Editorial

Google-Verizon: It's all about the Money

When does a compromise stop being a compromise and become an all-out policy reversal? In 2007 the iPhone was fresh and set to dominate the nonexistent "lifephone" market by single handedly creating the category. On June 29th of that year, the mobile market was forced to bow to a new ruler; ruthless and controlling, exclusive and dominating, iPhone became the new mobile standard. Riding on a platform of "consumer choice", Google looked to be the white knight gearing up to free a world locked into bondage by a single platform. Espousing "choice" and "freedom" as dictated by the 700 MHz spectrum auction's founding principal of software openness, and driven by Verizon's lawsuit condemning the FCC rules as “arbitrary and capricious, unsupported by substantial evidence and otherwise contrary to law", Google created what can be described as a modern day "Rebel Alliance" to combat the telco's "Imperial Grip" on the wireless market. Not so ironically, three years later, Google has joined the darkside; Google is to now to Verizon as Vader was to Palpatine.

"The nation's spectrum airwaves are not the birthright of any one company. They are a unique and valuable public resource that belong to all Americans. The FCC's auction rules are designed to allow U.S. consumers -- for the first time -- to use their handsets with any network they desire, and download and use the lawful software applications of their choice. 

It's regrettable that Verizon has decided to use the court system to try to prevent consumers from having any choice of innovative services. Once again, it is American consumers who lose from these tactics."

Never a company to mince words, in 2007 - Google was ready to fight. Allying with hardware manufacturers rather than to carriers was seen by many as a bold move, one that might offer the freedom and choice consumers had been severely lacking. The "Open Handset Alliance" was to be a conglomerate of organizations that believed in free, open hardware across product lines and carriers: real choice for the masses, freedom for the pocket. 

Only this never happened.

From the beginning, Android handsets were carrier exclusive. From the G1 being only available in the U.S. on T-Mobile to AT&T finally beginning to even stock Android devices, Google's vision of open, cross-carrier devices seemed to be slipping away. While a noble experiment, the foretold "saviour" of the free market, Nexus One, remained an afterthought to the mobile buying masses. Instead of cutting the "oooh-flashy" part of the hardware equation out of the selection game and focusing strictly on offered service; consumers, brainwashed by carriers, continued down the path of two-year service agreements, substandard coverage and poor service. The Nexus One could have succeeded had Google took a stand, the stand they had touted in the past, the stand for freedom.

Only this never happened either.

Google's #1 revenue generator is advertising. You know this, your grandmother knows this, even Ars Technica has managed to pick up on this from time to time. Google's no stranger to litigation, but instead of utilizing those eager legal teams for the greater good, instead of fighting against carrier locks and arbitrary hardware distinctions, Google decided to not only play it safe, but to follow the money. They're a publicly traded company, why wouldn't they? Google realized that if they allowed carriers to maintain exclusivity and pre-load their typical revenue-generating tricks that not only would carriers stock the handsets, but in return would maintain Google's dominance over search and advertising. Not a Nascar fan? Well you are now! Sprint's EVO 4G is a prime example of what could have been. Not only one of the most powerful smartphones on the market, EVO could have set the benchmark for an inter-carrier device. Harnessing great hardware, combined with the potential of an unlocked and free OS. Sprint decided to do what they do best: lock that sucker down and stuff it with crap. Did Google bat an eye? Not even a lash. Google's not stupid, they saw a revenue opportunity MUCH more lucrative than their original stance and decided, like any capitalist company should, to follow the yellow brick road.

Can you hear me now?

Let's recap: Google sees the potential for lost revenue by allowing Apple to have complete control over the smartphone market so forms an alliance with everyone who isn't Apple, well nearly. Also sounding like a good idea at the time (again to everyone that wasn't making as much money as they could), Google promotes freedom. This freedom, while sounding good on paper, didn't quite pan out, so instead Google compromises for the first time. They allow carriers to utilize their open OS on exclusive devices while maintaining a firm grip on their money-printing advertising and services. Sounds like a win-win, so it's time for policy. Enter Verizon.

With Google and Verizon's pact on net neutrality. In a joint blog post proposing policy to legislators, Google and Verizon covered these points:

  1. All legal content should be accessible to wireline customers.
  2. ISPs should not be able to discriminate against legal content in terms of access or quality of service. This includes not prioritizing Internet traffic, even at a premium rate.
  3. The customer should have fully transparent access to information about the services they purchase. This includes giving content providers access to ISP network management practices.
  4. FCC enforcement should occur on a case-by-case basis, using a complaint-driven system. The FCC can penalize violators up to $2 million.
  5. Provide opportunities for ISPs to partner with content providers to enable new , innovative and dynamic services to customers.
  6. Mobile Broadband is different than wireline broadband, and these frameworks, other than the transparency requirements, would not apply to wireless broadband providers.

Whoa. WHOA. What? That last point, let's try that again: mobile broadband is different and thus this net neutrality framework shouldn't apply? Bomb. Shell. Although arguing that the network is not as "mature" as wireline and is still untested under full deployment, this is not valid. Mobile carriers are a veritable gold mine. With infrastructure that has been paid for multiple times over, there is plenty of cash for support and continued deployment. This is not the issue at hand. Verizon et al are concerned with protecting their current, lucrative business model. By having Google on-board and providing its services coupled with the maintenance of the telco's feature crippling (hot-spot disabling), service limiting (read: Skype-free) software deployments both companies receive a part of this ever growing market. Google's ad-revenues continue to increase (200,000 new activations a day) while Verizon keeps lining them up and lockin'em down to their notoriously standard service agreements. Through their joint policy proposal, both companies are presenting a facade of neutrality in a stable market of wireline, while attempting to ensure that their developing revenue continues to grow unchallenged. By introducing neutrality concerns first and in an established market, this "coalition" is softening the blow to legislators who may already be timid to regulate a still developing paradigm.

Some say that the moratorium on net neutrality guidelines will only be temporary while the market develops, and others think that Google is only allying with Verizon in an attempt to temper their policy in the direction of open and fairness while utilizing their clout to moderate the market as a whole. This, as always is not quite the truth. The bottom line is money, as it always is. Hopefully you weren't fooled by Google's eternal "Don't be Evil" mandate. These words are no more steadfast than an "Open Handset Alliance" or even "Net Neutrality". Principals in business are as flexible as the credit cards that carry them; don't be fooled by ambitions or rhetoric, currency is pen of policy.

Read counterpoint: Google-Verizon: It's not as evil as it seems

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