Apple, AT&T Need To Mind The FCC

(MoneyWatch)  Apple and AT&T are about to learn that this isn't their father's FCC. It's more like George W. Bush's father's FCC, one which still believed that the second C after Communications stands for Castigation. Michael Powell, appointed by the latter Bush to head the Federal Communications Commission, believed the C stood for Capitulation (as in capitulation to vested interests).

Now, however, punishments are certainly in order, as neither AT&T nor Apple have forthrightly answered the FCC's initial request for an explanation into the circumstances of the rejection (or, in Apple's terms, 'it's not you, it's me') of Google's Google Voice application for inclusion in the iPhone app store.

To recap, either Apple is still "studying" the application, rejected it for reasons of its own, or rejected it at the behest of AT&T. Other possibilities include Google having secretly asked Apple to reject it in order to gain sympathy points, and Google Voice for iPhone actually being a ninja app that only exists by rumor and dark of night.

Maybe Apple is simply covering for AT&T, but as I've noted in an earlier post, a smoking gun exists that clearly indicates that AT&T asked Apple to remove the app in order to protect its own rather pathetic voice franchise (pathetic in voice transmission quality, not in quantity or ability to lobby Congress).

Why would Apple go out on a limb for AT&T? Contrary to wish-fulfillment fantasies of many would-be iPhone users, Apple is quite happy with its relationship with AT&T (and several analysts are convinced Apple will renew its exclusive arrangement with the carrier after the initial contract expires next year). Whatever punitive measures, if any, come down from the FCC as a result of this abusive maneuver, it will be a lot less onerous and disruptive to their respective businesses if Apple is seen as having overstepped its heretofore unclear bounds, than if AT&T is found to have interfered in Google's right to offer a service by using undue influence with a partner (in this case, Apple).

Whatever the ultimate truth of the matter, though, AT&T and Apple have played it too cute by half where this FCC chief is concerned. Already no fan of exclusive handset deals and a proponent of network neutrality provisions -- staunchly opposed by AT&T (and, of course, Verizon, Cox, Comcast and other incumbents) -- FCC chairman Julius Genachowski isn't going to take dissembling and distortions at face value. Just as their nebulous promises to abide by vague net neutrality "principles" won't buy them a respite from regulations enforcing those "principles," the vendors will find that the FCC will scrutinize their evasive responses and, ultimately, assume the worst of intentions were at play. Apple apologists and fanbois like DaringFireball.com's John Gruber notwithstanding, the FCC isn't taking this lightly.

That will mean not only more regulations, but probably punitive fines and embarrassing hearings for Steve Jobs and his partners in telephonic peccadilloes. If previous FCC members tended to take big business at their word, current commission members seem more inclined towards protecting small businesses and consumers. Ironic as it is to lump Google among the puny and the powerless, the outcome of these proceedings will have a tremendous impact on the fates of numerous small businesses who have heretofore been at the faceless and uncommunicative mercy of corporate giants Apple and AT&T.