[ NNSquad ] Letter asking FCC to investigate Verizon Wireless for Blocking Google Wallet

Dear all,

Two weeks ago, various news outlets reported that Verizon Wireless’s new Galaxy Nexus phone, an Android device that went on sale last Thursday, will not support Google Wallet, Google’s mobile payment application. Today, I filed a letter (attached) with the FCC asking it to investigate Verizon Wireless for blocking Google Wallet. The letter explains what we know about the facts, why Verizon’s behavior violates the openness conditions, why this violation matters, and what the FCC should do.

Verizon’s behavior seems to violate the FCC license-conditions on Verizon’s LTE spectrum that forbid Verizon to block applications or devices. There are no technical justifications for Verizon’s behavior, as Google Wallet has been operating without incident on an earlier version of the Galaxy Nexus offered by Sprint. However, Verizon has an incentive to block Google Wallet because it has partnered with AT&T and T-Mobile to launch a competing mobile payment service called ISIS, expected next year. Thus, Verizon’s behavior looks like an attempt to stall a competing mobile payment application until Verizon’s own application is launched.

As I explain in the letter, this is an important case that will have implications not only for the mobile payments market, but also for any application or service potentially available on a mobile network:

Verizon’s behavior hurts Verizon customers, a full 35% of the mobile market, who are unable to use the very first mobile payment technology based on near-field communications that has come to market. It hurts competition in the emerging, potentially huge market for mobile payments technologies and associated services. Verizon’s actions hurt innovation, in mobile payments or even in any other mobile technology. Finally, Verizon’s conduct undermines the Commission’s general approach towards mobile Internet openness by dismantling the protections for one part of the spectrum on which the FCC’s “incremental” approach to regulation in this space is built.

The Openness conditions in the C-Block of the 700 MHz spectrum are the centerpiece of the Commission’s approach to wireless network neutrality. The Commission adopted these conditions to ensure that at least one part of the spectrum remained open for mobile applications and devices. Earlier this year, Verizon violated the license-conditions by blocking tethering applications. The FCC has yet to act. Now Verizon is blocking Google Wallet. The FCC’s new network neutrality rules offer only very limited protections to mobile Internet users, innovators and investors, so keeping one part of the spectrum open is all the more important. If Google, one of the nation’s largest corporations, can be blocked by the one carrier that is subject to strong openness conditions, every mobile innovator and investor in the country will know that they are at the mercy of the carriers.

Thus, to protect users and innovators in the mobile payments market and in mobile broadband markets more generally and preserve the Commission’s approach towards mobile Internet openness, swift action is needed.

The letter is attached. A blog post summarizing the letter is here: http://netarchitecture.org/2011/12/is-verizon-wireless-illegally-blocking-google-wallet-its-time-for-the-fcc-to-investigate/.

The letter (in pdf) is also available here: http://www.netarchitecture.org/pdfs/vanschewick-2011-letter-to-fcc-googlewallet.pdf and on Scripd: http://www.scribd.com/doc/76026861/Van-Schewick-Letter-to-FCC-Verizon-Google-Wallet.

Best,

Barbara

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Barbara van Schewick
Associate Professor of Law and (by Courtesy) Electrical Engineering
Director, Center for Internet and Society
Stanford Law School

Author of "Internet Architecture and Innovation," MIT Press 2010
www.netarchitecture.org

Crown Quadrangle
559 Nathan Abbott Way
Stanford, CA94305-8610

Phone: 650-723 8340
E-Mail: schewick@stanford.edu