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Mobile App Stores – The Wider Issue


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With the recent rejection by Apple of the Google Voice application for the Apple app store and the FCC probe brought on by the scandal, TMV thought it apt (pun intended) to drill down on the issues at hand.

Firstly AT&T, Apple’s iPhone partner in the US, has denied any involvement in the negative decision in terms of the Google Voice app. However, according to ArsTechnica (http://arstechnica.com/apple/news/2009/08/fcc-probes-google-voice-rejection-att-denies-involvement.ars) AT&Ts history with the iPhone’s apps does leave questions in terms of whether it influenced the Google Voice fiasco. The telco has previously admitted it insisted that Apple limit the Slingplayer app to Wi-Fi only connections. This is despite the fact there are other mobile web capable phones, which do not carry any such restriction on the AT&T network.

Strangely, people can still access Google Voice via Apple’s native Safari browser (which users can access via their iPhone). So why has Apple rejected the software in its app store format? TMV is very confused by this. TMV presume this was the FCC’s angle to have an excuse to open an investigation as TechCrunch reported “It is the FCC’s way of putting a stake in the ground for making the wireless networks controlled by cell phone carriers as open as the internet” (http://www.techcrunch.com/2009/08/01/why-the-fcc-wants-to-smash-open-the-iphone/).

Going further, a group of senators requested that the FFC also investigate handset exclusivity agreements. This prompted Senator Jay Rockefeller to state there are “too many places in this country where wireless call quality is low and service unreliable – places where wireless broadband is only a pipedream”. So mobile operators what are your answers to this valid point?

The can of worms opened by this FFC investigation may have wider implications in terms of whether the Spotify app will be approved by Apple or not. Obviously, with such an investigation underway Apple cannot afford to be seen to be arbitrarily cutting out apps from its app store, just because they may present significant competition to Apple’s walled ecosystem.

On the Spotify question, Apple has approved a number of other music services like Pandora, Last.fm and Deezer. Although one school of thought states that Spotify’s unlimited on-demand music on the iPhone would cannibalize iTunes store downloads, TMV has learned of a confidential study which actually points to an upswing in iTunes sales if tracks are promoted via Spotify or other streaming services.

Google, Nokia, Microsoft and Blackberry have all recently launched their own app stores along with no doubt many others soon to launch. So you have a phone which is mobile internet capable yet you are closed out from using apps from competitor handset manufacturer app stores. The reason in the first instance is due to the overly fragmented mobile sector generally; with more than 57 different menu structures, 120 different screen sizes and 20 different operating systems – simply put, mobile is a nightmare.

This brings TMV to a serious question. Is such a fragmented mobile sector in the interest of consumers? TMV would state it clearly is not. The fact Apple and other device manufacturers are arranging exclusive deals with mobile operators is in TMV’s view anti-competitive and a number of EU governments also agree, where they insisted Apple had to let all operators retail its iPhone (France and Germany).

However, the key issue here is the fact that this “walled ecosystem” mentality is not good for competition or consumers. Mobile applications and their associated stores are not the answer to providing consumers with valued added software for mobile phones. For example, as a consumer you use the iPhone purchase a whole of apps and then for some reason (perhaps crap customer service at the carrier level), decide you want to leave and use a different handset. Such a decision would render your apps unusable and, in TMV’s view, a total waste of money.

How can the above in any shape or form be good for mobile consumers? It is TMV’s view that being tied into a mobile operator contract because your handset of choice is only available via one operator is wrong. The fact you may as a consumer want to have the choice to use a different handset is restricted by mobile operators and device brand tying you into a single non-competitive app store is quite frankly not acceptable!

Roberta Cozza, an analyst from Gartner, describes it as “a battle of the ecosystems”. TMV would counter that it is instead a battle for telecommunication regulators in all countries on a global basis to prevent these telco behemoths from restricting consumers and competition.

The battle that needs to be won is freeing the mobile internet so it operates just like fixed-line internet – that is in the best interest of consumers as well as competition. And once again according to TechCrunch in letters sent to all three companies involved in the rejection of the Google Voice app, the FFC cites “pending FFC proceedings regarding wireless open access”. At least the US and its regulatory authorities are actively pursuing an open mobile internet, but where are their European counterparts on this important issue?

Essentially, the core issue is about open mobile operating systems versus the closed restrictive ecosystems consumers currently have no choice but to deal with. Google should be commended for its attempt to bring competing mobile device companies together to build a truly free and open mobile ecosystem in the form of Android. However, handset manufacturers do need to speed up their adoption of open operating systems as do their operator partners, before they are forced via government regulation. We all realize no party in this important transitional period will be happy if it comes to government regulation.







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