issues having to do with broadband in the US is a lack of competition, so any stimulus needs to address that, instead of just throwing money blindly at broadband providers. Mobile operators have already complained about anything that might force them to compete interfering with the government broadband giveaway; now BusinessWeek reports that several incumbent telcos are holding back from the stimulus, because they're afraid the government will attach strings to it to try and increase competition. Most of all, they're worried they may have to allow line-sharing, which, of course, they worked very hard to get tossed out in 2005. The rules are still under discussion, but we're optimistic that the opportunity to effect some positive change on the broadband market won't get left behind in the rush to throw money at it.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Did Google Leave Multi-Touch Out Of Android At Apple's Behest?

from the chilling dept

Apple's made a lot of noise lately about the strength of its patents covering the iPhone's multi-touch interface and the lengths to which it will go to defend them. Most recently its harsh talk was aimed at Palm, whose new Pre device also features multi-touch. VentureBeat is now reporting that Google left support for multi-touch out of its Android OS -- because Apple asked it to, and Google didn't want to jeopardize its relationship with the company. VentureBeat sources the claim to an anonymous "Android team member", while a recent multi-touch hack for the G1 device was made by uncommenting several lines of code. This would indicate the capability was in the OS, but later "commented out", meaning it was left in the code, but preceded with an instruction for it to be ignored by the device. If this is true, it's scary to think that companies would make these sorts of arrangements in which one competitor gets to determine the features of another's products. Competition benefits everyone: consumers get the benefit of innovative new products, while companies get spurred on to continue development and continue raising the bar. Setting up an environment in which people need permission to innovate really doesn't help anybody -- even Apple, who apparently now believes it's got more to gain by keeping competition out of the market, rather than by focusing on innovation of its own. Is multi-touch really so important that Apple needs to make all of these defensive moves? Or has the company run out of the sorts of ideas that have kept it a step ahead of its rivals?

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Is Bell Canada Going To Purposely Screw Up GPS Signals To Harm Competitors?

from the get-lost dept

It's good to have market power, apparently. Remember how Bell Canada started throttle bandwidth to its reseller partners without telling them? And then told them to shut up and take it when they complained? Oh, right, and then tried launching its own video download store just as it was making it more difficult for anyone else's to work? Apparently, the company may be doing that again... Michael Geist points us to reports that Bell Canada is looking to purposely degrade the GPS signal on certain Blackberrys for anyone using third party mapping programs, such as Google's. However (wouldn't you know it?), Bell is promising to allow the GPS to work properly if you pay the company $10/month and use Bell's own mapping solution.

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Apple Shuts Off Loophole For Podcaster App Developer; He Switches Over To Android

from the pissing-off-developers dept

We noted that Apple had recently started banning any kind of competitive app from the iPhone App Store, saying that various iPhone developers must be eagerly awaiting the launch of Google-powered Android phones. And, indeed, that seems to be the case for the developer of the Podcaster app, who has announced that he'll now develop the app for Android phones instead. The final straw, apparently, was Apple closing the workaround he was using to get the Podcasting app to users -- and doing so with no communication or explanation whatsoever. Apple may believe it can get away with treating developers this way when there's no serious competition in the marketplace, but they may discover that pissing off your developer community has pretty long-term negative consequences when that competition actually arrives.

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Apple's Podcaster Block Backlash Getting Louder

from the not-so-good,-Apple dept

Apple is getting an awful lot of attention for blocking a podcasting app from the iPhone App Store because it competes with iTunes, and the more details come out, the worse it looks for Apple. In the original post on it, I had wondered, as an aside, if the app had useful functionality that Apple refused to provide -- and, indeed, that's the case. CNET is pointing out that the app is much more useful, since it lets you download podcasts directly to the iPhone -- something iTunes doesn't currently allow. Yet, Apple has no incentive to add this very useful feature, because it can just block out anyone who tries to do it for them. In the meantime, the developer of the app is forced to use a very limited workaround to offer the app to folks who want it (knowing that Apple could just come in and shut it down). Again, these moves are all well within Apple's right to do -- but it's going to piss off developers (and customers) if these sorts of activities keep up.

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Apple Now Banning Potentially Competitive Apps From The iPhone

from the pissing-off-developers dept

Yet another day and yet another odd attempt by Apple to arbitrarily control what's in the App Store for the iPhone. A bunch of folks have submitted the news of a podcasting app that's been blocked because Apple claims it competes with iTunes. This should, of course, scare of iPhone developers even more than previous bans. After all, it means that should an app get particularly popular, Apple would most likely just create its own competing version and remove the popular app from the store.

While some are decrying this as being an abuse of power, Apple certainly has the right to do it. It's just not a particularly good long term strategy -- and likely to backfire badly. Pissing off your developers or making them worry isn't going to get very many good apps written going forward. Also, limiting competition is actually going to hurt Apple, because it no longer has anyone driving them to be better. What if this podcasting app had certain features that were really cool and useful -- and not available in iTunes? Right now, Apple has no incentive to include that functionality, thus making its own software worse.

In the meantime, you've got to imagine that a number of iPhone developers may be eagerly awaiting the launch of Google's Android platform which won't have such arbitrary restrictions.

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Mixed Signals: Is There A Broadband Price War? Is It A New Thing?

from the depends-on-who-you-ask dept

Remember just two years ago, when there were all sorts of stories about a supposed "broadband price war" in the US, where prices of DSL were even dropping below the cost of dialup lines? While that was somewhat misleading, it's difficult to see how the Wall Street Journal can suddenly claim that the idea of cut rate promotional pricing for broadband is suddenly new. That seems to go against what was being reported just a few years ago. Broadband providers have had such promotions going for quite some time -- and while the specifics of the promotion (and the ease of actually getting the promotion pricing) change over time, it's hard to see how the latest efforts are all that different. And, in the meantime, just as the WSJ is claiming that broadband prices are in some sort of freefall due to this competition, Richard Bennett is trying to make the case that we're all about to get broadband price increases thanks to the FCC's wrist slap on Comcast.

So, apparently, broadband providers are extending all sorts of promotions with cheap pricing to get people onto their network, but if you actually want to use the network, you should expect much higher pricing. That seems like a recipe for disaster.

Of course, the truth is somewhere in between. The so-called "price war" is exaggerated for effect -- as it's often nearly impossible to get the actual advertised prices in many cases. Meanwhile, Bennett exaggerates the claim that we're seeing price increases due to caps. Broadband caps will eventually be recognized as a hindrance to innovation, but they're hardly a price increase in most cases. And, if they really do end up being a huge price increase for users, then won't that create incentives for the other providers (the ones that the WSJ claims are itching to steal customers away) to get rid of the caps or change them? That is unless there really isn't competition in the market -- and Bennett himself was just suggesting that there's plenty of competition in the broadband market.

So, based on these various stories, it seems that, thanks to the FCC's deregulatory efforts, we have tremendous competition in the broadband market that is driving down prices, except for the fact that it's driving up prices due to the lack of competition in the market created by bad FCC rules. Clear?

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Is The iPhone App Kill Switch Really Such A Surprise?

from the this-is-Apple-we're-talking-about dept

There was a lot of fuss last week as some folks discovered a secret "kill switch" in iPhone software that allows Apple to retroactively "kill" an app that it allowed you to "buy" (but apparently, not really buy). Steve Jobs admitted over the weekend that the kill switch exists, with this gem:

"Hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull."

Irresponsible? Really? That's why no other platform has a similar switch? Apparently, everyone else is irresponsible. The truth is more along the lines of this being a standard Steve Jobs offering, where he wants full control over how things are done -- even if it means removing apps you thought you had bought.

But the question is whether this is really a surprise or even a bad thing? While some are screaming "bloody murder" (or at least asking why people aren't screaming that), as others point out, if this is such a big deal, don't buy the iPhone. I agree that this isn't very smart on the part of Apple or Jobs. It certainly opens up an opportunity for competitors to point out that they don't maintain such a closed system, but it's hardly the end of the world. The more Apple makes decisions like this, the more likely people will be more open to alternatives that are coming to market -- and that's exactly what should happen. There's no "bloody murder" to scream. There's just a chance for the competition to come up with something better that doesn't give Steve Jobs the ability to pull a lever and make apps you thought you had bought disappear.

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Openness Is A Winning Business Strategy

from the it's-not-just-a-philosophy dept

For some unfortunate reason, there seems to be this idea that "open" solutions are somehow a less feasible business strategy. There are still those that sneer at open source companies as somehow being less-than-true-businesses, despite an awful lot of evidence to the contrary. But beyond just being a good business strategy, it's worth pointing out that "open" solutions will almost always win in the end, because they simply provide more opportunities. For years, AOL insisted on a walled garden strategy -- and in the mid-90s there were many who believed that AOL's proprietary system would "beat" the wider internet. How's that looking these days?

More recently, there's been concern about the various "walled gardens" in the mobile space -- which folks like Walt Mossberg have referred to as "the Soviet ministries." Jonathan Zittrain has been beating the drum, insisting that a closed system, like the iPhone's, is a dangerous trend. However, it seems quite like looking at AOL vs. the internet in the early- to mid-90's. While the proprietary iPhone system may seem a lot better at first, there are problems under the surface -- and openness is coming to the rescue.

Now, we've been beating on mobile providers for their silly "walled garden" approach for years, so you'd expect that maybe we'd be pessimistic. But, competition does wonderful things for innovation, and Apple's presence in the market is driving everyone else to become a lot more open. Hell, even Apple is now a lot more open than it was just a little while ago, when Steve Jobs thought that 3rd party native apps would ruin the iPhone. He changed his mind when he realized that the iPhone needed a more open app environment to compete with what was coming down the road from others (competition drives innovation again).

But, Apple's iPhone apps aren't really that open -- something that we warned would be an issue. That's getting some attention now as Apple is, without explanation, making some apps disappear completely, without even telling the developers why. That will cause one (or maybe both) of two things to happen: developers will start concentrating greater efforts on other, more open, platforms to avoid having to deal with the mysterious Apple gods, or Apple will have to give in and be much more open itself.

In discussing this phenomenon, Princeton's Ed Felten points out:

Generally, the closer a system is to being open, the more practical autonomy end users will have to control it, and the more easily unauthorized third-party apps can be built for it. An almost-open system must necessarily be built by starting with an open technical infrastructure and then trying to lock it down; but given the limits of real-world lockdown technologies, this means that customers will be able to jailbreak the system.

In short, nature abhors a functionality vacuum. Design your system to remove functionality, and users will find a way to restore that functionality. Like Apple, appliance vendors are better off leading this parade than trying to stop it.

Openness isn't just a business strategy -- it's the natural evolution of the marketplace, because, in the long run, it will be the business strategy that succeeds.

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The March Of Mobile Phone Progress Isn't Always Smooth Or Direct

from the be-patient dept

Tim Wu is discouraged. Writing in Slate last week, the telecom expert lamented the terms he's facing as an aspiring iPhone 2 owner: a two-year AT&T contract thanks to the handset's newfound inability to be unlocked and a move toward a more conventional subsidized handset model. Wu sees this as emblematic of a shift in the mobile industry:

The fact that someone like me is switching to AT&T is a sign of the times in the telephone world. The wireless industry was once and is still sometimes called a "poster child for competition." That kind of talk needs to end.

He's right -- but then, that kind of talk shouldn't have been started in the first place. The mobile market was defined by long contracts, locked handsets and a lack of prepaid options long before Apple arrived on the scene. Now it appears that it'll remain that way long after Apple.

Admittedly, this is a disappointment. Many looked at Apple's choice of a second-rate carrier -- one they could bully around -- as a sign that everything was about to change. Finally a handset manufacturer had arisen that was powerful enough to break the industry's self-serving revenue model and empower consumers! With the recent declaration of the iPhone 2's retreat toward conventional industry shadiness, those counting on Apple's benevolent technological dictatorship have found themselves disappointed (as they have before, and no doubt will again). They were fooling themselves anyway: did anyone really think Apple was going to tolerate phone unlocking forever?

But the outlook isn't all grim. As Wu notes, the Google-led Open Handset Alliance is trying to follow in Apple's footsteps with its own game-changing, must-have handsets -- only this time there seems to be a more expressly ideological slant to the effort. And Verizon's Open Development Initiative, while less than perfect, is perhaps even more encouraging in that it shows the industry has begun to acknowledge the market's need for more flexibility in data services.

And that's the real reason for hope: the march of progress. Anyone who tries to paint the mobile industry as the picture of efficient market competition is either in denial or deeply dishonest. But wireless services will inevitably become more important and more available, whether thanks to WiMAX, revived municipal wifi projects (now without capital costs, thanks to the magic of bankruptcy!), spectrum freed by digital broadcasting, or some other wireless technology. The mobile carriers haven't been great at competing amongst themselves, but you can bet they'll begin responding once consumers have reasonable alternatives.

Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.

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Telcos Realizing Markets Don't Just Grow Forever

from the maturing-markets dept

It's always interesting to see stories worrying about high growth markets maturing. When a market is growing rapidly, there are always those who believe they'll grow forever. But markets mature and run out of growth potential. The telco industry is now coming to terms with that, as 80% of Americans have mobile phones, and 79% of homes with computers have broadband access. At that point, it's no surprise that telcos might not have the same growth opportunities as before, and might start scrambling to try to find new avenues for growth. That's why you see both Verizon and AT&T pushing into the television market, while poking around in some other areas as well. It's also why Sprint needs to kiss and make up with Clearwire, and get a nationwide WiMax system up and running. Also, start expecting to see attempts to create more innovative uses of the telecom systems already in place, such as non-phone equipment making use of mobile networks (the Kindle was just the beginning). Either way, the scramble is now on for telcos who are used to growing at a certain pace to start aggressively seeking new avenues for growth. While that's happening, don't be surprised to see more aggressive attempts to poach customers from each other as well. That's going to be good for customers, as it's likely to force the various telcos to become more open as a way of attracting more customers by doing more than just dropping prices. No matter what happens, the telco industry recognizes that it needs to change and change quickly if it wants to keep up some form of growth.

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Frienemies? Now Verizon Wireless And Google Will Work Together?

from the funny-what-a-little-competition-will-do dept

There's lots of talk in the news today saying that Google is pretty close on a deal to have Verizon Wireless be the first to offer Google's new wireless bundle of software that many people are referring to as the "GPhone" (which still hasn't officially been announced). This might seem like an odd pairing to some. After all, it seems like the two companies are pretty vehement in disagreeing on some key telecom issues concerning things like 700 MHz spectrum and network neutrality. Besides, Verizon Wireless is infamous for being the US carrier most focused on walled gardens, while a big part of the supposed point of the GPhone is to force more openness into the wireless arena. So why the pairing? It's actually fairly simple. Blame Apple. Verizon Wireless famously turned down the chance to be Apple's partner for the iPhone, claiming that Apple had too many strict rules to make it worthwhile. So how do you fight back against the juggernaut of the iPhone? Yup, with the GPhone. It's got nothing to do with openness, the features the Gphone provides or any of the other disputes. It's all about Google's brand and the fact that it's, perhaps, the one brand on a phone that will attract enough attention to (maybe) come close to the hype surrounding the iPhone.

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