Poll: Should Google take a stand against Verizon over Wallet?

26 Comments

Has Google(s goog) betrayed its principles? In 2008, Google convinced the FCC to impose ‘open access’ requirements on Verizon’s(s vz)(s vod) future 4G spectrum, requirements Verizon now appears to be flouting. Thanks to Google, Verizon is required by the Federal Communications to allow any non-harmful application or device onto the network, but Verizon doesn’t think that applies to the search giant’s new near-field communications (NFC) payment app, Google Wallet — at least not until technical issues are worked out. Google doesn’t seem willing to stand up to the carrier that happens to be its largest distributor of Android phones in the U.S.

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Google claimed Verizon requested that it left Google Wallet off of the versions of the Galaxy Nexus, which could be a critical distinction – there’s a difference between banning and asking. Meanwhile, Verizon has explained that Wallet is not blocked, but rather turned off while Big Red and Google work on integrating it into secure hardware elements that Verizon requires in all of its phones.

Verizon could be trying to fit wallet into its future NFC payment engine, Isis, which uses SIM cards to authenticate transactions, unlike Wallet, which uses embedded security features in the phone. If that’s the case, Google could be cooperating with Verizon with the expectation that Wallet will be enabled on future Verizon phones – not just the Nexus. If that isn’t the case, though, then Google might be a backing away from the fight it started in 2008, giving in to the demands of one of its biggest customers for Android phones. It wouldn’t be the first time that Google has let its business considerations trump net neutrality principles.

What do you think? Should Google challenge Verizon, invoking the open access principles it fought so hard for in 2008? Or should it honor its customer’s request and continue to work with Verizon behind the scenes to get Wallet implemented? This is a simple three-question poll, but the issue is obviously nuanced, so feel free to chime in with your thoughts in the comments section.

26 Comments

joelhaus

@Dave – Something you just said might point to the source of any misunderstanding we have:

“What would be the point of fighting for payment if in the process the platform for which it would be on loses the armies pushing Android.”

For me, Verizon blocking Google Wallet on the Galaxy Nexus is only an example (albeit, an excellent one) of the more fundamental issue at play: carriers blocking device manufacturers and applications from competing for consumers.

I would make the same argument if Verizon was blocking a Blackberry or Windows phone from installing applications that compete with Verizon’s own offerings (e.g. ISIS v. {INSERT_APP_DEVELOPERS} Wallet). I believe we agree that there is a mutual dependency between carriers & device/software providers, but my previous comment explains why I wouldn’t waste time laying the blame at the feet of either Microsoft or RIM, and it goes on to explain why Google is even less culpable.

Thanks to Google getting the Open-Access rules implemented for the 2008 C Block spectrum auction, the public and the government now has a very strong basis for standing up to the carriers when they exhibit this type of anti-competitive behavior. The spectrum is a public good and it’s important that we hold the corporations (e.g. Verizon) who receive rights to it accountable.

Dave

@Joelhaus, WP7 is virtually blocked by Verizon, as well as the other carriers. If one is not paying attention it looks like WP7 is supported. But if you look the product is ignored by sales staff, or phones are not set up to function properly, not activated, off in a corner, as well sales staff pushes android. You wont find it in a theoretical paper, but you can see the actual empirical fact if you look, investigate with your own brain and eyes. The carriers a smart about manipulation IE; they sell Data, voice, and text under the spin of consumer choice, BS it is all transmitted data. What it really is is a way to get more money out of us. Banks call overdraft protection a benefit for you, BS spin, it is a way to charge us. Its all about the money. Take HMO’s, big business hospitals, how could they get the doctors to push people through the system in a cost cutting way, how do you get certain pharmaceuticals pushed. You might ask, aren’t doctors usually pretty smart educated people? How can a bussiness model become more important than care for patients. the answer is continual education of the HMOs methods, the people that capitulate stay and are accepted, and those that don’t end up leaving. My point here is that its intelligent manipulation, rater that stark in your face bare knuckle control. WP7 platform is shunned, for “free” Android. We are just talking about payment systems, imagine how MS must feel. But I’m tired of talking about this stuff now.

Dave

@Joelhaus, your words; The spectrum is a public good and it’s important that we hold the corporations (e.g. Verizon) who receive rights to it accountable.
I agree democracy is important for public good.

joelhaus

@Kevin Fitchard, Your comment stated:

“If it were purely an over-the-top player than it would have every incentive to take VZW on. But since it depends on Verizon as a distributor partner, challenging Verizon isn’t necessarily in its best interests.”

I fail to see how this makes any difference, but I’m all ears. With or without the Motorola hardware (which they will soon own), Google still relies on Verizon as a distribution partner. I would also argue that distribution of the Android OS is (and will continue to be) a far more lucrative business for them than Moto hardware could ever be. Software is where Google excels and has resulted in profitability that pure hardware companies only dream about.

Bottom-line: Google benefits from an open and competitive eco-system where their products can be offered as a choice to consumers on a fair playing-field. Google Wallet offers a MASSIVE advertising opportunity (their core source of revenue) and to think they would willingly give that up without a giant concession is incredulous.

Let me ask three questions: (i) If you were Google and you were told by Verizon (the largest domestic U.S. mobile carrier), we’ll carry your Nexus device, but only if you leave off Google Wallet, what would you do? (ii) As a consumer, who do you think deserves the blame? (iii) In light of the C block Spectrum auction open-access rules, are your first two answers any different?

Kevin Fitchard

Hi Joelhaus, I agree with everything you say. I think we’re just focusing on different aspects of the discussion. Google has every interest in getting Wallet pushed as far and wide as it can, but Google isn’t dealing just in individual applications now. Any fight it has with Verizon could damage its extremely lucrative partnership with its biggest U.S. distributor. Verizon isn’t going to yank all Android phones from its racks, but it could shift more focus to another platform. It has the iPhone so isn’t as dependent on Google as it was when the smartphone rage began. If Google knows it will eventually get Wallet onto VZ phones by working with it behind the scenes, I think that’s exactly what it will do rather than press a public open access case against its partner.

Sure, Verizon is to blame for blocking Wallet. The point of this story and poll, though, was to explain how Google may have other motives that prevent it from making a big open access stink.

joelhaus

Kevin, Seems we are actually on the same page, thanks for taking the time to reply… it frustrates me when carriers are able to push off blame for their own anti-competitive practices and Dave’s comment seemed too friendly to the carriers by half.

joelhaus

One more important thing, given the sensitive nature of Google’s relationship with Verizon that you point out, it clearly falls on the Public and the Government to push for enforcement of the C Block Spectrum auction rules.

In fact, we should be extremely grateful to Google that we even have this opportunity to fight back. Without Google’s vast resources and foresight during the 2008 auction, Verizon would have been under no obligation to run their 700mhz network with open-access rules for devices and applications.

Dave

Well said Kevin, it is about the Android platform expanding due to companies of power pushing Android. What would be the point of fighting for payment if in the process the platform for which it would be on loses the armies pushing Android.
@Joelhaus, the point was not to cast blame, I agree carriers use their power to manipulate and dominate. The point is no matter what we think about their ways, Google has the force of that “monopoly power” pushing Android. Justification; trained attack pitbulls is not so bad , as long as the pitbulls are fighting on your behalf.

Kevin Fitchard

Joelhaus, Yep. If Google is going to pass someone will have to be its surrogate. It seems a case from a public interest group would be much more powerful if the manufacturer of the product in question was on board. I suspect we haven’t heard the last from Google on this matter. If behind the scene negotiations work, maybe they’ll make a bigger stink (or potential Wallet customers will make them).

Dave

If Google fights Verizon, Google fights Android!!! Android is activated by the masses in droves because it is forced upon the masses by a closed stream of corporate power players: OEM’s, Carriers, and big retail chains. Not thinking deep we say, what? its open!. Wake up. no! its not. They all market Android! Yes if you are awake you can choose another platform. But most eat the information they are fed! Its no secrete, that’s why companies spend big bucks on commercials, it works! Google would be undermining its own aggressive strategy, rather than undermining competition by controlling the supply chain to consumers with a “free” meal ticket strategy for corporations. Would it be a good idea for a cocaine producer to fight their pushers on the street? the Answer is no, not if they want the masses on their coke. “Open” is an illusion for the non thoughtful to parrot. Android is in the masses, because the subsidized model feeds the greed instinct. Carriers push Android, this is eyeball to eyeball sales! OEM’s manufacture a massive amount of the product, they push it to big retail partners. Google leveraged the “free” meal ticket psychology. Remember Enron?, remember credit default swaps? The”free” meal ticket is a powerful intoxicant. Google knows this, they leveraged it as their core bossiness model, after all, our data traffic is their $$$$$$$$money$$$$$$$$$$$$$$. Its not about what can work, its about what they want to do to make money, second is how they are going to spin it so when swallowing the bullshit you don’t choke on the tail. Google won’t fight Verizon!

joelhaus

Dave, your angst is misdirected and uninformed.

Aside from the baseless and unsupported claims you make, the culprit in this case is none other than Verizon.

For decades, carriers have been the gatekeepers wielding (mostly unrestrained) monopoly power over their supply chain and customers. It’s safe to say that most anti-consumer and anti-competitive practices can be blamed on them.

If you’re actually interested in this topic, I would suggest you to look into these two terrific sources:

* “Long Distance Warrior” a documentary about AT&T and MCI on PBS
* “The Master Switch” by Tim Wu

Dave

Thank you Joelhaus, But I see the forest for the trees. Not because somebody else connected the dots in a report, but rather through empirical observation. Anything can be justified, Justification is the first step of corruption. No spin, just look at the action, call it what it is! As you point out carriers “monopoly power” of supply chain, why the heck would Google bite the hand that feeds there product to the masses? Observe; Google product is pushed by carriers! as you point out, and name it “monopoly power”. Google has leveraged that “monoploy power” by giving “free” product to OEM’s, carriers, and retail giants. You are allowing the tree branches to obstruct your view of an entire forest, prune the tree and expand the view. Pruning the mind is to dissolve the opacity of beliefs, there by allowing more light in. Its not necessary to eliminate the thought, the key is removing opacity from the thought.
Thank you for sharing.

Kevin Fitchard

Hi Joelhause, Dave, Actually I think Dave does have good point. Google does have significant business conflict here. It uses Android as a vehicle for its services and it will soon be a big handset manufacturer in its own right. If it were purely an over-the-top player than it would have every incentive to take VZW on. But since it depends on Verizon as a distributor partner, challenging Verizon isn’t necessarily in its best interests.

You’ll get no argument from me as to operators being gatekeepers, but in this case Google may be reluctant to charge the gates.

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