Verizon, Google Wallet and the LTE Network Agreement

Verizon Wireless has come under fire for blocking the mobile payment app, Google Wallet, from the keystone of its newly-released product line. Samsung’s Galaxy Nexus, which was developed in partnership with Google,
was released last week after delays and speculation

over whether or not Verizon would ship the phone with Google Wallet functionality.  Ship it did, absent the app - and it seems that in doing so Verizon may have violated its open-devices and open-applications conditions in its legal licenses for the 700MHz spectrum - the spectrum that operates its LTE network.  An open

letter to the FCC was promptly dispatched by Barbara van Schewick, a professor at Stanford Law School and Director of the Center for Internet & Society.

The letter urges the FCC to investigate Verizon’s blocking of the app, as it appears to contravene FCC Service Rules which prohibit standards that block specific devices or applications or “
other services that compete with wireless service providers’ own offerings”.  For example, Verizon and AT&T’s new mobile payment application slated for launch next year, ISIS, which will be in direct competition with Google Wallet.  

Van Schewick’s letter added that such a violation will have serious ramifications for all innovation in mobile technology -- not just mobile payment technology -- because investors will shy away from a business that is entirely at the mercy of wireless providers; companies that may have a stake in stifling competitive technologies.

Verizon already has a big piece of C-Block Spectrum-
they recently signed a deal with Comcast and Time Warner to acquire 122 Advanced Wireless Spectrum licenses from SpectrumCo, which means they control a pretty significant chunk of the bandwidth -- a pretty hot commodity in the toll-road style spectrum system we currently have, and the very same type of license AT&T will now transfer to T-Mobile in the wake of their failed merger attempt.  So if the wireless companies can claim this much control over spectrum, do we really want to give them a monopoly over which companies and products they allow to use it?  The FCC still has to approve the Comcast/Time Warner deal. Only time will tell if Verizon’s move will play into their decision - and how similar deals are structured going forward.