Free Press charged on Tuesday that Verizon may have violated federal rules for openness by wrangling with Google over a mobile payment app.
Google says that Verizon asked it not to include the program Google Wallet on the Galaxy Nexus phone, which runs Google's Android operating system. That raised eyebrows because Google Wallet competes with a payment system from Verizon and AT&T.
Matt Wood, a Free Press attorney, says that the Verizon move may have violated a federal requirement forcing Verizon not to "deny, limit, or restrict the ability of their customers to use the devices and applications of their choice” on its network. The Federal Communications Commission attached the rule to spectrum licenses that Verizon bought in the so-called C block of spectrum three years ago.
"We think this could very well be a violation of the C-block conditions," Wood said. “When you have a powerful network operator, it can wield a lot of influence. But Google Wallet should be allowed to compete with Verizon.”
Verizon defended its decision, saying it had not sought to “block” the app. The company said that the Google Wallet operated in an unusual way, while adding that it is still talking to Google about the issue. “Google Wallet does not simply access the operating system and basic hardware of our phones like thousands of other applications,” the carrier said in a statement. “Instead, in order to work as architected by Google, Google Wallet needs to be integrated into a new, secure, and proprietary hardware element in our phones.”
Google and Sprint have teamed up to provide a mobile payment method while T-Mobile, AT&T, and Verizon have their own solution.
Internet, phone, and credit-card companies all want to become crucial players in mobile commerce through payment apps that allow customers to use their smart phones to pay for items while shopping.
But the tiff between Google and Verizon is just the latest push-and-pull between two giants struggling to wield influence on the mobile Internet. Verizon and Google were at odds three years ago when the C block of spectrum went up for sale. It was at the behest of the search giant that FCC added the open-access requirements for the winner, a move that Verizon strongly opposed. At the time, Verizon called open-access mandates the "imposition of regulatory judgments and intervention in the markets," but the company eventually bid on the spectrum anyway.
The carriers again skirmished over, but eventually came to an agreement on FCC's net-neutrality rules passed last year. The rules aim to prevent phone and cable companies from interfering with the Internet traffic running over their networks.
“Verizon and Google are pleased to discuss the principled compromise our companies have developed over the last year concerning the thorny issue,” the companies said in joint blog post. The proposal became an official part of the proceeding when FCC took comment on the deal. It eventually passed rules tougher than the Verizon-Google deal, and the wireless carrier sued.
Google's public statement came as Verizon begins a new regulatory proceeding at FCC in hopes of aquiring spectrum. The spectrum is from cable companies and could be used to bolster Verizon's network.