More questions than answers in AT&T, Apple responses to FCC

[1]Apple and AT&T have responded to the FCC's probe into how Apple accepts and rejects iPhone applications [2], in particular the Google Voice app, and whether AT&T played any role in the purported rejection of the Google app. And there are some interesting explanations that I think developers and consumer advocates at large may take issue with.

1. Apple claims [3] it did not "reject" the Google Voice app, but rather continues to study it as it appears to "alter the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface..." Apple could probably say that about any app it doesn't approve.

2. The FCC also asked why Apple removed previously approved third-party Google Voice applications from its app store. Apple didn't answer that question directly, but did list three third-party Google apps, including VoiceCentral, that it said fall into the same category as the "studied" Google Voice app it says alters the iPhone's user experience. Kevin Duerr, chief executive of Riverturn and the developer of VoiceCentral, told Computerworld [4] that "it was certainly black and white when we were told that VoiceCentral was being removed." In July, Sean Kovacs, developer of the GV Mobile app, which was also removed, said Apple called him to say it was removing the app [5], not "studying" it.

3. In response to the FCC's question about what standards Apple uses to approve iPhone apps and the approval process, Apple said it has a comprehensive review process that looks at every iPhone application that is submitted to Apple and that developers receive detailed information about Apple's standards. Interestingly, Apple said it typically sends a developer a note describing the reason why an app won't be approved and in many cases, provides specific guidance about how a developer can fix that application. That certainly is contrary to what the developers of rejected apps are saying [6]. We've heard numerous stories of developer confusion and frustration over why some apps make the grade and others don't--even after they are approved.

4. This is a biggie: AT&T said it had nothing to do with Apple not approving and yanking the Google Voice apps. But, Apple said, "There is a provision in Apple's agreement with AT&T that obligates Apple not to include functionality in any Apple phone that enables a customer to use AT&T's cellular network service to originate or terminate a VoIP session without obtaining AT&T's permission."

5. AT&T's own responses [7] to the FCC's questions were interesting. It cited the familiar network degradation issue as one reason why VoIP and other bandwidth-hungry applications aren't allowed. But I wonder if the FCC will buy into its explanation that VoIP apps running over the AT&T network could cut into AT&T's revenues, and therefore into its deep iPhone subsidy.

[8]"The parties' willingness and ability to assume the risk of their investments in the iPhone and of their pricing strategy were predicated, in significant part, on certain assumptions about the monthly service revenues that would be generated by iPhone users," AT&T wrote. "In particular, both parties required assurances that the revenues from the AT&T voice plans available to iPhone customers would not be reduced by enabling VoIP calling functionality on the iPhone. Thus, AT&T and Apple agreed that Apple would not take affirmative steps to enable an iPhone to use AT&T's wireless service to make VoIP calls. Without this arrangement, the prices consumers pay for the iPhone--particularly the broadband-enabled iPhone 3G--would likely have been higher than they are today."

6. AT&T said it plans to take a fresh look at possibly "authorizing VoIP capabilities on the iPhone for use on AT&T's 3G network." What type of VoIP capabilities? Third-party apps or an AT&T-branded service?

7. Another interesting bit that makes the whole apps process cloudy in terms of what role AT&T can play in the apps-approval process: AT&T said it has no agreement or contract with Apple regarding the certification of applications or any particular application's ability to use AT&T's 3G network because the two companies entered into an agreement before the App Store ever existed.

I suspect that the iPhone will be the springboard off of which the FCC evaluates the future of the mobile Internet. In fact, the commission will soon discuss how it will probe into competition in the mobile industry [9].--Lynnette [10]