Apps and net neutrality make for a symbiotic relationship

Net neutrality – a concept or policy initiative that seemingly began as the topic du jour – is on the verge of vaulting the wireless industry and countless other industries that cross its path (read: everything) into an all-out battle.

Not since Switzerland declared itself neutral in World War II has the word “neutral” rankled so many. Scores of lobbyists, politicians, technologists and the like are motivated to either pursue probably the most far-reaching regulation to ever fall upon the telecommunications space or protect the status quo and the consolidation of power that supports the way things are today.

Net neutrality stokes philosophical differences for many. Because it borders on the most prized rights of humankind, especially the right to speak freely, the definition or outcome of net neutrality as it relates to wireless communications is likely to be tenuous at best for decades to come. To be sure, carriers and practically every other incumbent stakeholder are concerned and wondering exactly how third party app providers and publishers might take advantage of a neutralized mobile Internet. Taking the wired online world and its set of regulations of policies and forcing it on the wireless world could turn out to be an effort in futility that never ends. There is no longer a need to speak about what-ifs when debating net neutrality because many of these apps that carriers worry about (some to a greater extent than others) are already live and gaining considerable user bases. It’s been an interesting scene to follow because there’s almost no rhyme or reason to how things have progressed to the point they are today. Carriers are making exclusive deals with Voice over Internet Protocol providers and a variety of other services that mimic their bread-and butter are already working uninhibited on many carrier networks today as well. It’s hard to say whether we’re witnessing a case study in keeping-your-friends-close and- keeping-your-enemies closer, but much of what was expected a couple years ago is simply no longer matched in reality. Verizon/Google In that vein, it should come as no surprise that the largest U.S. carrier, Verizon Wireless, and arguably the most powerful technology company in the world, Google Inc., are right at the center of this entire net neutrality debate. And as the empowered often do, each is doing its best to define the issue on its terms and to an effect that will enrich their position and strength overall. Beginning with the 700 MHz auction, Google tactfully lobbied the Federal Communications Commission to impose an open-access provision to newly opened spectrum if a certain bid threshold was reached. Google then bid high enough for that requirement to kick in, then bailed out of the bidding, leaving Verizon Wireless with a nationwide swath of beachfront spectrum that also just so happens to carry some of the most stringent open-access requirements for licensed spectrum yet. After bidding $4.7 billion for the spectrum, Verizon Wireless battled in court and then abandoned those efforts only to have CTIA pick up the torch with an appeal to the FCC. While Verizon Wireless pushed for a softer regulatory touch, Google continued to fight for stronger rules. The spectrum bought by Verizon Wireless continues to carry those open-access rules today. It will carry consequences and have a tremendous impact on the wireless industry for some time to come. In the two years since, Google’s position in the wireless space has grown by leaps and bounds, thanks to the rise of its Android operating system and the countless apps the company continues to develop and expand for the mobile environment. In that time, Google’s apparent philosophy on the entire issue of net neutrality has changed as well. Under a joint policy proposal offered this summer by Google and Verizon Communications Inc., wireless broadband would remain largely unregulated. The net-neutrality “compromise” offered by the two companies for the most part keeps in mind federal goals, but reserves some yet-to-be-created services that would be treated differently. The seven principles spelled out by the Internet search giant and the nation’s second- largest telecom company mostly relate to wireline broadband access, including a component that offers nondiscriminatory access to the Internet. “Importantly, this new nondiscrimination principle includes a presumption against prioritization of Internet traffic – including paid prioritization. So, in addition to not blocking or degrading of Internet content and applications, wireline broadband providers also could not favor particular Internet traffic over other traffic,” according to Google’s public policy blog. Surprisingly, the proposal uses the “competitive” argument to urge regulators to use a light touch in governing the wireless industry. “We both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly. In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement.” The FCC in May ruled that the wireless industry was not competitive, instead finding it concentrated. The meat of the proposal would allow broadband providers to develop new services with partners, and presumably treat those services differently. Google said some services could include health-care monitoring and smart-grid services. Public-interest groups were quick to denounce the effort, noting that these “managed services” could take up all of the network traffic. “The agreement between Verizon and Google about how to manage Internet traffic is nothing more than a private agreement between two corporate behemoths, and should not be a template or basis for either Congressional or FCC action. It is unenforceable, and does almost nothing to preserve an open Internet,” said Gigi Sohn, president and co-founder of Public Knowledge. “Most critically, it sacrifices the future of the mobile wireless Internet as this platform becomes more central to the lives of all Americans. Under the Google-Verizon definition of network neutrality, wireless companies would only have to be transparent about their network practices – meaning that they could block any application, content or service so long as they told consumers they were doing so. And while there would be no pay for priority on the best efforts Internet, there are almost no limits on so-called ‘managed services,’ other than that they would need to be ‘distinguishable in purpose and scope,’ from the Internet. Thus, it is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the best-efforts Internet.” Playing ball The FCC clearly wants the net neutrality ball back in its court now. The agency has released a further notice of proposed rulemaking that specifically addresses how wireless networks and specialized services should be managed under the agency’s plan to preserve open access to the Internet. The FCC wants comments on how wireless providers should address transparency, devices and applications. “The NPRM seeks comment on ‘how, to what extent, and when’ openness principles should apply to mobile wireless platforms, with a particular emphasis on furthering innovation, private investment, competition and freedom of expression,” the agency said. “Mobile broadband providers such as AT&T Mobility and Leap Wireless (Cricket) have recently introduced pricing plans that charge different prices based on the amount of data a customer uses. The emergence of these new business models may reduce mobile broadband providers’ incentives to employ more restrictive network management practices that could run afoul of open Internet principles. Additionally, Verizon and Google issued a proposal for open Internet legislation that would exclude wireless, except for proposed transparency requirements.” By and large, wireless carriers and wireless industry trade association CTIA have maintained that wireless technology is different from wireline technology, and that operators need to be able to manage their networks for all of their subscribers. Further, there are technology issues in that a GSM-based device cannot run on a CDMA network. “We understand all options remain on the table, with the driving force apparently being Chairman Genachowski’s desire to identify a path that leads to a compromise without abandoning fundamental open Internet principles and doing so in a way that acknowledges real-time political realities/economic implications of resetting broadband policy in the aftermath the D.C. Circuit’s decision in April to limit FCC internet jurisdiction,” said Jeffrey Silva, senior policy director at Medley Global Advisors L.L.C. Beyond seeking comment on transparency so end users, content, device and applications companies can make “informed choices” regarding mobile broadband providers, the proposal asks a number of questions about devices and applications. “Can adherence to industry standards for mobile wireless networks ensure nonharmful technical interoperability between mobile broadband devices and networks? Will deployment of next-generation technologies (e.g., LTE) further facilitate interoperability? To the extent that compliance with technical standards needs to be validated through laboratory testing, could such testing be conducted through independent authorized test centers? Were the commission to require mobile providers to allow any non-harmful device to connect to their network, subject to reasonable network management, how would mobile broadband provider conduct have to change, if at all, in light of existing device certification programs?” App impact The agency also is seeking comments on how applications are tied to the network. “To what extent should mobile wireless providers be permitted to prevent or restrict the distribution or use of types of applications that may intensively use network capacity, or that cause other network management challenges? Is the use of reasonable network management sufficient, by itself or in combination with usage-based pricing, to address such concerns? Should mobile wireless providers have less discretion with respect to applications that compete with services the provider offers? How should the ability of developers to load software applications onto devices for development or prototyping purposes be protected?” The FCC is also concerned about network operators that have their own apps stores. “If providers were to be prohibited from denying or restricting access to applications in their capacity as network providers, should they nevertheless have discretion regarding what apps are included in app stores that they operate? Are there safe-harbor criteria that, if met by a provider, would ameliorate potential concerns? For example, if a provider’s customer had a choice of several app store providers that offered applications that could be downloaded onto the customer’s mobile device, would that adequately mitigate concerns about potentially anticompetitive or anti-consumer effects of a provider excluding applications from its own app store?” The agency also is questioning if web-based applications should be regulated differently than native applications. After the FCC issued its notice for comment, CTIA President and CEO Steve Largent responded in kind: “We are pleased the FCC has put out the Public Notice for comment on the application of open Internet rules for our industry. We are happy the chairman and the commissioners realize that wireless is different. We will continue to work with them to explain why these rules are unnecessary and should not be applied to the wireless ecosystem. “The fact is that mobile Internet works for Americans. With more than 285 million subscriber connections, consumers are seeing the tremendous benefits of the industry’s innovation and investment in mobile broadband. We look forward to continuing the dialogue with the commission on why wireless is different.”

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