Last summer, we wrote about an incredibly poorly thought out lawsuit, by a company named Luvdarts, developers of MMS content, suing the mobile operators, because MMS can be forwarded from a recipient to another person. The company claimed that the big mobile operators were no different than file sharing networks, like Limewire or Gnutella, because each forwarding of content was infringement. As we pointed out at the time, this made no sense. It was a silly argument that was really being put forth by a guy named Max Davis, who has an equally silly plan to add compulsory licensing to MMS content, and this lawsuit was an incredibly weak attempt to push the mobile operators into negotiating. Instead, as we predicted, it's been dismissed by the courts for failure to state a claim. The dismissal was with prejudice, meaning that the court doesn't want to see them again on this. The press release linked above is kind of amusing, because it has the folks behind the lawsuit claiming that they're happy about this result and planning to appeal. Guys, you just got laughed out of court, because this lawsuit makes no sense. Appealing isn't going to fix that.

The internets are flooded with iPhone on Verizon commentary -- and the buzz probably won't die down until people actually start using the phones. Until then, we'll be ignoring all the debates over whether or not it's a fatal flaw that CDMA won't let you talk and surf at the same time. As Louis CK says, "Everything is amazing and nobody is happy." Anyway, here are some quick wireless articles that remind us that these radio-powered gadgets always have room for improvement.

Got antenna problems? Perhaps solid-state plasma antennas will be the answer. This kind of antenna definitely won't be exposed on phones -- and it's a bit ominous that this technology is also being developed for "pain beams" by the military. [url]

Verizon's modem hand-offs from 3G to LTE can take two minutes. Clearly, the solution to this problem is to just upgrade everything to LTE. [url]

T-Mobile is trying to get 4G speeds with 3G equipment. Hopefully, the alphabet soup of wireless acronyms will be completely obsolete in a few years. [url]

To actually make reliable calls, perhaps we just need wires still -- and have femtocells to let people go cordless. The femtocell workaround seems like a strange kludge... you really have to love your cellphone to set up a dedicated 5-bar area for it. [url]

While I still think that uproar over Google and Verizon's "deal" "agreement" "pinky shake" "policy framework" statement on net neutrality is quite exaggerated given that no one has accepted it and the framework is more or less meaningless, it is amusing to watch the reaction to all of this. Lots of folks who perhaps leaned too heavily on Google to push for a certain position are now screaming about Google's move to the dark side. I don't believe that either. Instead, this seems like a calculated business decision of the kind that Google was bound to make sooner or later, and one which might not mean anything.

On the flip side, Google is trying to defend itself against these attacks by pushing back on a few points. Unfortunately for Google, there's a wonderful search engine called Google, which can be used to dig up things said by a company called Google in the past. Over at Broadband Reports, Karl Bode has noted some of the... changing sentiment of Google policy lawyer Richard Whitt. For example, in the latest blog post defending the Verizon agreement "framework" (sorry), Whitt explains why they think it's okay, for now, not to apply any sort of neutrality rules to mobile networks. He first admits that they've pushed for openness safeguards in the past, but feel this is an acceptable compromise for a few reasons:

First, the wireless market is more competitive than the wireline market, given that consumers typically have more than just two providers to choose from. Second, because wireless networks employ airwaves, rather than wires, and share constrained capacity among many users, these carriers need to manage their networks more actively. Third, network and device openness is now beginning to take off as a significant business model in this space.

But... here's the very same Richard Whitt in 2007 (pdf), making the argument that mobile providers were already abusing mobile networks and required more openness:

wireless providers block many common Internet applications and services outright, frequently do not allow network attachment of any device but their own, and reserve the right to terminate service arbitrarily for using other services that do not conform to a short and vaguely-defined list

As Bode notes, nothing has magically changed to make this competitive market any better. Instead, what's changed is Google's heavy investment in the mobile space:

So what changed? Google did. In 2007, Android wasn't a major mobile OS, and Google didn't have multi-billion-dollar wireless advertising relationships with Verizon and AT&T. You'll also recall that Google had hopes of bypassing the carrier retail experience completely -- hopes that flamed out rather spectacularly with the death of the Nexus One and their online phone store. The policy shift is clear and indisputable, as is the motivation: Google doesn't want consumer protections (be they privacy, or network neutrality) to impact wireless ad revenues.

Again, none of this should be seen as a surprise, but just a reminder that, in the end, Google is going to do what it believes is best for Google. There's nothing wrong with that -- it's just that, in the past, Google tended to realize that what was best for consumers was also best for Google. Now... it doesn't seem quite as sure of that. I think this is generally a mistake that Google may come to regret. Even if this agreement (damn) "policy framework," really amounts to nothing much, this move is convincing many people that Google might no longer believe that supporting consumers is the best view, and that may lead to more backlash than the company realizes.

Last week we highlighted the highly-flammable combination of users who don't read their contract fine print or know what a gigabyte is -- and carriers that seem incapable of properly alerting customers before their 3G bill requires a second mortgage. This week the Boston Globe has yet another story of this kind -- exploring how a Dover, Massachusetts man has been fighting Verizon Wireless over an $18,000 phone bill since 2006. The man (obviously annoyed about the impact this has on his credit report) missed the fact that his two-year contract with Verizon expired, and his new contract began billing him by the kilobyte. His son, who had tethered his phone to his laptop, quickly racked up thousands of dollars in overage charges after downloading 1,119,000 kilobytes. Verizon, for their part, were not particularly helpful according to state regulators:

"Kevin Brannelly, an official at the state Department of Public Utilities, tried to help the St. Germain family fight the bill because it did not seem right. "Never in my 25 years here have I seen such stubborn and senseless resistance to what is obviously a mistake," he wrote in an e-mail to St. Germain."

As with all these stories, Verizon justifies this absolutely insane markup over cost on their data service by insisting they at least made their ridiculously-constrictive pricing clear to consumers. Apparently not, given we've been watching a steady parade of these stories for years now. What has been made clear is that the cap and overage billing model isn't working for many customers. It also continues to be clear that carriers are doing a miserable job educating their users, and an even worse job implementing effective systems that alert a user before their bill goes utterly apocalyptic. While carriers often do reduce these charges after they're exposed in the press (though in this case half-off is still obnoxious) -- you have to wonder how many of these over-billing stories aren't being told.

Some carriers appear to be realizing that the millions to be made from ripping off retirees and the kilobyte confused isn't worth the endless bad press, and that helping your customers understand their bills might just help you differentiate your services. T-Mobile for instance is moving away from this cap and overage model, and last week announced they'd simply start throttling users back to slower (usually around 128 kbps) speeds should they cross their monthly cap. It seems like wireless carriers can either continue to rip people off until regulators get involved (or customers flee to more user-friendly carriers) -- or they can provide users with the tools necessary to help them adequately understand and control their monthly bill -- before it requires loan shark intervention.

There's something anti-competitive afoot in the 'VoIP over 3G' space this year. Let me run you through a timeline, and see if you can't spot the dirty pool:

0. Skype has had a highly functional VoIP client for Windows Mobile devices for a few years. It allowed smartphone customers to use most features of Skype over WiFi OR a carrier's cellular data network. It was distributed around the carriers direct to customers of Skype, and was designed for those customers' benefit.
1. March 2009: Skype on iPhone is launched, but is unable to do VoIP over the 3G data channel because AT&T and Apple blocked that functionality. Skype, Google, the FCC, and consumers cried "foul" at AT&T and Apple.
2. Oct. 2009: After considerable FCC and consumer pressure, AT&T relents, and allows VoIP over 3G (and was even publicly applauded by Skype's CEO Josh Silverman). Skype users, naturally, expect an updated Skype version that will leverage 3G data.
3. Jan 16, 2010: Skype releases a new iPhone version which DOESN'T take advantage of the new leeway AT&T (and ostensibly Apple) allow for VoIP over 3G. Skype points fingers, mostly back at Apple.
4. Jan 27, 2010: Apple removes any 3G VoIP restrictions. Now there is nothing holding Skype from doing VoIP over 3G on iPhone.
5. Mid Feb, 2010: At MWC in Barcelona, Verizon and Skype announce a special version of the Skype app that will run on Verizon. While most press outlets rejoice at the "openness" Verizon wireless is finally showing,  it turns out to be a limited, crippled version, which is designed to fit Verizon's agenda, NOT customer wishes. This version can use the 3G data network, but just for chat and 'control', not for voice. It requires a >$10/mo data plan, is not available for phones with Wi-Fi, and 'Skype out' cannot be used to make domestic phone calls. In this deal, it appears that VZW paid Skype for some exclusivity in the USA.
6. Mid-Feb, 2010: Also at MWC, Skype CEO Silverman tells Om Malik that we can expect 3G VoIP on iPhone "Very soon", with no firm commitment.
7. Feb. 26, 2010: Skype completely pulls it's very functional Windows Mobile apps with little explanation, and no suggestion of when they might return. The app, which works fine, just goes away. Why pull the most functional Skype mobile app and leave only crippled versions?

Looking at the timeline above, it's pretty easy to guess what's going on here. Skype has been negotiating with Verizon Wireless for some exclusive deal in the USA. But unlike the relatively good, open Skype deal enjoyed by Hutch "3" subscribers in the UK, the Verizon version is crippled with confusing limitations, complications, conditions. It's clear the Verizon goal is to use Skype to upsell data plans to users who don't yet have one, and to drive or retain Minutes of Use of cellular voice traffic. Skype just sold its US mobile users down the river! Skype still promotes "Skype Mobile" on its US web pages, but if you click on any OS like Android or Blackberry, you'll see the bold headline "Coming Soon: Skype on America's most reliable wireless network." And are basically told to wait for the exclusive product.

The only reason Skype offered for retracting the WinMo app is "because we want to offer our new customers an improved mobile experience – much like the version that has proved so popular on the iPhone..." Wait...Is that the same version that annoyed users because it couldn't do VoIP on 3G? And how does killing a product with no replacement offer an "improved mobile experience"? Seems like more of an absent mobile experience.

Going forward, this also could position Skype well for offering a premium paid version of a fully functional app at a future date, when exclusive deals expire. A freemium model would be less unsavory than the exclusive/crippled structure that we apparently have for now. At least with freemium, the free market can choose to pay or not from any given carrier. With the exclusive/crippled structure, customers have little choice - except the choice to use another VoIP provider who is focused on giving end users what they want.

The result of this exclusive deal is, essentially, to deprive an entire country of the value of a good VoIP service (Skype) on mobile phones, and instead to offer us a crippled version that is designed not to delight any user, but to delight a carrier. How ironic, then, that Skype's Silverman has been at the forefront of the push for more "open" networks:

"Nonetheless, the positive actions of one company are no substitute for a government policy that protects openness and benefits consumers. We're all looking forward to further developments that will let people use Skype on any device, on any network."

or when he said this from a September lobby trip to DC:

 "We have witnessed certain broadband providers unilaterally block access to phone calls delivered over data networks and implement technical measures that degrade the performance of peer-to-peer software distributing lawful content. And as many members of the Internet community and key congressional leaders have noted, there are compelling reasons to be concerned about the future of openness."

Compelling reasons, indeed. It seems that in this case, AT&T actually followed through with their promises to be more "open" while Skype and Verizon have just painted a big "open" sign on the gates of the walled garden. Enter at your own risk.

We still don't understand why AT&T called so much more attention to Verizon's ads that highlight AT&T's weak 3G network coverage by suing over the ads. Things were made worse when a judge refused to block the ads from airing. Perhaps finally realizing that all this was doing was creating free advertising for Verizon -- and more attention on the quality of AT&T's network -- the company has decided to drop the lawsuit. Apparently, instead, it's going to focus on its own misleading ad campaign.

Recently, Verizon came up with a rather clever ad campaign, mocking the iPhone ads that claim "there's an app for that" with ads that showcase Verizon's wider 3G footprint, claiming "there's a map for that," and showing the two services' 3G coverage maps side by side: It does a nice job poking fun at one of AT&T's weaker points: its mobile network infrastructure. But apparently, AT&T is not happy with the ad campaign and has sued Verizon over those ads, claiming that it uses an unfair comparison. That's because the maps only show 3G coverage, and Verizon has significantly greater 3G coverage. However, AT&T feels that the map showing its coverage implies, falsely, that AT&T has no coverage outside of its 3G coverage areas. While you can see why AT&T would make this complaint, it does make you wonder if it's really worth the effort to sue. All it's really doing is attracting a lot more attention to the original ad, which does accurately state that it's talking about 3G coverage, not overall coverage, though you can see why some people might not realize that AT&T's network also includes non-3G areas.

It's really sad to see some of the struggles that legacy businesses go through in trying to adapt to a more modern world, but not all of it is the fault of those businesses themselves. Look, for example, at what's happening with Verizon. Subsidiary Verizon Wireless -- which is 55% owned by Verizon -- began a marketing campaign pushing people to ditch their landline phone and go completely wireless. That's not a bad marketing campaign (and, in fact, might be a very good marketing campaign these days). So what happens? The union that represents Verizon's landline telco workers flips out and accuses the company of trying to undermine the union by helping Verizon get out of the landline business, so it can get rid of those workers. Seriously. First of all, there's little evidence to suggest that's true. Like most traditional telcos, Verizon still sees its basic landline business as a useful cash cow that I'm sure it intends to milk for as long as possible. Chances are, since VZW is a separate company, the marketing plan had nothing to do with the parent's marketing efforts. But, either way, at some point the company should be pushing customers to ditch landlines and other older technologies and embrace better solutions. Not because it puts old union guys out of work, but because it's where the market is headed.

Almost all of the issues facing broadband in this country (our slow speeds and high prices relative to other countries, questions about "neutrality" and things like customers being forced into broadband tiers) are really symptoms of a lack of significant competition in many markets. Many customers really only have one or two options, neither of which they like (I'm in that camp myself). Yet, the broadband providers want to make everyone believe it's a really competitive market. That's why they've done everything possible to block the FCC from getting accurate data about actual broadband deployments and competition over the years. Their most recent plan has been about pitching the idea of an organization called "Connected Nation" to "map" broadband penetration. However, as has been discussed previously, Connected Nation seems more like a front for the big telcos to try to pretend there's significant competition... and an increasing number of doubts are being raised about Connected Nation's efforts -- even as it seems to remain a darling of DC politicians. However its "mapping" still won't look at house-by-house penetration and competition (by demand from the broadband providers) and the collected data will remain proprietary, rather than open.

Meanwhile, Verizon has put up a video claiming to explain why there's plenty of competition in broadband in the US, but it does so by pulling a neat little trick: rather than defining the market as DSL and cable providers, it dumps wireless providers into the mix... So when you add mobile data providers, yes, there are more players in the space, but that ignores the fact that (1) many of the mobile players and broadband players are actually connected (i.e., AT&T has both, as does Verizon) and (2) that the cellular wireless broadband providers are all greatly limited, and use terms of service that tend to forbid using the data account as a primary connection. In other words, they're not really part of the same market at all.

But, most importantly, the video fails to back up its thesis that the US is "one of the most successful broadband markets in the world." It says there's lots of competition, investment in new technologies and consumers are getting more as prices go down. That suggests there is, in fact, some competition in the market -- a point pretty much everyone agrees on. But it does nothing to compare the US to other markets around the world that have much more competition, much more investment and much greater consumer value per dollar spent. Just saying that because there's some competition, the US is one of the most successful in the world, doesn't back up the thesis at all. It's like saying that you won a baseball game because you fielded nine guys. You forgot about the actual game.

We've wondered before why mobile operators say they hate the subsidies they pay to discount handset prices, but then expand their use of them to include laptops and netbooks. The trend looks like it's here to stay, as Verizon Wireless has now confirmed it will start selling 3G-equipped netbooks by the end of June, so now, in addition to tying yourself into a 2-year contract where you're paying back the cost of your cell phone, you'll soon be able to tie yourself into a long-term data-service contract to pay back the price of a laptop, too. Of course, once that contract's up, the device will still be locked to the operator from which you bought it, making it difficult (or impossible) to take your business elsewhere. Meanwhile, business is flowing the other direction, too: Dell is reportedly looking to set up a virtual operator in Japan, selling its customers network access on another operator's mobile network to use with their mobile-equipped laptops. It's an interesting contrast in models, because it's unlikely Dell will subsidize the hardware like the operators. Part of the issue with handset subsidies is that consumers are used to paying the lower subsidized prices, and so any change that raises prices will be met with disdain. But people aren't used to the benefit of subsidies for their PCs, so may be more open to paying a higher upfront cost for the hardware if it means they don't have to sign a long-term contract with a high monthly service charge.