Apple pays the price for iPhone's success

Apple is starting to pay the price of success with the iPhone.

It has won plaudits and big bucks for creating both an irresistible device and a popular sales platform. Together the iPhone and the App Store comprise the mobile data "ecosystem" that has eluded operators for the past decade.

Inevitably the App Store has become too important a platform for commerce for regulators to ignore. Apple's self-interested, arbitrary and opaque administration style has only encouraged official scrutiny. 

All this came to the boil when Apple blocked the Google Voice app from the App Store, six weeks after Google had filed it. Apple also a removed a number of other third-party VoIP apps that it had previously approved.

The move has sparked heated discussion among developers and in the blogosphere. Many see the invisible hand of Apple's US iPhone partner AT&T, although some also point out that AT&T seems comfortable with Google Voice on BlackBerry phones connected to its network.

Neither Apple nor the equally-secretive Google has contributed to the discussion. AT&T issued a statement asserting that it "does not manage or approve applications for the App Store."

But all three are going to have to talk now. The FCC has begun an investigation, asking Apple why it rejected the app, whether it consulted with AT&T and just exactly what was the difference between Google Voice and other VoIP applications in the App Store?

Responses are effectively on the public record, so we should learn a lot from this inquiry. Whichever way you look at it, it's a big deal for the telecom industry, colliding the two hot-button issues of VoIP substitution and access to the App Store.

As I write, it's early days, and there's still the possibility that Apple will object to the FCC's right to regulate software. The commission clearly has coverage of handset contracts between AT&T and Apple, but does it have a remit over the App Store? We're in new territory there.

The investigation underlines the dominant role of the App Store. It now has 65,000 apps and clocked up a staggering 1.5 billion downloads in its first year.It has little in the way of competition, with Ovi flailing, Android awaiting phones and Windows Marketplace still not ready.

The biggest threat to the App Store's dominance is Apple itself. It is possible that Apple cut Google's app because of pressure from AT&T, but even prior to that developer dissatisfaction ran deep thanks to its secretive and high-handed manner.

If you're an operator, it's a schadenfreude moment. What could be better than seeing Apple and Google being monstered by a powerful regulator, except to see Ma Bell caught in the crossfire?

Watch what you wish for

Don't gloat too soon. Google and Apple may have the same relationship to the mobile business as a lion to an antelope, and FCC may be determined to bust open the iPhone, but we don't know which way this is going. Apple may still end up with much less control of the App Store, but will still get the dollars.

In any case, don't forget that operators have been miserable failures to date in winning customers to their own online storefronts.

Where operators may have a chance is becoming  a sales channel for the thousands of unhappy developers whose apps are stuck somewhere below the top 25 of the App Store. They may also make common cause with other storefronts and online music or games stores; it's not just about the apps, you know.

The VoIP side of this reminds us that a war of attrition against mobile minutes and text is underway. It will take some years, and Asian regulators are likely to be helpful to local companies, but those minutes will leak.

Given the degree of price competition right now, the revenue loss may not be severe. But from voice to content to SMS, the fabulously successful mobile gravy train has extra passengers. 

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