The possibility of an iPhone running on Verizon's LTE network has shown a spotlight on a loophole in the open access provision the U.S. Federal Communications Commission set on spectrum Verizon uses to offer the network.
Verizon won at auction prime wireless spectrum in the 700MHz band that it is using to build its high-speed LTE network. The FCC put an unusual provision on that spectrum: Verizon can't block applications or devices that customers want from running on the network, unless they harm the network.
The FCC added that provision in hopes of encouraging mobile broadband innovation by ensuring that consumers have access to devices and applications of their choosing. The FCC was focused on preventing limitations that operators have imposed, such as blocking devices that include Wi-Fi or certain websites.
After Verizon on Tuesday introduced an iPhone that runs on its slower 3G network, which uses spectrum that doesn't have that same provision, Chris Sacca, a former Google executive and venture investor, wondered if the iPhone could be offered on the LTE network because of the open access provision. That's because it's well-known that Apple has an approval process for apps that users can access on the phones, blocking some for what can appear to be arbitrary reasons. "Anyone speculating that the Verizon iPhone doesn't have LTE because it would use their spectrum that's subject to FCC openness rules?" he wrote on Twitter.
However, legal and regulatory experts say that Apple would be free to block applications on a device using Verizon's LTE network because the FCC rules apply only to Verizon, not Apple. "Apple is neither a [spectrum] licensee nor an ISP; it's not regulated by the FCC except to the extent that its devices, like all devices that radiate, need to be certified as complying with FCC's technical rules," said Michael Calabrese, director of the wireless future project at the New America Foundation.
Kevin Werbach, who is an associate professor at The Wharton School, worked with the FCC under the Clinton administration and co-led the review of the FCC for President Obama, agreed. "Verizon would not be the one blocking applications, since the App Store is an Apple service," he said. In addition, Verizon could not preclude users from accessing online apps via the browser on the phone, making it relatively open, he said.
The distinction between the FCC imposing the rules on Verizon but not Apple makes sense, Calabrese says, because Apple faces essentially "limitless competition" in the device and application market. Even if a user lives in an area where Verizon is the only operator offering LTE, the user would have many other smartphones beside the iPhone to choose from, he said. The FCC designs rules like the one on the 700MHz spectrum to ensure that service providers, which may have monopolies or near-monopolies, treat customers fairly.
Still, users suffer when blocked from using an application, whether the device maker or the operator does the blocking, said Matt Wood, associate director at Media Access Project. "If the customer is getting hurt, they won't care if it's Apple or Verizon" preventing them from accessing an application, he said.
His organization generally advocates that the FCC go further in ensuring open access, but he says there are legitimate questions about how far the FCC can reach.
Groups that argue for policy that ensures an open Internet plan to keep an eye on the issue. For instance, if Verizon does offer an LTE iPhone "it could get messy if Verizon had some sort of agreement or contract with Apple that said Apple, you have to do this or that and prevent this or that," said Chris Riley, policy counsel for Free Press. "Then that's a grey area."
At the launch of the Verizon iPhone on Tuesday, Apple said that it decided against an LTE iPhone now because the current-generation chips forced design compromises that the company wasn't willing to make. The companies declined to say when an LTE iPhone might become available.
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