December 2011 – maneeshpangasa

First off would like to wish all my readers a Happy New Year 2012. Secondly I know I’ve not updated my blog in a while as I’ve been kind of busy lately but hope to keep it more up to date in the new year. Since my last post Adobe announced they would discontinue mobile Flash development and AT&T has given up on merging its wireless business with T-Mobil. This decision from AT&T came after both the U.S. Department of Justice filed an antitrust lawsuit to stop the merger and the Federal Communications Commission Chairman proposed sending the case to an administrative law judge. Now one of the commenters on my previous posts about the AT&T T-Mobil merger made an interesting point stating that mergers in the current economy seem like a necessary evil stating that if big companies are going to go under it would be more beneficial for them to merge. However, the commenter replied in agreement that consumer choice though is being sacrificed particularly in the market for telecommunications. This comment was very well said and I do indeed worry about telecom and media consolidation. In the following passages will discuss how both the discontinuation of mobile Flash development and AT&T’s abandonment of the T-Mobil merger affects the mobile Internet.

When Adobe announced it would be discontinuing mobile Flash development after it had begun developing HTML 5 authoring tools critics of Flash began proclaiming the death of Flash and saying Apple’s late and great CEO Steve Jobs was right to exclude Flash from iOS devices including the iPad tablet computer and iPhone line of smartphones. However, let’s not get too carried away on the talk of Flash’s demise. Adobe Flash is not dead yet it lives on for desktop computer users and in the world of notebook computers. That being said it is true Adobe is ending mobile development of its Flash Player which Apple criticized as a buggy and insecure program. Despite what you think of Adobe’s Flash Player Apple in their criticism of Flash made some hypocritical remarks. In the open letter Steve Jobs had written against Flash he talked about how it was a proprietary and closed development platform as opposed to HTML 5. The truth is that Apple products are also proprietary and while they use some open source technologies in some of their products their hardware and software is just as proprietary.

In fact Apple uses H.264 a proprietary web codec for HTML 5 video in a number of its products including QuickTime. While H.264 is the current industry standard for HTML 5 video as it is also supported by Blu Ray Disc Players and associated media Google has developed the royalty free and open source WebM codec for HTML 5 video. Google has also dropped support for H.264 in its Chrome web browser since producing WebM which is supported by the Mozilla Foundation, Opera and a number of organizations in the free software movement. Now some have speculated on why Apple opposed Adobe Flash in the first place from being run on iPhones, iPods and iPads noting that Apple probably wants to protect sales of mobile apps in its App Store from competition via web apps developed for use with Flash.

Of course when the iPhone & iPod Touch were first launched there was no App Store and Apple told developers who wanted access to Apple’s devices to make mobile web apps using HTML 5 which some certainly did and today users have a choice between those web apps or the native apps included in Apple’s App Store. Don’t like the selection of apps in Apple’s App Store and their lock-in you can jail-break your devices to run non Apple approved apps from Cydia and other app stores but you run the risk of voiding your warranty. That being said another reason why Apple may have chosen to prevent users from running Flash besides protecting App Store sales/profits is the fact that when Adobe Flash arrived it may have cut into Apple QuickTime’s market share for in browser web streaming. Also Google as noted earlier chose an open royalty free specification for HTML 5 video with the development and launch of their WebM codec. Google decided to support mobile Flash since Apple wasn’t and at the same time support an HTML 5 video format Apple didn’t and hope to be able to undercut Apple using Flash along with its own HTML 5 format.

As for AT&T’s abandonment of the T-Mobil merger in a way this is very good news for consumers. First the future of the mobile internet as an open platform which would have been seriously threatened by this merger is looking brighter. However, even without the merger there is insufficient competition in the wireless market. Big carriers continue to claim a spectrum shortage to justify monopolistic takeovers when it is the smaller carriers with insufficient spectrum. In the case of the AT&T T-Mobil merger after AT&T tried to justify the merger by claiming it faced a spectrum shortage they proved otherwise when the Justice Department filed its suit against the merger asking regional carriers like MetroPCS and Leap Wireless to buy some spectrum to save the T-Mobil deal. So which is it AT&T? Do you lack spectrum in which case you couldn’t afford to sell off spectrum or do you have sufficient spectrum? You can’t have it both ways. Fortunately the Justice Department and FCC saw right through Ma Bell’s deception. FCC licensees are required in their filings to be transparent and to not deceive the Commission. As a penalty for doing so licensees can have their licenses revoked. However, the FCC tends to only do so for smaller companies that lie. This double standard should be stopped. If AT&T willfully and purposely lied to the Federal Communications Commission they should have their licenses revoked.

Also the fact that the Communication Workers of America (CWA Union) supported the merger was rather unsettling. It figures they supported the merger because by their calculations the merger could lead to more union jobs but overall the record revealed a net loss in overall American jobs post-merger. Moreover regulators correctly recognized that T-Mobil was responsible for many industry firsts like being the first carrier to offer Google Android smartphones and for being a low cost innovator. Without T-Mobil in the market prices for wireless phone service could skyrocket and the market would have been a near duopoly with just 2 companies AT&T Mobility and Verizon Wireless controlling 80% of the market. Today’s Twin Bells would become Twin Cells with Ma Bell (AT&T) erecting a Ma Cell over the wireless market. Sprint Nextel which would have become a distant third in the market would be substantially weaker and could easily be bought up by one of the remaining big two carriers leaving the post-paid national wireless market with only 1 or 2 national carriers remaining. Ever since the Federal Communications Commission classified broadband via cable modems in 2002 as a Title I information service competition in broadband has begun to decline. Worse still was the 2005 ruling extending that status to telecom companies with DSL modems supplying broadband. Today there is more competition for slow dead-end dial-up Internet access than there is for broadband or mobile broadband. What’s needed are competition mandates for broadband providers. Next time will discuss Verizon Wireless’s non compete agreement with cable companies in exchange for buying unused wireless spectrum that could spell the death knell for FIOS services.