Google, Verizon Make Strange Bedfellows

(MoneyWatch)  Verizon Wireless said it will introduce two smartphones this year running Google's Android operating system, a remarkable development between two companies with a history of deep mutual antagonism.

Lowell McAdam, CEO of Verizon Wireless, told reporters during a conference call that Verizon will allow the Google Voice application, a service that offers free long distance calling, text messages and voice mail, to run on the Verizon phones. "Either you have an open device or not," he said. "This will be open."

How much of a turnaround in relations does this represent? Google and Verizon Wireless have been fierce antagonists in a series of issues relative to public policy that speak to who controls wireless spectrum, handset arrangements, and Internet bandwidth. Even today, parties allied with Google filed briefs with the U.S. Court of Appeals supporting an August 2008 ruling by the FCC that Comcast violated net neutrality principles; Verizon Wireless is as active in its opposition to net neutrality as Google is in favor. The two companies also squared off quite contentiously when it came to the January 2008 auction of wireless spectrum.

To say these companies weren't on speaking terms is to put it mildly; Verizon's imprimatur (not to mention its willingness to swallow its bile) is the surest sign that telephony incumbents view Google not only as a serious player, but as wielding technology that could actually disrupt their industry. The threat represented by Google is twofold: it allows developers to create and sell applications to end-users via the Web rather than through an app store, bypassing the carriers entirely, and it enables end users to add applications to their devices, like Google Voice, that allow them to (again) bypass the carriers when making calls. Better to work with such a powerful player than have it working against you.

In addition, Android becomes a point of leverage against which Verizon can lean when negotiating with Apple over the iPhone, or any other wireless devices that Apple may roll out in the future.

For its part, Apple has not allowed the Google Voice application to run on the iPhone, which uses the AT&T network. At the time McAdam was asked about Google Voice, AT&T policy was still to prohibit vendors from installing applications of that kind on devices for which it was the carrier, but AT&T announced later in the day that it was reversing course. Apple immediately said it would start making Skype and other VoIP applications available on its app store.

I've argued in earlier posts that AT&T was in fact the party responsible for banning Google Voice from the iPhone, all protestations by both AT&T and Apple to the contrary. If Apple turns around and allows it now, it should seem more obvious than ever that AT&T was indeed blocking the Google application.