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.

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?

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.

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?

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.

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.

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.

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.

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?

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.