Guest Post: Hanging on the Telephone: Apple’s App Store fiasco and what the FCC is doing about it

SpicyIP is pleased to bring to you a guest post by Chaitanya Ramchandran, a good friend of mine who has very recently graduated from the National Law School of India University, Bangalore. During his stint at law school Chaitanya was editor in chief of NLSIU’s flagship tech law journal – Indian Journal of Law & Technology whose archives can be accessed here. His post focuses on the competition law issues arising out of Apple’s latest policies regarding the applications that can be used on the iPhone.
Hanging on the Telephone: Apple’s App Store fiasco and what the FCC is doing about it

Why is it not surprising that Apple is the new Microsoft? How has it become the most monolithic, anticompetitive technology company in the world? For starters, we’ve let Steve Jobs get away with too much for too long, and understandably so; Apple’s products are unmatched in elegance, simplicity, and desirability. Unfortunately, they are increasingly lacking in a most crucial quality; generativity. Given the tight and comprehensive vertical integration Apple is known for today, this is hardly an inexplicable trend. That’s pretty ironic, considering that Apple computers were once a pre-eminent platform for third party software (few people know that Microsoft Office ran on a Mac years before it was introduced for Windows). This is compounded by the Orwellian control Apple maintains over its online iTunes/Apps Store, which is the only legal source of applications and media for iPods, iTunes, and iPhones. Third-party applications have been a major value addition to the iPhone/iPod lines, and have great potential to improve the functionality and usability of these devices. The iPhone, however, is more equal than the others, and it is the subject of this post.

As I just wrote, the App Store is the only legal source of apps for the iPhone (and this status has fostered enough disputes as it is, with this remarkable trademark suit showing how serious developers are about their iPhone apps). That means that Apple can exercise total control over the applications people can download and use for their iPhones. And they do. This is pretty absurd in itself; imagine if Microsoft vetted every application written for Windows. That’s exactly what Apple is doing for the iPhone, and the situation is made much worse by the collusion between Apple and AT&T, the sole carrier for the iPhone in the US. Apple has been rejecting iPhone apps from third party developers for a while now, but things reached boiling point a few days ago with Apple’s rejection of Google Voice, an astoundingly useful piece of software that probably “put the fear of God into AT&T”. This event was significant enough to attract the attention of the FCC.

But what does it do? Google Voice is a free application that has some truly revolutionary features; it bundles all your phone numbers (work, home, mobile) into a single, Google-issued number. When someone calls or messages you, all your phones ring simultaneously (even this can be modified, so that at a given time or on a given day, all calls are routed to a designated number). This alone is a monumental feature that can change the future of telecommunications, but there’s more! Google Voice lets you send, receive, and (for the first time) archive SMSes, all for free. It can transcribe voicemail and send it to you by email or SMS. It also bundles a huge number of other features into a single service, including conference calling, call blocking, call recording, and many more. It also offers free calling within the US, and extremely cheap international calls. And again, all this is free.

Obviously, AT&T is very worried. Its lucrative deal with Apple is staring down the barrel, because subscribers could effectively switch carriers and avoid a lot of charges, even though Google Voice would use AT&T’s voice channel rather than the data plan. A senior official at AT&T said “[W]e absolutely expect our vendors not to facilitate the services of our competitors”. This isn’t the first time that Apple has done AT&T’s bidding; earlier this year, it restricted the official Skype application to WiFi-only operation, thereby limiting its utility and ensuring customers didn’t use Skype over the mobile network, eating into AT&T’s revenue. But wasn’t Google different from everyone else? For one thing, Eric Schmidt, Google’s CEO, was on Apple’s board until last week. Also, the iPhone comes with YouTube and Gmail apps baked right in, and Google is also suspected to have used private APIs for its Google Mobile iPhone app. But now, as Google becomes a competitor to Apple in more and more businesses (smartphones, OS, browsers), their relationship has become much less cosy. And that means Apple is all the more ready to toe AT&T’s line.

This is worrying from a regulatory point of view. Pressure groups and developers of internet communications applications like Skype have been requesting the FCC to put wireless services on par with traditional telephone networks and cable/DSL broadband providers. This would mean that the net neutrality principles (found here) already applicable to those other networks would also apply to wireless networks, stopping the Apple/AT&T combine from deciding what apps could be used on the iPhone, and with what functionality. Unfortunately, Skype’s petition was lost in a web of red tape, and remains unresolved. The regulatory position needs to be changed to preserve the interests of consumers. In the words of Chris Riley, policy counsel for the net neutrality pressure group Free Press, “The Internet in your pocket should be just as free and open as the Internet in your home. The FCC must make it crystal clear that a closed Internet will not be tolerated on any platform.” That’s easier said than done, because wireless policy in the US has never really been geared towards neutrality. But with the high-profile one-two punch of the Skype restriction and the Google Voice rejection, that could be set to change this year. In fact, the FCC ruled in 2007 and again in 2008 that the Internet Policy Statement applied to wireless networks. However, the FCC uses a case-by-case approach for enforcing the Internet Policy Statement (and there are people who believe that it cannot be enforced at all), purportedly because this kind of adjudication is more appropriate for “complex and variegated” networks. This means that without a definitive ruling by the FCC on the general applicability of the Internet Policy Statement to wireless networks, the regulatory position will remain ambiguous, allowing the continued exploitation of consumers by device manufacturer/wireless service provider alliances.

Another pressing issue is Apple’s inexplicable review process for prospective apps. Since the App Store is the only legal source of apps for the iPhone (jailbroken iPhones can use non-approved software, but users risk losing their warranties), it’s only fair for developers to know beforehand what standards they need to comply with to get their apps onto the App Store. The only information Apple has released is that apps may be rejected if they “duplicate features of the iPhone”. The absurdly opaque review policy (and developers’ frustration with it) is best illustrated by this transcript of a Kafkaesque conversation between an Apple representative and the developer of a Google Voice-based app that had been rejected. Not only do developers not have any clue about whether or not their app will be accepted until they actually submit the finished product to the store for approval, Apple seems to be washing its hands of any responsibility after pulling apps from the App Store.

Luckily, the FCC is not letting this slide. It has sent out letters to Apple, AT&T, and Google, seeking more information on the matter. The letter to Apple asks some very relevant questions, including:
Why did Apple reject the Google Voice (and related) apps?
Did it act alone, or in concert with AT&T?
Does AT&T have any role in the approval of apps for the App Store?
What are the differences between Google Voice and other (approved) VoIP apps? Are those apps allowed to operate on AT&T’s 3G network?
What are the standards for accepting and rejecting apps? What is the approval process? What are the major reasons for rejecting an application?
These events promise to chart the future course of net neutrality for wireless networks. The “my house, my rules” attitude adopted by AT&T is as old as the Marconi Company’s refusal to transmit a diplomatic message from Prince Henry of Prussia to President Roosevelt only because it was transmitted using Slaby-Arco equipment, way back in 1902. But wireless networks are no longer self-contained. They are essential gateways to the infinity of the internet, and we spend our hard-earned money to use them. From the consumer’s point of view, restrictions like these kill a large part of the value of devices like the iPhone.

From an Indian point of view, the issue is much closer to home than one might think; Apple has still not launched the iTunes Store in India, but it launched the App Store to support the incredible popularity of the device here. Even in India, a country where SIM locking is still rare, the iPhone is only sold through Vodafone and Airtel. And the Indian App Store is run under the same principles as its US counterpart. However, the fact that India’s telecom regulator has more pressing matters to attend to, including a botched 3G auction, means that it will be some time before mobile broadband becomes widespread enough for wireless net neutrality to be a significant issue in India.

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1 thought on “Guest Post: Hanging on the Telephone: Apple’s App Store fiasco and what the FCC is doing about it”

  1. Sir,
    I completely agree with you on the topic that Google Voice app should have been approved (and I still hope it will get approved soon 🙂 ) despite of the fact that a feature similar to merging multiple telephone numbers exists as an AT&T service. But I am critical about two points put up in the blog.

    1st. ” And they do. This is pretty absurd in itself; imagine if Microsoft vetted every application written for Windows” While the App store approval procedure is still in top secret files of APPL, and aberrant in nature as what it seems from the outside, but I am pretty much in favor of the concept of “approval”; because if you look at Android Store by Google or the (old) Firefox add-ons page or for that matter in any applications repository with an open-mindedness, you can find a number of apps that don’t do anything.. or bluff users of doing something and possibly withdraw money from users… besides they can potentially “DEGRADE” the quality of experience you are getting on your iPhone or iPod touch. Everyone loves it not only because it is sexy or an one-stop device.. but because it’s something “that just works” out of the box. You can spend time to do your own work without fighting with the device to get it to work. And thus, I feel, the approval concept is pretty much justified by itself and is good enough.. although the approval procedure is still in dark for anyone outside Apple..

    2nd thing.. “The only information Apple has released is that apps may be rejected if they duplicate features of the iPhone.” This has since been modified, I believe; because there are apps available in the app store that duplicate the functionalities of built-in apps in iPhone.. (like iCab browser and Safari.. and you can find few others..) and jailbreaking is not a good solution I would suggest(unless of course you want your iPhone to work on some other network than the approved ones), since it would again degrade the whole “iPhone experience”.. you would get nothing from changing the black background in the apps page of iPhone.. neither from making the number of docked apps from 4 to 5.. cut, copy, paste and video.. they are already there in iPhone.. What i believe is, you just need to wait a bit for Apple to come up with all the features you desire.. like Apple could have released copy-paste feature a bit early.. but i dont think it would have been that “sleek and natural” as it’s now.. with ability to copy paste images and maps even.. the thing is, you notice only when the device is unable to do something.. but when it works, it just works.. the way you expect it to.. Isn’t that better than something half working?

    as far as my knowledge goes, the only thing they publicly say they consider while approving apps is the adult rating of the app and possibly network bandwidth it would consume.. (though I have seen download managers for iPhone)..

    anyways, it was a nice article.. and Google voice should get approval soon. As far as rumors go, google is coming up with an web-based app instead of a native app which can be a good solution considering the situation. And for generality, from my view point, it should be well acceptable if at the end of the day you get something that just works….

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