Opinion: Technology: Will Google Wallet ever open on Verizon phones?

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By asking Google to remove an app from a forthcoming phone for its network, Verizon Wireless has rekindled the debate over a compromise in the Federal Communications Commission’s Net neutrality rules that Google and Verizon helped broker.

The app is Google Wallet, which enables users to charge purchases to their credit cards by waving a specially equipped phone (such as Sprint’s Nexus S) over a customized card reader. That, by itself, is nothing special; I mean, how hard is it to swipe a credit card? But Google envisions a future in which merchants send special offers wirelessly to customers who walk into their stores, and customers automatically redeem stored coupons and earn loyalty points just by paying with their mobile phone. With a digital wallet that’s continuously connected to the Internet, shoppers can have the same sort of interaction with local retailers that they do with merchants on the Web.

It’s a potentially huge market, and Google is just one of several big players trying to grab a piece of it. Others include Visa, Paypal, American Express and, wouldn’t you know it, Verizon Wireless. The Verizon effort, called Isis, is a joint venture with AT&T and T-Mobile.

Verizon’s forthcoming Samsung Galaxy Nexus smartphone includes the secure microchip necessary to run Google Wallet, but at this point it won’t have the app. Verizon offered a couple of vague explanations as to why: It told the Associated Press that it was holding back the app until it could offer ‘the best security and user experience,’ and it put out a statement asserting that ‘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.’ Maybe so, but that work has already been done by Google. The statement also insisted that ‘Verizon does not block applications.’ Nevertheless, it hasn’t provided a good explanation for why it asked Google to remove the Wallet app from Galaxy Nexus phones that were built to support it.

Here’s the part of the blog post where irony comes in. The Net neutrality rules the FCC adopted last December bar broadband Internet service providers from blocking legal applications or services. But the rules provide a sweeping exemption for wireless carriers; the only legal apps they can’t block are voice and video calling services that compete with the carriers’ offerings. So if Verizon wanted to hold off Google Wallet until its Isis service was ready to go, it wouldn’t face any obstacles from the FCC.

That provision was a compromise promoted by Google and Verizon in a framework for Net neutrality released in August 2010. ‘We both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly,’ their joint proposal declared. ‘In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline [neutrality] principles to wireless,’ except for the one requiring ISPs to disclose their network-management practices.

That’s a retreat from the expansive principle first laid out by Republican FCC Chairman Michael Powell in 2004, which called for broadband providers to let consumers use whatever applications they chose ‘unless they exceed service plan limitations or harm the provider’s network.’

The opacity of Verizon’s explanation left some technology advocates scratching their heads and worrying about the implications.

David Sohn, senior policy counsel for the Center for Democracy & Technology, said it’s in the public interest to maintain a competitively neutral environment in broadband that’s open to new innovators. That innovation shouldn’t be confined to wired networks, Sohn said. Proponents of the neutrality rules, he said, ‘certainly wanted to achieve a world where even in the wireless space, new entrants can come up with products and make them available without having to worry about competitively based discrimination from the carriers.’

Harold Feld, legal director for Public Knowledge, said it’s impossible to determine whether Verizon is stiff-arming Google for competitive reasons or just trying to work out some kinks in Google Wallet before rolling it out. That’s because the FCC’s permissive rules don’t give Google -- or anyone else -- the opportunity to challenge the wireless company’s decision. ‘Verizon is never going to come out and say, we’re never going to let a rival payment service on our phone,’ Feld said, adding, ‘The disadvantage of not having a process [at the FCC] is, you never know.’

RELATED:

Google, Verizon lay down a market on Net neutrality

Isis launching in Austin, Salt Lake City in 2012

Google Wallet opens for business, Visa gets on board

Google flashes its new credit-card app, Google Wallet

-- Jon Healey