Letter filed with FCC requesting Verizon investigation for blocking Google Wallet [Updated]

Letter filed with FCC requesting Verizon investigation for blocking Google Wallet [Updated]

Yesterday, Free Press filed a letter with the FCC against Verizon urging the Feds to investigate the “blocking” of Google Wallet on the Galaxy Nexus NFC smartphone. Well, it was bound to happen that a consumer protection group would tackle an Isis MNO about treating data in different ways and challenging the FCC to uphold their newly established powers to stop this from happening. The irony is that Verizon has been the strongest critic of net neutrality and it is now them who have been placed in the crosshairs of net neutrality organizers.

“Free Press believes that Verizon Wireless may be denying subscribers’ access to third-party mobile payment applications because it is part of a joint venture to develop its own mobile payment technology, called Isis,” the organization stated in their release.

The Free Press complaint is bigger than either Google Wallet or the Galaxy Nexus

We have probably been one of the harshest critics of Isis and its member MNOs, including AT&T, Verizon and T-Mobile USA. Because we speak to people everyday who are effected by the joint venture’s anti-competitive behavior across many industries we see how consumers’ rights are being ignored so that the three firms can collude to make more money and control their customers to unprecedented levels. Making money is certainly not a crime, but stifling competition and selectively blocking certain data types since a month ago is.

We have mentioned how net neutrality concerns may erupt as Isis gets closer to having a product in the market and this letter to the FCC is the first bout that Isis and Verizon, AT&T and T-Mobile will have to face as they attempt to allow some services who pay for representation on the networks and shut out others that are deemed to be competitive.

“It appears as though Verizon Wireless is abusing its power to act as a gatekeeper and blocking applications developed by competitors. If Verizon Wireless is restricting its subscribers from accessing such applications, it is breaking FCC rules and harming innovation in the process,” said Press Policy Director Matt Wood.

“The FCC cannot allow Verizon to continue to engage in these textbook examples of anti-competitive and anti-consumer behavior. It must enforce Verizon’s existing license conditions and adopt real Net Neutrality rules that protect all wireless Internet users,” Wood added.

The Isis joint venture has been a very contentious issues since it was announced. Consumer privacy is a major concern and consumer choice is another. NFC is new to consumers and is a young industry even though the technology itself has some age to it. In Freudian terms, Isis and its MNOs are still in the anal retentive stage where they are grappling for control. It may be a year or so until they release. They cannot control NFC – it is a consumer driven technology and not an MNO ecosystem to be controlled and exploited. In the meantime, those Isis MNOs, including Verizon, are either shutting NFC off, blocking card emulation mode that is used for payments and access control among other use cases, and attempting to put the secure element that holds personal data on SIM cards that can easily be removed from a phone.

Verizon may be in the crosshairs today but AT&T and T-Mobile will be next

An unfortunate side to these actions is that service providers are moving away from card emulation mode, which makes a phone act as if it is an NFC tag to a peer-to-peer model where two machines are talking to each other. This gets around the card emulation blocking that Isis MNOs are attempting. However, because there is no access to the secure element, it means that sensitive data has to be passed from servers sitting on the web. Whereas that information is cryptographically encrypted, it does expose consumers’ data to one more opportunity for hackers to attempt to gain access to transactional data as it passes from the web to the NFC smartphone.

Something we find surprising is that the Free Press has decided to put this letter in requesting an investigation before the Galaxy Nexus is launched. Verizon has stated that it still intends to talk with Google about Google Wallet, although this is a likely a PR cover story. One thing is for sure though is that Verizon is in for a bumpy ride with its stand point on Isis and Google Wallet. There are more consumer activists that will jump on this train. AT&T and T-Mobile USA are no doubt watching to see what happens with this complaint to the FCC. Now that an official letter has been lodged with the FCC, it is the duty of the regulator to get to the bottom of the Isis mess and fix it.

Verizon attempted to say that the Galaxy Nexus didn’t have the correct hardware to run with Google Wallet. That statement was untrue, and that little turn of phrase could cost Verizon dearly.

What happens next will define how NFC adoption happens in the USA and Verizon should not take this lightly. We can’t wait until the Isis model becomes an actual open ecosystem instead of a closed ecosystem that Isis and its MNOs calls “open”. Then the NFC industry can shine and consumers can have choice in services and we can get on with building the internet of things. This works out great for Google but Verizon and its co-conspirators now have a battle to fight and it appears to be strike one for consumers and the NFC industry.

UPDATE: We reached out to the Free Press who let us know they haven’t filed a formal complaint at the FCC, but have sent a letter calling for an investigation into Verizon’s actions around Google Wallet.

M.Chris Riley who acts as the Free Press policy counsel also told NFC Rumors that  ”Verizon talks about the phones it sells as if it makes or owns all the devices that operate on its networks. It not only wants to sell you a phone, but also to control what you can do with it. We hope the FCC will act on our call for investigation, and remind Verizon of its legal obligations to refrain from discriminating against applications on your phone.”

So there you have it, calls for an investigation into Verizon’s handling of Google Wallet. Verizon has now been called out because of Google Wallet, now all we can do is wait to see what happens.