It’s fairly well understood that Google’s idea of “Net Neutrality” is to view the telco as a “dumb pipe” and nothing more. Looking over the barrage of reports of the “Google Phone” that have come out over the last few days, I have come to realize that most analysts are completely blinded by the device itself, and do not see the underlying logic in the strategy. Aside from any technological innovation in the device, aside from any privacy concerns one might have with it, what’s really going on here is that Google is trying to expand their vision of Net Neutrality beyond the basic ISP and into the world of cell phones.
Right now, the cell carriers control the entire user experience, from being able to cut off certain applications (like AT&T can with the iPhone), provisioning other applications (Verizon’s VCAST comes to mind), telling the handset maker what kind of UI it should have (Verizon phones again), what Bluetooth profiles to support, and more. Part of this equation is phone exclusivity. A phone is only sold through one carrier usually. The carrier subsidises the phone, and in exchange for taking the up-front loss, locks a customer in to a 2 year contract where they know they’ll get the subsidy back. Even though the customer is paying a fortune for cell phone service, they don’t care, because otherwise they couldn’t afford the up-front phone cost. I know, earlier this year I had to buy a phone a “full retail price” (I lost the phone I had bought a month after I got it), and I was flabbergasted at the prices of handsets. $100 is the basic minimum for the garbage phone that they give away for free, $300 is the base price to get a phone that you won’t throw out the car window on purpose. How many teenagers, college kids… heck, anyone who isn’t well into “middle class” do you know that can spend $300 on a phone? Even if you are solidly “middle class”, $300 phones are a real deterrent from giving one to your spouse and each of your three kids, that’s $1,500 in phones. Not happening. And this is why the current system works the way it does.
Google is looking to subvert this system with the “Google Phone”. If you read the news reports carefully, you’ll see an interesting tidbit about the sales model. Instead of giving an exclusive contract to a carrier, the carrier subsidizing the phone, and locking the customers into a contract, Google is going with a more European/Asian model. They are planning on selling the unlocked phone directly, and at the time of checkout, pointing the customer to a choice of carriers. Right now, it looks like carriers would be offering discounted plans, to compensate for not having to subsidize the phone. An alternative that I could see as well, would be for the carrier to still subsidize the phone. Regardless, what Google is clearly doing, is trying to shift the balance of power. They controlled the development of the Google Phone without input from carriers. In previous Android phones, the carriers did the work with the handset folks and consulted with Google. This time around, Google did it themselves, in association with HTC. So the phone does not have the carrier’s interests baked into the design (just Google’s, and presumably the customer’s). And along the same lines, the phone is divorced from carrier-specific technologies and features. Is this a new idea? Hardly. It’s the way cell markets work in Europe and Asia. Even in the US, you can buy an unlocked phone to use on the carrier of your choice, but it is too expensive for all but the wealthiest to consider it a viable option (think: $700 phones like the Nokia N97). This is a unique proposition because the “Google Phone” already looks to be a “crave phone” and it’s from a vendor that is currently picking up a lot of momentum in the space.
By offering a choice of carriers, Google is basically saying: “the cell carrier is a ‘dumb pipe’. The only factors left in your choice of carrier are customer service, price, and coverage. You no longer pick a carrier based on the phones they offer (AT&T and the iPhone benefit from this, Verizon usually suffers for it), you pick a phone that you want and then the carriers compete with each other to get your business based on their ability to be a good ‘dumb pipe’.” It’s an interesting idea, and it is one that I fully support.
Does this mean that I am suddenly in favor of the current Net Neutrality legislation? No, because the two ideas are hardly the same. But at the same time, by seperating the phone from the carrier, Google can reinforce in peoples’ minds the idea of a “dumb pipe” cell carrier, which is important in their push on Net Neutrality.