700 MHz Update: Will VZ comply with the rules?
Last Friday (HT: IPDemocracy), Google filed a petition [PDF] asking that the Commission ensure that Verizon understands what those “open platform” requirements for the C Block really mean. Verizon has taken the position in the past that its own devices won’t be subject to the “open applications” and “open handsets” requirements of the C Block rules, and Google says it is concerned that Verizon doesn’t plan to follow those requirements in the future.
This is big. Here’s the background.
In the 700 MHz auction rules, the Commission noted that public advocacy organizations were claiming that “incumbent wireless carriers . . . routinely choke bandwidth to users, cripple features, and control the user experience” in order to protect their highspeed internet access businesses. Verizon had argued strenuously that “imposing an open access business model undermines the auction process and competitive bidding,” but the Commission nevertheless stated that it would “require licensees to allow customers, device manufacturers, third-party application developers, and others to use or develop the devices and applications of their choice.” The nickname for this requirement imposed on the C Block of spectrum (a large 22 MHz block divided into a few regional licenses) was “open platforms for devices and applications.”
Accordingly, . . .we will require only C Block licensees to allow customers, device manufacturers, third-party application developers, and others to use or develop the devices and applications of their choosing in C Block networks, so long as they meet all applicable regulatory requirements and comply with reasonable conditions related to management of the wireless network (i.e., do not cause harm to the network.).
Specifically, a C Block licensee may not block, degrade, or interfere with the ability of end users to download and utilize applications of their choosing on the licensee’s C Block network, subject to reasonable network management.
The rules explicitly say that C Block licensees may not “disable features on handsets it provides to customers,” and “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice.”
When this rule was released I expressed skepticism about the “reasonable network management” and “regulatory requirements” wiggle room provided. I also noted that Verizon had insisted on retaining the ability (1) to privately “certify” applications and devices for use on its network (a process during which a great deal of mischief is possible, as we know from the pre-Carterfone days), (2) to sell heavily-subsidized handsets of its partners in its retail stores (which will make it unlikely for competing, full-price handsets to be popular), and (3) to prioritize its proprietary or charged-for content over “ordinary” Internet traffic.
But even I didn’t imagine that Verizon would actually claim that the handsets *it sells* for use on its 700 MHz network would not be subject to these limitations, weak as these limitations are. That’s what Google’s petition says:
Notwithstanding the clarity of the rule, Verizon has taken the public position that it may exclude its handsets from the open access condition.
Apparently VZ plans to treat customers using non-VZ handsets differently from VZ-handset customers, by giving them different access rights. And maybe VZ plans to not allow *its* handsets to download particular applications. In a nutshell, it’s unclear what VZ’s plans are in detail, and for this reason Google wants to make sure that VZ will adhere to the rules.
This petition appears to be designed to smoke out the truth: did the Commission draft these conditions so loosely (”regulatory requirements”) that VZ’s reading is tenable? Or is VZ simply playing fast and loose, hoping that it will be too difficult for any single actor to challenge it, given the Commission’s comfort with ambiguity? Or were the rules actually designed to be unambiguous?
My own opinion is that VZ will do anything it can to retain discretion over use of its networks, both wired and wireless, and that there likely is at this moment a strongly-held belief inside that company that no reasonable regulator could possibly require VZ to operate an “open platform.”
“Where’s the revenue in being a commodity transport provider? VZ is a broadcaster!” Watch for First Amendment claims from VZ in response to the Google petition.
[My article on the auction is available here.]
Comparative internet law
Alan Davidson visited Yale Law School today, speaking to my Internet Law class and to a large lunchtime group. Key takeaway for me: the center of gravity of internet policy is not so much in Washington any more. Discussions of Issues like ISP filtering and data retention are taking place in Europe with enormous energy. There things we might take for granted here - like avoiding online content regulation, or the undesirability of using ISPs as private police - are actively considered.
At the same time, Alan points out, architectural constraints that we also used to take for granted, like “it’s too difficult to look at the packets that are crossing our networks,” or “we can’t know with any reliability where people are coming from who visit our sites” are melting away.
So it’s a time of tremendous upheaval in internet policy, and storm clouds are gathering over Europe (not to be too bombastic, but it does feel like that from here).
It was absolutely wonderful to have Alan here. We need more comparative internet/telecommunications experts - I’m hoping that some of these terrific students will take up that challenge.
Making the wireless world more web-friendly
Your wireless carrier (in the U.S., probably AT&T or Verizon Wireless) has a lot of control over the handset you can use and the applications that can run on that device. In fact, wireless carriers routinely ask for (and get) an enormous slice of the revenue from applications that work on their networks, and they force handset manufacturers to jump through all kinds of hoops in order to be allowed to sell devices that can connect to these networks. (You can’t, usually, buy devices except through the wireless carrier itself.)
There has been a great deal of consolidation in the wireless carrier market: twelve wireless carriers that were independent as of 1999 have combined (through merger, spinoff, or joint venture) into four large wireless carriers: AT&T, VZ, (and, far behind in terms of size) T-Mobile and Sprint. AT&T and VZ together control more than half the market and the lion’s share of new subscribers. The competitive picture isn’t great — AT&T and VZ actually charge more per minute than other, smaller carriers (like Sprint).
Until the FCC’s 1968 seminal Carterfone decision, which allowed non-AT&T equipment to be connected to the telephone network, consumers were not free to buy and use devices of their own choice for ordinary telephone communications. Carterfone led to the broad use of the modem and the fax machine, and arguably the birth of the commercial internet. But this open attachment regime has not to date applied to the wireless world, as either a legal or practical matter. The wireless carriers are in complete control.
This has had bad effects on the ecosystem of the wireless world. It’s essentially a closed system, for both applications and devices. We’ve gotten used to locked phones that cannot be switched between service providers and two year contracts with heavy penalties for early termination. Here’s the Washington Post from this past summer:
Currently, the major U.S. wireless carriers, including AT&T and Verizon Wireless, largely decide which Web sites, music-download services and search engines their customers can access on their cellphones. This is accomplished by wireless companies determining which cellphones will receive their services: AT&T, for example, is the only carrier available to users of Apple’s iPhone.
This isn’t a great situation for consumers or innovators.
Google’s paired announcements yesterday were aimed at addressing this situation in a way that will - ultimately - be very good for Google.
First, they said they were releasing a software “stack” - an open software platform called Android - that would be available under an open-source license. The idea is that anyone could adopt that platform (which includes an operating system, middleware, a user-friendly interface, and some applications) and use it on their phones or in their networks. They’ll be releasing tools for developers to use in writing for that stack, which will (they hope) spur the creation of impossibly cool applications that everyone will have to have. They’ll have big developer conferences someday for Android, just like Microsoft does, creating buzz, t-shirts, and a general sense of well-being and connectedness.
Second, they announced a large consortium of companies that will help in further developing Android and pushing it out into the world - the Open Handset Alliance. It’s significant that this group includes T-Mobile and Sprint, the smaller guys in the U.S. It’s also significant that some large handset manufacturers (but not Nokia, why?) and chipset creators are involved too. This will give these guys courage to fight the depredations of the current breaking-kneecaps wireless carrier situation in the U.S. I bet the handset manufacturers are feeling some relief. There’s strength in numbers. This is like unionizing to challenge The Man.
Yes, Om Malik is right, this is a big PR move. But the goal is to raise things up a level, to make this platform so ubiquitous and crammed with so many great applications (including Google ad-serving thingies) that the incumbents won’t be able to avoid it. Now, nothing guarantees that this platform will stay open. In fact, VZ could adopt it and close it to applications it viewed to be competing with its core services - like Skype. But the hope is that this kind of modular approach will become the norm in the wireless world.
In fact, the goal is greater than that - the goal is to make the wireless world much more like the PC world, where there is no necessary connection between transport and content and anyone can introduce the new cool thing.
This clearly helps Google. Of course it does. Why would they do it otherwise? There will be new landscapes to plaster with ads, new ways to make money out of disorder. We won’t be able to find a thing or a person we need without Google’s help.
But this initiative also leaves room for new Googles to show up in the wireless ecosystem, and to take advantage of new kinds of cheap, portable devices that are much better than what we’ve got now.
Maybe I’ll finally be able to afford a cool phone.
Judgment and automation
What would you do if you were Google?
You know that targeted keyword-driven ads will be useful to customers. In fact, your company’s survival depends on keywords working well. At the same time, you know that trademark holders seem to think that they own the string of letters that make up their mark - no matter in what context, or for what purpose, that string of letters is being used. You know this because you keep getting sued when companies get huffy that “their” string of letters is being used by their competitors to target ads. You’d like everyone to relax and compete on the merits (rather than on some pretended magic ownership of strings of letters in all contexts), but these matters get very tense very quickly. These companies don’t want to talk about the theoretical purpose of trademark law.
(By the way, if they’d listen you’d tell them that trademark law is really designed to protect against unfair competition, not uses of strings of letters in the abstract. But they’re not listening.)
So you, Google, have to figure out a way to get through the fire swamp of litigation without falling into the great hole of commercial irrelevance. What do you do? You’re feeling brave, so you convince a few courts that what trademark owners are entitled to worry about is uses of their marks in displayed ads. Not uses of their marks in keywords that trigger the display of ads. It would be nuts to eliminate uses of marks in keywords that trigger the display of ads (you argue elegantly) because the mark isn’t really being “used” in that context - and it certainly isn’t being used in a way that would be likely to confuse a consumer, because the consumer will just be seeing ads after typing in the keyword.
You can’t convince courts in Europe, unfortunately, so with a sigh you don’t allow the use of trademarked keywords there. But in North America you have a different policy:
When we receive a complaint from a trademark owner, we only investigate the use of the trademark in ad text. If the advertiser is using the trademark in ad text, we will require the advertiser to remove the trademark and prevent them from using it in ad text in the future. Please note that we will not disable keywords in response to a trademark complaint.
That’s pretty good, and pretty brave, but the policy has the problem that it might conceivably block perfectly fair uses of trademarks in ads. For example, comparative advertising might not be allowed - if Apple objected, an ad saying “Nokia Phones are Always Better Than the iPhone” wouldn’t fly because it uses the Apple trademark. Or parody advertising might be stymied. Google just can’t decide on a case-by-case basis whether a particular ad using a trademark is fine. Instead, it automates the process; if a trademark holder says “don’t allow use of my marks in ads,” that’s the end of the issue. Google blocks the use of the trademark in the text of ads triggered by particular keywords.
Recently, MoveOn got stuck in a whirlpool of inaccurate reporting about this automated process. Here’s Art Brodsky’s post on the issue. Someone at MoveOn had checked a box on the Google site saying “don’t use my trademark,” so as to avoid frauds and phishing scams. But that check-box-check meant that attack ads directed at MoveOn, or comparative advertising, or parodies would be blocked. When Rep. Susan Collins wanted to place an ad criticizing MoveOn for criticizing General Petraeus, the ad wasn’t allowed by Google. Big squabble and lots of finger-pointing ensued. MoveOn, alarmed, surprised, and chagrined, removed the barrier.
Who’s doing what to speech in this story? Google isn’t a state actor, so the First Amendment of the constitution doesn’t apply to it. It’s finding a way to make lots of fair uses of trademarks in keywords possible, and it’s avoiding the worst liability by blocking keyword use in ads when the trademark holder objects. It’s muddling through. And it has to automate the process - or so it claims - so that it’s not in the position of having to judge which keywords uses are okay and which aren’t.
But default settings, check-boxes, and automation of all kinds can lead to speech being restricted. What’s the right balance? On this one, I think Google is being pretty brave by allowing keyword use to trigger ads at all. They’re taking a position that keyword use - by itself - isn’t trademark infringement. This dispute shows that it’s very difficult to automate judgment.
What’s a fair use, in copyright or trademark? These are judge-run, fact-intensive disputes. Do you want to spend years litigating this question? Or would you rather make your best guess, strike a balance, and automate as much as you can?
What would you do?
Yearly
Today was the day I finished off my cyberlaw syllabus. You should take this course! It’s got life, death, technology, transfiguration, and plenty of cases in which Perfect 10 is the plaintiff or Google is the defendant (or both).
More tomorrow.