AT&T to Google: Your trumpet stinks
I'm glad the net neutrality dispute that broke out this week between AT&T (T) and Google (GOOG) has nothing to do with Apple (AAPL).
The two companies' arguments are so cynically self-serving and the common carrier issues they have locked horns over so thorny and impenetrable that I don't know where to start. (If you want to pursue it, the New York Times' Saul Hansell does a good job laying the groundwork in his latest Bits column.)
But there's one thing in AT&T's letter to the Federal Communications Commission that deserves comment, and it has nothing to do with intercarrier compensation, call termination fees or pornographic chat lines. It concerns the English language.
Google spills the beans on Apple
Image: FCC
"Contrary to published reports," Apple (AAPL) told the FCC back in August in response to a government inquiry about why it rejected Google's (GOOG) famous voice management app. "Apple has not rejected the Google Voice application, and continues to study it.” (link)
What Google had to say about that was unknown because unlike Apple, which made public its response, Google asked that key portions of its letter to the FCC be kept confidential to protect "sensitive commercial conversations" between the two companies.
Now Google has spilled the beans. In a blog post Friday, Google attorney Richard Whitt announced that rather than fight several Freedom of Information Act requests, the company asked the FCC on Thursday to release the unredacted version of its letter.
You can read the full letter on the FCC's website, but the thrust of the previously undisclosed passages is that Apple's top marketing executive personally told Google that its app had been rejected. The key section is this one:
40 staffers. 2 reviews. 8,500 iPhone apps per week
Image: Apple Inc.
It took the heavy hand of the Federal Communications Commission to pry it loose, but we finally have a clearer picture of how Apple's (AAPL) App Store approval process works.
The details are contained in Apple's response to the FCC's July 31 letter of inquiry into why Google's (GOOG) Google Voice app has not been approved. AT&T's response fills 16 pages with legalese and footnotes, but the bottom line is short and sweet: it wasn't us.
Apple's response is a little more artful, starting with a six-paragraph preamble about revolutionary interfaces and seamless user experiences.
When it finally gets around to the FCC's first question — why was Google's app rejected? — Apple claims that contrary to published reports, Google Voice it still "under consideration," although the app as Apple describes it does such violence to those revolutionary interfaces and seamless user experiences that it seems unlikely the thing will ever see the light of day, except perhaps as a Web app.
The meat of the document, however, comes later, in answer to the FCC's question "what is the approval process?" Apple's reply tells us more about how the machinery works than we've learned in a year of hits, misses and developer hissy fits.
The procedure, as the company describes it:
AT&T: We didn't ask Apple to block Google Voice
AT&T stayed mum for weeks to protect its relationship with Apple, but thanks to prodding from the Federal Communications Commission the company is talking now. The upshot: AT&T didn't demand that Apple (AAPL) block Google Voice from the iTunes App Store, thus keeping it off of the iPhone. In fact, AT&T says it didn't even talk to Apple about it before the iPhone maker handed down the decision.
This is the impression I got when I talked to sources close to AT&T (T) after the incident blew up. As I suggested here, Apple probably did the blocking on its own, for fear that Google Voice (GOOG) would take over the iPhone. To my amazement, AT&T refused to talk about the Google Voice controversy on the record, even to clear its name. That's how much the carrier wants to avoid ticking Apple off. More
Dancing on AT&T's grave in the Wall Street Journal
The Wall Street Journal's editorial board and I disagree about almost everything, including the legacy of the late Robert Novak.
The op-ed page, however, is a different matter. And on Tuesday the Journal ran a guest commentary by Andy Kessler that says what many of us have been thinking about AT&T's (T) role in Apple's (AAPL) rejection of Google's (GOOG) Google Voice app — the universal telephone number and voice mail system the telcos should have offered us years ago. (See here.)
Like most observers, Kessler, a former hedge fund manager, blames AT&T for forcing Apple's hand, and he doesn't mince words. [UPDATE: In letters to the FCC, Apple and AT&T make it clear that it was Apple that decided not to accept the app, no AT&T. See here.]
"What this episode really uncovers," he writes, "is that AT&T is dying … cling[ing] to the old business of charging for voice calls in minutes."
Unlike, we imagine, the Journal's editorial board, Kessler welcomes the intervention of the FCC and its new Chairman Julius Genachowski, arguing that the United States can't just rethink its communications policy — even that is obsolete. What we need, he says, is a new national data policy, and he offers four suggestions:
The FCC is asking Apple and AT&T all the right questions
Google Voice. Art: Google Inc.
[NEWS FLASH: Google CEO Eric Schmidt has resigned from Apple's board. See here.]
Sometimes you've just got to love the government.
Case in point: the inquiry that the U.S. Federal Communications Commission launched Friday into why exactly Apple (AAPL) decided to reject Google's (GOOG) powerful Google Voice call-management system for the iPhone, and what role AT&T (T) played in the decision.
Hundreds of reporters — from the tiniest blogs to the most powerful national newspapers — have been trying since Tuesday to get to the bottom of the story and have run into the same brick wall. The problem is, none of these companies are under any obligation to answer their pesky queries.
But companies do have to answer to the FCC if they want to provide telephone service in the United States. And on Friday, letters sent to Apple, AT&T and Google asked all the right questions. (You can read them yourself below the fold.)
But first, a bit of background.
Group asks FCC to probe iPhone Skype restrictions
It didn't take long for Skype's free application for Apple's (AAPL) iPhone to climb to the top of the App Store bestseller list — nor for net neutrality advocates to cry foul over the restrictions placed on its use.
In the first two days after its release, the iPhone Skype app has been downloaded more than a million times — about six downloads per second, according to Skype's official blog.
The application allows iPhone and iPod touch owners to make free and low-cost international calls over Wi-Fi networks. But in deference to AT&T (T), the iPhone's exclusive carrier in the U.S. market, Apple blocks Skype calls made over AT&T's cellular networks. That makes Skype useless for telephony when it's out of range of a Wi-Fi network.
And that's what has the open-Internet advocacy group Free Press crying foul. Arguing that the airwaves should be treated by the same common carrier standards applied to telephone wires, it has asked the Federal Communications Commission to investigate whether Apple and AT&T have violated federal rules.
According to the Wall Street Journal, such a request might get a more sympathetic hearing from the new administration that it would from the old. As a candidate, President Obama expressed support for the principles of net neutrality, and his choice for FCC chairman, Julius Genachowski, is said to have helped Obama craft his position on the matter. (link)
AT&T has declined to comment, and since Apple never comments, it didn't either.
See also: Skype by the numbers
iPhone: How to get from 2G to 3G without killing sales
For Apple (AAPL), the transition from the 2G (or 2.5G) iPhone to the 3G iPhone is a tricky one.
We know the new model is coming sometime in 2008. Steve Jobs hinted as much in September, and AT&T's (T) Randall Stephenson confirmed it last month.
The problem for Apple is that it must get formal FCC approval before it releases any new radio-based device. Such applications are public documents, which makes it hard to keep a new cellphone secret for very long.
Jobs unveiled the original iPhone six months before it shipped. If he announces the 3G iPhone ahead of time, he risks choking off sales of the 2G model.
What to do?
The stock traders at The Mac Observer's Apple Finance Board have started speculating about how Apple might handle this delicate transition. One of the moderators, a Devon-based investor who calls himself sleepygeek (and uses those quaint British spelling conventions), offers a few ideas:
- innovative confidentiality agreements with approval agencies.
- No change in appearance – so that those encountering the device in advance don't realise it has new hardware.
- Covert hardware upgrades (like macbook 802.11n) so that iPhones sold in the weeks before announcement already have the important new hardware.
- Trade in programme – those on contract (and generating revenue share) can trade-in the old iPhone and start a new 2-year contract.
- price/model alternation (similar to macbook/macbook pro): new features are announced on a much more expensive model, which becomes the standard at the standard price at the next model change. (link)
How do you think Steve Jobs ought handle the 3G introduction?
