Today the Federal Trade Commission released a new report entitled, “Mobile Apps for Kids: Current Privacy Disclosures Are Disappointing,” which concludes that “confusing and hard-to-find disclosures do not give parents the control that they need in this area. The FTC argues that “parents need consistent, easily accessible, and recognizable disclosures regarding in-app purchase capabilities so that they can make informed decisions about whether to allow their children to use apps with such capabilities.”

It’s hard to be against the FTC’s “the more disclosure, the better” policy recommendation and I’m not about to come out against it here. But the question is: how much disclosure is enough? Reading through the report and seeing how hard the FTC hammers this point home makes me think the agency wants our app store checkout process to be littered with the pages of fine print disclosure policies that now accompany our credit card statements and home mortgage payments! Seriously, would that make us better off?

As a parent of two kids who both download countless apps on my Android phone, my wife’s iPhone, and our family’s Android tablet, I appreciate a certain amount of disclosure about what sort of information apps are collecting and how they are using it. I think Google’s Android marketplace strikes a nice balance here, providing us with the most crucial facts about what the application will access or share. Apple could do more on disclosure but the company also prides itself (to the dismay of some!) on its rigorous pre-screening process to make sure the apps in the App Store are safe and don’t violate certain privacy and security policies. Yet, as the FTC correctly points out, “the details of this screening process are not clear.” Of course, most Apple users simply don’t give a damn. They’re all too happy to let Apple just take care of it for them even if they’re not really sure what’s happening to their data behind the scenes. The more privacy-sensitive crowd wants greater disclosure and control, of course, and I’m sympathetic to that plea.  But again, how much disclosure is enough? Are you going to wade through pages of disclosure policies and privacy opt-ins before downloading that latest iteration of “Angry Birds” or “Cut the Rope”? Yeah, I didn’t think so.

Anyway, I don’t want to dwell on that. The more interested findings in the survey relate to price and market dynamics and I am hoping people don’t ignore them. After surveying the price of kids’ apps available in the Android Market and Apple App Store, the agency found that, “While prices ranged from free to $9.99, most of the 960 app store promotion pages listed a price of $0.99 or less. Indeed, 77% of the apps in the survey listed an install price of $0.99 or less, and 48% were free.  Free apps appeared to be the most frequently downloaded.” Here’s the pricing breakdown for both Android and Apple:

Folks, these are astonishing numbers. Almost 100% of the most downloaded kids apps in the Android Market are free… as in ZERO dollars and ZERO cents! And while Apple App Store prices tend to be a bit higher, 93% of apps are $2 or less.  This is one of the great consumer success stories of our time. Consumer welfare is vastly enhanced by the presence of hundred of kids apps that serve almost every interest and desire under the sun, and all for less than what you’d pay for a cup of coffee or a gallon of gas.

But wait, there’s more!!

This incredible success story is even more remarkable because of what the FTC finds next about market structure:

Staff found that hundreds of developers were responsible for the apps in the study. Staff encountered 441 unique developers in this study, only twelve of which had apps on both platforms. Only a handful of app developers were responsible for more than 10 apps in our sample. Developers with one app in our sample were popular, accounting for about 50% of all downloads/feedback ratings, even though they were responsible for only about 30% of the apps. In contrast, those developers with more than 10 apps in our sample accounted for about 1% of the feedback ratings for Apple, (and 20% of the downloads for Android) despite accounting for about 20% of all of the apps in the survey. This finding illustrates the broad and diverse nature of the mobile app marketplace.

“Broad and diverse marketplace,” you say?  That might be the understatement of the year!  I challenge you to find another part of not just our online ecosystem but indeed our entire economy that is this broad, diverse, innovate, competitive, and inexpensive.  I’m not sure that such a radically atomistic, mom-and-pop marketplace of entrepreneurs can last forever, but let’s pause and appreciate the fact that it does exist today.

Now, here’s the really interesting part of this story: This is generally what the world of kids’ online services looked like back in the late 1990s as well. It was incredibly diverse with lots of small mom-and-pop sites catering to kids and parents, often at no charge. And then along came COPPA. [Background here for those who are not familiar.] While COPPA helped address the legitimate problems a small handful of bad apples out there at the time created, it also raised serious compliance costs for that entire sector, including the many smaller mom-and-pop sites. In a letter send to the FTC back in 2005, child safety advocate Parry Aftab claimed that, “The cost of obtaining verifiable parental consent for interactive communications is very high, estimated at more than $45 per child, and even at that price difficult to obtain.” I have no idea how accurate that number was then (I think that was way too high of an estimate), or what the compliance cost per child was in the late 1990s, but let’s be conservative and say it was much smaller, perhaps less that a few bucks per child verified under COPPA.  And let’s assume that if we extended COPPA-like regulatory requirements to app stores that there would be some compliance cost. Again, even if the compliance cost was only a buck per kid, can you see how it devastating that would be to all the small mom-and-pop app developers out there who currently only get a dollar or two for their apps (assuming they charge anything at all)? Yes, it’s true that some of them use ads to offset their costs, but those ads have to pick up the tab for all their labor and development costs.  If you add new regulatory compliance costs to the mix, those mom-and-pop developers will be hit very hard. And then we will have far fewer of them. And the ones that remain will likely charge us more than the couple of bucks we pay per app today.

Further, even if the compliance cost per child gets down to a few cents (or tens of cents) per kid for large operators, it’s probably much higher for smaller operators. In other words, most of the costs here are fixed (hiring an extra employee, having lawyers review your policy, etc.), not marginal (the cost of verifying each additional kid), so it’s really hard to say what the real costs are. And with Apple and Google also taking a cut of the apps sold in the market, you really begin to see how adding on any additional compliance costs could hit the bottom lines of smaller app developers in a big way. When margins are this thin, burdensome regulatory mandates hurt even more. And sometimes they can drive you right out of business.

Which brings us back to the FTC’s role here. It’s clear that the consumer protection side of the agency has an important role to play here when it comes to ensuring consumers are better informed about data collection practices and corresponding privacy issues. But let’s not forget that the FTC was originally created as a competition agency. It’s supposed to care about market structure, competition, and consumer welfare. So, I wonder… are the folks in the FTC’s Bureau of Economics paying any attention to what their colleague are doing here? Because if we start layering on privacy regulations, all the good intentions in the world won’t be able to hold back the likely contraction and consolidation of this vibrant industry that will take place as small mom-and-pops struggle to absorb new regulatory burdens and compliance costs.

Something to think about before regulatory intervention drives up consumers prices and drives out of the market the countless entrepreneurs that make this sector so exciting–especially for parents and kids.

Two data points in the news over the past 24 hours to consider:

• A new report on “Smartphone Adoption & Usage” by the Pew Internet Project finds that “one third of American adults – 35% – own smartphones” and that of that group “some 87% of smartphone owners access the Internet or email on their handheld” and “25% of smartphone owners say that they mostly go online using their phone, rather than with a computer.”
• According to the Wall Street Journal, the “Average iPhone Owner Will Download 83 Apps This Year.” That’s up from an average of 51 apps downloaded in 2010. (At first I was astonished when I read that, but then realized that I’ve probably downloaded an equal number of apps myself, albeit on an Android-based device.)

As I explain in my latest Forbes column, facts like these help us understand “How iPhones And Androids Ushered In A Smartphone Pricing Revolution.” That is, major wireless carriers are in the process of migrating from flat-rate, “all-you-can-eat” wireless data plans to usage-based plans. The reason is simple economics: data demand is exploding faster than data supply can keep up.

“It’s been four years since the introduction of the iPhone and rival devices that run Google’s Android software,” notes Cecilia Kang of The Washington Post. “In that time, the devices have turned much of America into an always-on, Internet-on-the-go society.” Indeed, but it’s not just the iPhone and Android smartphones. It’s all those tablets that have just come online over the past year, too. We are witnessing a tectonic shift in how humans consume media and information, and we are witnessing this revolution unfold over a very short time frame.

Unsurprisingly, therefore, “unlimited” wireless data plans are probably on the way out since, as I observe in my Forbes piece:

That model created unsustainable network traffic burdens and it’s surprising unlimited plans have lasted this long. With smartphone users increasingly using their mobile devices to access the Internet and consume more cloud-based services and mobile video than ever, the “all you can eat” data buffet eventually had to end.

But critics are far too quick to suggest this is some of nefarious, anti-consumer conspiracy. In reality, I argue:

Tiered and metered pricing schemes are a sensible way to price demand for bandwidth-intensive users and applications and, in the process, alleviate network congestion, encourage new investment, and ensure that average costs for consumers are more reasonable over time.

Using usage data provided by Nielsen, I document the dramatic traffic growth that carriers are struggling to deal with but also show how most average consumers will do better under the new tiered plans. That’s because, even with a significant uptick in wireless data demand, the vast majority of users will not exceed the lowest tier of service (2 GB) that carriers are pricing at $20-$30. That’s less than most of them pay today. Thus:

It’s only the most rapacious mobile data consumers who’ll pay the higher tier prices. Doesn’t it make more sense that the most intensive network users pay more instead of raising average costs for all consumers? Why should minimal data users subsidize the big eaters?

Instead of repeating it all here, I’d just encourage you to bounce over to Forbes to read my entire essay.

The interesting policy question raised by all this is whether critics and policymakers will give network operators the freedom to innovate and employ creative business models so market experimentation can determine which pricing schemes will best calibrate supply and demand while also ensuring optimal network investment. You may recall that usage-based pricing has already become a flashpoint in the Net neutrality wars, and just last Friday I wrote about Netflix’s shameless attempt to get the feds to regulate usage-based pricing on the wireline front.

So, stay tuned. This fight could really heat up. Perhaps it’s time to dust off the old books and papers about how to fight off government price controls!

Related Reading:

• Netflix Falls Prey to Marginal Cost Fallacy & Pleads for a Broadband Free Ride (July 8, 2011)
• Why Congestion Pricing for the iPhone & Broadband Makes Sense (October 7, 2009)
• The (Un)Free Press Calls for Internet Price Controls: “The Broadband Internet Fairness Act” (June 17, 2009)
• Free Press Hypocrisy over Metering & Internet Price Controls (June 18, 2009)
• Once Again, Why Not Meter Broadband Pipes?  (September 7, 2007)
• Why Not Meter? (March 12, 2007)
• The Real Net Neutrality Debate: Pricing Flexibility Versus Pricing Regulation (October 27, 2005)

In my work critiquing the Lessig-Zittrain-Wu school of thinking–which fears the decline and fall of online “openness” and digital  “generativity”–I have argued that, while there is no such thing as perfect “openness,” things are actually getting more open and generative all the time. All that really counts from my perspective is that we are witnessing healthy innovation across the generativity continuum.

Will some devices and platforms continue to be “closed”? Sure. Think Apple and cable set-top boxes. But (a) there’s a ton of innovation taking place on top of those supposedly “closed” platforms and (b) there are other options consumers can exercise if they don’t like those content /information delivery methods. [See this chapter from the Next Digital Decade book for my fuller critique.]

And, even if one adopts a rigid Zittrainian view of openness and generativity, each day seems to bring more good news. From that perspective it’s hard to find a better headline than this one: ” Smartphone Makers Bow to Demands for More Openness.” That’s from ArsTechnica today and it refers to the fact that smartphone giant HTC just announced it would no longer attempt to lock the bootloader on its smartphones, meaning geeks like me can root and hack their devices to their heart’s content. As the Ars story notes:

HTC has long been seen as a relatively modder-friendly phone manufacturer. Although many of their phones have had locked bootloaders, workarounds were easy enough for software developers to spot in order to gain superuser access to their phones. That changed recently, however, when modders discovered that two new Android phones—the HTC Sensation and Evo 3D—would come with software that prohibited bypassing locked bootloaders. “The system was locked but exploitable before,” Android enthusiast Irwin Proud told Wired.com in an interview. “Suddenly they required signature checks,” or digital verification of software that allows it to load. An Android activist, Proud has organized online campaigns to fight against locked-down phone releases. After hearing this, the modding community wasn’t happy. Users launched WakeUpHTC.com, a website which gave upset modders all of HTC’s contact info, encouraging them to bombard the company with requests for a change in its bootloader policy. On Thursday, the company relented.

Here’s specifically what HTC’s CEO Peter Chou had to say in a Facebook post:

“There has been overwhelmingly customer feedback that people want access to open bootloaders on HTC phones. I want you to know that we’ve listened. Today, I’m confirming we will no longer be locking the bootloaders on our devices. Thanks for your passion, support and patience.”

Now that’s what I call a Zittrainian success story! Markets and public pressure prevailed and led to more openness and generativity in the purest sense of the terms.

I suppose that some will still worry and retort that “well, the carriers might still try to lock down the devices.” That story might have been more believable five years ago but the new reality of the smartphone world today is that the OS and app makers now hold most of the cards. Carriers are practically giving away the store (literally!) as they rush to get the latest and greatest phones and operating systems from the likes of Apple, Google, Microsoft, HTC, Motorola, LG, and so on.  This is amazingly dynamic ecosystem with multiple layers of innovation and competition.

I don’t think there’s any way the generativity genie could be put back in the bottle at this point. Too many people want tinker-friendly devices and more “open” platforms.  Of course, it’s also true that some devices will remain somewhat more locked-down to ensure “stability” or simplicity for those users who desire it. But what’s wrong with that? Shouldn’t they have that choice? Again, it’s the innovation across the full range of devices and platforms that is so important and impressive in this case. That’s all we should really care about. Finally, if goes without saying that even the most heavily fortified security can be broken when determined people try hard enough.

I hope Zittrain, Wu, and Lessig appreciate this and that they and others acknowledge these beneficial developments so that we can avoid foolish calls to regulate this healthy information ecosystem. These guys should declare victory and pop the champagne. The vision they favor is prevailing.

Every once an awhile I like to post something about my favorite tech toys, apps, and services to highlight what I think are spectacular innovations in the field.  I usually do so at the end of the year, like this. But I there’s no reason to wait for end of the year lists. So here are a few things that are currently making my life better.   [Note to pesky FTC before they send the Blog Police to my door… I didn’t get paid for any of these “endorsements”!]

NewsRoom RSS Reader: After months of searching fruitlessly for a decent RSS reader for Android, I finally stumbled upon NewsRoom last month. Wow, what a life-changer. It has become my primary RSS reader largely taking over for Bloglines on my PC (which is an app desperately in need of a makeover). NewsRoom’s slick interface is the most friendly finger-swiping app I’ve ever touched. I can quickly flip (left and right) through headlines for each feed and then easily pull up full text of any particular post with a quick flip of the thumb up. The only downside is the limited number of feeds you can have on the main pages. But that actually helped me go back and sort through my feeds to determine which ones I needed to be reading on a daily basis vs those that I can just monitor every couple days or weekly via my PC. I love this app.

TweetDeck (v.34): I have no idea how the folks at TweetDeck make any money, but they produce one the most spectacular pieces of freeware on the planet. It makes Twittering a real joy by making it a cinch to follow multiple hashtag topics in addition to your primary friends and mentions. And reTweeting is super simple. And version 32 just raises the bar even higher with new features like scheduled Tweets, maps, Buzz and Foresquare integration, and much more. I would gladly pay a few bucks a month for TweetDeck, but this amazing app remains free to the public.  Apparently they are booking revenue, but I can’t figure out how. (Seriously, how do they do it?!) Regardless, keep up the great work guys… and hurry up and get the Android version out!  I played with TweetDeck for the iPhone and it is outstanding. I’m pretty happy with TwiDroid, but I think I’d prefer TweetDeck for my Droid.

Stardock Fences for Windows: I am a huge Windows 7 fan as it offers me just about everything I’ve ever wanted in an OS. However, I’ve remained mystified by the lack an icon “grouping” capability on the Windows desktop. I know you can always created folders and throw programs in there, but why no ability to group the icons for specific programs into a “pen” that could be easily moved around on the desktop? Well, someone finally did it. Stardock (the folks who make some amazing (but memory-intensive) “deskscape” desktop skins) have created “Fences” for Windows, and God bless em for it. Fences allow you to easily create groups for specific icons, programs, documents, shortcuts, etc.  And you can scale them however you wish and place them wherever you want. Better yet, to create a new “fence” of any shape or size, just by right-clicking on your mouse, holding it down, and then drawing the outline of your new group and it will instantly pop up. It works perfectly. There’s also a ghosting feature that allows you to change the opacity of any one fence, or hide it entirely unless you hover over it. You can also double-click anywhere on the desktop and it wipes the slate clean of any icons momentarily.  “Fences” is a great little program that helped tidy up my desktop the way I have always wanted.

Toy Soldiers for XBox: Is it a bad thing for a 41-year old man to be hopelessly addicted to a video game? Well that’s me right now with “Toy Soldiers” for the XBox 360. I am a sucker for just about any “tower defense” game (“Defense Grid” is another obsession, but it’s too easy).  Toy Soldiers, however, has revolutionized the tower defense genre by combining a bit of history (World War I battlefields and units) with a unique form of gameplay that puts you more fully in command of the individual towers, as opposed to typical “place and pray” model of other tower defense games. By allowing the user to take control of artillery, machine guns, chemical weapons, sniper rifles, mortars, anti-aircraft guns, bombers and bi-planes, and so on, Toy Soldiers allows the user to play almost any role they want in the battle. (I love the guided artillery cam!) The battlefields are spectacular, although a bit constrained. You are only allowed to place units in pre-selected spots, and some of the maps are a bit small in scale. (I’m still waiting for some new downloadable battlefields, but none have yet been offered by Microsoft.) Regardless, this game is an absolute masterpiece and I can’t put it down, even after completing all the battles on multiple skill levels.  Pathetically, I check nightly to make sure I haven’t fallen out of the top 100 players in the world. Yes, I play that much!

So, a big THANK YOU to all these companies for making my life better, more productive, and enjoyable!

I’ve always generally agreed with the conventional wisdom about micropayments as a method of funding online content or services: Namely, they won’t work.  Clay Shirky, Tim Lee, and many others have made the case that micropayments face numerous obstacles to widespread adoption.  The primary issue seems to be the “mental transaction cost” problem: People don’t want to be diverted–even for just a few seconds–from what they are doing to pay a fee, no matter how small.  [That is why advertising continues to be the primary monetization engine of the Internet and digital services.]

That being said, I keep finding examples of how micropayments do work in some contexts and it has kept me wondering if there’s still a chance for micropayments to work in other contexts (like funding media content).  For example, I mentioned here before how shocked I was when I went back and looked at my eBay transactions for the past couple of years and realized how many “small-dollar” purchases I had made via PayPal (mostly dumb stickers and other little trinkets). And the micropayment model also seems to be doing reasonably well in the online music world. In January 2009, Apple reported that the iTunes Music Store had sold over 6 billion tracks.

And then there are mobile application stores.  Just recently I picked up a Droid and I’ve been taking advantage of the rapidly growing Android marketplace, which recently hit the 20,000 apps mark. Like Apple’s 100,000-strong App Store, there’s a nice mix of paid and free apps, and even though I’m downloading mostly freebies, I’ve started buying more paid apps. Many of them are “upsells” from free apps I downloaded. In most cases, they are just 99 cents. A few examples of paid apps I’ve downloaded or considered buying: Stocks Pro, Mortgage Calc Pro, Currency Guide, Photo Vault, Weather Bug Elite, and Find My Phone. And there are all sorts of games, clocks, calendars, ringtones, heath apps, sports stuff, utilities, and more that are 99 cents or $1.99.  Some are more expensive, of course.

I don’t have any idea how big this marketplace is in the aggregate, but according to AndroLib, “fully 62.2% of the apps available are completely free, compared to just 37.8% that are paid apps. That’s in stark contrast to the [Apple] App Store, which now has over 100,000 individual apps, of which (by some recent counts) a hefty 77% are paid applications — although only 30% of total App Store downloads are for paid apps.” That suggests that micropayments are doing quite well in mobile marketplaces. And this Wall Street Journal piece I was reading just yesterday, “Mobile-Payment Services Grow,” suggests there are lots of innovative things are happening in this space right now.

Of course, this gets into the semantic issue of, “what is a micropayment”? Does 99 cents qualify? I don’t know. I’ve never found any widely accepted definition of the term. Moreover, even if it’s true that a lot of people are buying “small-dollar” apps in mobile marketplaces, that doesn’t mean micropayments can fund all media going forward. It’s unlikely, for example, that we can fund quality journalism one micropayment at a time. People are just not going to pay a quarter (or even a penny) every time they want to read an article.  They might, however, be willing to pay a small monthly or annual access fee for some sites or services.  But with the exception of The Wall Street Journal and a handful of other media services, that model just doesn’t seem to have legs right now. [Although take a look at Dale Jefferson’s amazing newspapers app in the Android marketplace. Very cool. Perhaps media providers will learn from aggregation efforts like that and find a way to charge a small fee for access. But at less that one British pound — the cost of Jefferson’s app — I can’t imagine that funding a lot of content. They’ll need plenty of ads and other revenue streams to make up for what they are losing.]

Anyway, I’m not saying I have any answers here, just that my mind is still open regarding the possibility of micropayments as a method of funding online services and content. It may end up being easier for the former rather than the latter, however.

Seems like everywhere I turn someone is gushing about their new Droid phone, including my TLF colleagues Berin Szoka, Braden Cox, and Ryan Radia, who all had great fun rubbing their new toys in my nose over the past couple of days. And why not, it’s a very cool little device.  It makes my HTC Touch seems positively archaic in some ways, and it’s only a year old.  Apparently, 100,000 people already picked up a Droid in just its first weekend on the market.

But here’s the first thing that pops in my mind every time I see someone showing off their new Droid: How can a device like this even exist when America’s leading cyberlaw experts have been telling us that the whole digital world is increasingly going to hell because of “closed” devices, proprietary code, and managed networks?  I’m speaking, of course, about the lamentations of Harvard professors Lawrence Lessig, Jonathan Zittrain, and their many disciples.  As faithful readers will recall, I have relentlessly hammered this crew for their unwarranted cyber-Chicken Little-ism and hyper techno-pessimism. (See my many battles with Zittrain [1, 2, 3, 4, 5, 6 + video] and my 2-part debate with Lessig earlier this year).

“Left to itself,” Lessig warned in Code, “cyberspace will become a perfect tool of control.”  He went on to forecast a dystopian future in which nefarious corporate schemers would quash our digital liberties unless benevolent public philosopher kings stepped in to save our poor souls. Code was the Old Testament of cyber-collectivism. The New Testament arrived last year with Zittrain’s The Future of the Internet and How to Stop It. In it, we hear the grim prediction that “sterile and tethered” digital technologies and networks will triumph over the more “open and generative” devices and systems of the past.  The iPhone and TiVo are cast as villains in Zittrain’s drama since they apparently represent the latest manifestations of Lessig’s “perfect control” paranoia.

Apple’s “Angel of Death”

How completely out-of-control has this thinking gotten?  Well, here’s David Weinberger — another Harvard Berkman Center worrywart — talking about that supposed satanic font of all evil, the Apple AppStore:

The AppStore is the seductive angel of death for computing. It enables Apple to keep quality up and, more important, to keep support costs down. But a computer that can’t be programmed except by its manufacturer (or with the permission of its manufacturer) isn’t a real computer. The success of the AppStore is a gloomy, scary harbinger. From controlling the apps that can go on its mobile phone, it’s a short step for Apple to decide to control the apps that can go on its rumored slate/netbook device. And since so much of the future of computing will occur on mobiles and netbooks, this portends a serious de-generation of computing, as predicted by Jonathan Zittrain in The Future of the Internet and How to Stop It.

The “angel of death”? A “gloomy, scary harbinger”? Wow, who knew!  In Weinberger’s world, Apple is guilty of the heinous crime of “keep[ing] quality up and, more important, [keeping] support costs down.”  OH MY GOD, how dare they.  Somebody make them stop!  No, seriously, how silly is all this? It’s like those Republicans who, in their zeal to do anything to defeat health care nationalization, decide it’s OK to make up spooky stories about “death panels” hidden deep inside congressional bills.

I find Weinberger’s claim that “a serious de-generation of computing” is looming because of the iPhone to be especially ridiculous. It’s the same sort of rubbish Lessig was spewing in Code when he predicted that AOL’s walled garden model was going to take over the entire cyber-world and ensure “perfect control,” just one of the many things Lessig got wrong in the book.  And it’s the same silliness we see at work in Zittrain’s work when he claims that we’re doomed to live in a world of closed “sterile and tethered” digital technologies and networks. Similarly, last year, Public Knowledge analyst Alex Curtis managed to reach the zenith of this rhetorical insanity when he likened the Apple App Store to an Orwellian Big Brother that was bringing us a “1984 kind of total control.”  You know, because Apple is forcing us all to own iPhones and locking us into re-education camps.  Right.

I Fart, Therefore I Am (Generative)

Which brings me back to the Droid.  If all these dour predictions about the death of digital generativity and the rise of closed networks and walled gardens were true, how in the world does a phone with an open source operating system and a completely open applications process for developers even exist? (Android devices like the Droid don’t require users to rely exclusively on the Android Marketplace for apps; you can run other apps if you like).

Moreover, it’s not just that a remarkably innovative and generative device like the Droid gets widespread release and praise, it’s the fact that there are countless other mobile devices and applications on the market today much like it. On the Zittrainian “generative-vs.-sterile appliance” spectrum, the range of mobile devices just continues to grow and grow in both directions. You can decide exactly what type of device you want.  But here’s the more important point: How much of a difference does it even make how “open” these phones and app stores are?  You’ve got more “closed” systems like Apple’s iPhone and Palm’s Pre on one end of the spectrum and then more “open” systems like the Droid and even many Windows Mobile devices on the other end, but do these competing models really result in many difference in terms of functionality and innovation?  The reality is this: tons of innovation is occurring across all of these devices and platforms regardless of how “open” or “closed” they may be.

For example, when I go to Handango, a terrific mobile application marketplace, and search for “all apps” available for my HTC Touch (which runs a Windows Mobile OS), my senses are assaulted with 6,677 choices.  It’s all a bit overwhelming.  Luckily, a quick search can get me right to the important applications I really need — like the “Pocket Fart” app.  Folks, let me tell you, no “generative” device is worth its salt without a good farting application.  I don’t care how bad of a mood my kids are in, when I fire up a fart app, it puts an instant smile on their faces!

But hey, guess what… that “angel of death,” the iPhone Store, offers fart apps, too!  Dozens and dozens of fart apps, in fact.  In terms of Zittrainian generativity, the iPhone is positively fart-tastic. Just check out that video below. And in addition to those dozens of flatulence apps, the Apple AppStore has another 100,000 apps available for downloading, making it the largest applications store in the world. And back in September, Apple announced that more than two billion apps had been downloaded from the App Store in its short existence. That’s Billion with a “B”.  Does this sound like it “portends a serious de-generation of computing” as Weinberger suggests?  Incidentally, if he’s so frightened that Steve Jobs is the Grim Reaper incarnate he can always go find another phone. Seriously, Steve Jobs doesn’t force anybody to buy one of these expensive toys.

If the iPhone is Good Enough for Zittrain, Why Isn’t It Fine for the Rest of Us?

Incidentally, despite all the fear and loathing about Steve Jobs and the iPhone that one finds in Future of the Internet, I was very entertained to discover that Jonathan Zittrain is an iPhone user himself!  I used some shameless McCarthyite tactics during our debate at New America Foundation last year — “Are you now, or have you ever been, an iPhone user!” — to publicly out him. [Go to the 55:00 minute mark of the video to see.]  But my point to him that day was a serious one: If you so fear the death of generativity because of that little demonic device, than why carry one in your coat pocket?  Why not use a device that lets you break all the rules because it essentially has no rules?  There are multiple open source mobile operating systems and a thriving community of “homebrew” developers. Go spend a few minutes at PCC Geeks or Howard’s Forums and see what I mean.

But the Berkman boys don’t seem content with all that.  And I wouldn’t usually give a damn about the lunacy of these hyper-pessimistic prognostications from the Harvard crew if it was all just harmless cyber-sourpuss ramblings from the ivory tower geeks with too much time on their hands.  But the problem is that these people want regulators to take steps to correct these supposed “code failures,” as Lessig calls them.  Zittrain calls for “API neutrality” in his book, which would force net neutrality-like mandates on digital devices. And in a New York Times editorial this summer entitled “Lost in the Cloud,” he made it clear that cloud neutrality regulation was next on the list. [Others are joining that call.] I’ve got a serious problem with that, as I detailed extensively in earlier essays (here and here), and Berin Szoka and I have discussed how these escalating neutrality wars are bound to lead to the digital equivalent of “mutually assured destruction” within the tech community before it’s all over.

Finally, when the Berkman gang, which is the most respected cyberlaw shop in the land, go around casting these debates with terms like “evil” applications and “angels of death,” then I have a serious problem because the game you are playing becomes hazardous to the health of the digital economy.  This poisons the public policy debate by using absurd moralistic rhetoric about something as fundamentally agnostic as digital platforms and protocols.  These things are neither good nor evil; they are just choices.  They represent different ways of promoting innovation.  And we should be happy that our current digital marketplace is offering us a rich mosaic of business models and options that can fill almost any need and fit almost any picky user’s desires.  If that ain’t progress, I don’t what is.

by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)

Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”

The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.

New Fronts in the Neutrality Wars

The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. The reality is that regulation always spreads. The march of regulation can sometimes be glacial, but it is, sadly, almost inevitable: Regulatory regimes grow but almost never contract. Indeed, in some ways, the prediction we made just three weeks ago is already coming true: The basic premise of neutrality regulation is already being proposed for other layers of the Internet—and not just by AT&T in retaliation. One need not agree with all of AT&T’s accusations to recognize that, whatever the FCC might say today, any large online intermediary with a popular platform potentially faces the threat of “network neutrality” mandates—because every platform is essentially a “network,” too. We’re not just talking about “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising, etc.

An open letter sent to FCC Chairman Julius Genachowski this week by 28 founders and CEOs of leading application providers—including Amazon, Google, Facebook, Netflix, Craigslist, Sony and Twitter—speaks generally about the need for the FCC to enforce a “guarantee of neutral, nondiscriminatory access by users.” While many of these signatories may have in mind ISPs as the network “gatekeepers” that need to be reined in by the FCC, the more successful among them are likely to find this letter used against them in the future—perhaps even by co-signatories—to advance a broad conception of what the government must do to ensure “openness” and “access” for platforms at all layers of the Internet.

Dumb Networks, Dumb Devices

The intellectual foundations for this regulatory creep have already been laid by groups like Free Press and Public Knowledge and law professors like Columbia’s Tim Wu, Harvard’s Jonathan Zittrain and Seton Hall’s Frank Pasquale. As originally conceived by Tim Wu in 2003, “network neutrality” is not unique to broadband networks: “the basic economic problem found in the network neutrality debate (a form of ‘platform exclusion’ or ‘vertical foreclosure’) can be found in many other markets.” Indeed, Wu’s popular Net Neutrality FAQ declares:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.

Zittrain picked up where Wu left off in The Future of the Internet and How to Stop It—attacking, as the enemies of innovation, not ISPs but the supposedly “closed” platforms of Apple, TiVo and Microsoft’s Xbox. Zittrain warns that:

If there is a present worldwide threat to neutrality in the movement of bits, it comes not from restrictions on traditional Internet access that can be evaded using generative PCs, but from enhancements to traditional and emerging appliancized services that are not open to third-party tinkering.

Zittrain’s general solution is “API [Applications Programming Interface] neutrality:” If you create a platform (whether hardware or software) and begin allowing third-party contributions (“generativity”), you will lose all control over devices or applications that can run on that platform.

Those who offer open APIs on the Net in an attempt to harness the generative cycle ought to remain application-neutral after their efforts have succeeded, so all those who built on top of their interface can continue to do so on equal terms…. [N]etwork neutrality ought to be applied to the new platforms of Web services that, in turn, depend on Internet connectivity to function.

Clearly, if Zittrain and his allies have their way, the sort of neutrality mandates envisioned by the FCC or some Congressmen for ISPs will eventually cover companies such as Apple, Google, Facebook, Myspace, Twitter and Amazon—all singled out by Zittrain in a New York Times op-ed in July:

If the market settles into a handful of gated cloud communities whose proprietors control the availability of new code, the time may come to ensure that their platforms do not discriminate. Such a demand could take many forms, from an outright regulatory requirement to a more subtle set of incentives — tax breaks or liability relief — that nudge companies to maintain the kind of openness that earlier allowed them a level playing field on which they could lure users from competing, mighty incumbents.

Frank Pasquale agrees on the need to restrain all “the dominant players at all layers of online life,” but focuses on his demand for a Federal Search Commission to control supposedly “biased” search results. While the FCC wrings its hands over “managed services” offered by ISPs, search engines are increasingly offering their own value-added services by “blending” algorithmically-derived results with special features like maps, videos, books or music depending on what the search term suggests the user is interested in. “Artificially” ensuring that these features appear on the first page of search results is clearly non-neutral, and necessarily involves search engines making ”managed” decisions as to whose features to include. Yet such features also clearly benefit users—dramatically improving the usefulness of search engines and helping to sustain struggling business models like music retailing.

But one need not resort to the works of “ivory tower” academics to see the slippery slope we’re already tumbling down with the infinitely elastic principle of “neutrality.” The prospect of the FCC gradually transforming into a “Federal Information Commission” becomes more apparent when one reads the Wireless Innovation and Investment Notice of Inquiry recently released by the FCC:

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

One can imagine how some might use such language to accuse Google of being in “a dominant cloud computing position” such that “the context of network neutrality” will be applied to cloud service (like Google Voice) to “modify the existing balance between regulatory and market forces” through regulation. Indeed, that’s precisely what AT&T has suggested in recent letters (September 25 ^th and October 14 ^th) to the FCC.

AT&T’s partner Apple has already been the subject of such attacks for its decision to block the Google Voice app earlier this summer. The incident marked the beginning of open warfare between Google and AT&T/Apple. The FCC quickly jumped into the mix, first questioning how Apple manages its iTunes apps store for the iPhone, then questioning how Google runs its free Voice application. What legal authority the FCC has over either service is far from clear, but Apple seems to have gotten the message: It recently approved the Spotify music streaming app for the iPhone, which could be a serious competitive threat to the iTunes music store. This small incident highlights how easily regulators can impose their will through informal mechanisms like open-ended investigations even without clear authority to issue rules or bring enforcement actions. Yet none dare call it what it is: regulatory blackmail.

The Inevitability of Regulatory Capture

No doubt, other industry players will cheer on such regulatory harassment of the titans of tech—and maybe even demand more of it. Regulatory creep is driven by more than the self-interests of every bureaucracy to expand its own mission, budget and staff. As the Electronic Frontier Foundation has noted, “Experience shows that the FCC is particularly vulnerable to regulatory capture.” While lobbyists play an important role in defending business from government, all too many businesses naively look at government as a beast that can be tamed, trained, and turned to one’s own advantage, and often try to use the expanding regulatory apparatus to their own advantage or simply throw their competitors under the bus to save themselves. The result is a Hobbesian regulatory “war of all against all” within industry.

As Professor Alfred E. Kahn explained in his 2-volume opus, The Economics of Regulation, all regulation—however high-minded—is inevitably captured by special interests because:

When a commission is responsible for the performance of an industry, it is under never completely escapable pressure to protect the health of the companies it regulates, to assure a desirable performance by relying on those monopolistic chosen instruments and its own controls rather than on the unplanned and unplannable forces of competition. […] Responsible for the continued provision and improvement of service, [the regulatory commission] comes increasingly and understandably to identify the interest of the public with that of the existing companies on whom it must rely to deliver goods.

If Internet regulation follows the same course as other industries, the FCC and/or lawmakers will eventually indulge calls by all sides to bring more providers and technologies “into the regulatory fold.” Clearly, this process has already begun. Even before rules are on the books, the companies that have made America the leader in the Digital Revolution are turning on each other in a dangerous game of brinksmanship, escalating demands for regulation and playing right into the hands of those who want to bring the entire high-tech sector under the thumb of government—under an Orwellian conception of “Internet Freedom” that makes corporations the real Big Brother, and government, our savior.

Toward a Less MAD World: Digital Détente

Sincere defenders of real Internet Freedom—that is, freedom from government techno-meddling—recognize that there will always be disputes over how companies deal with each other online across all layers of the Internet. The question is not whether we need a technical coordinating mechanism for handling such disputes. Someone should mediate conflicts over alleged deviations from abstract neutrality principles. But should that arbitrator be an inherently political body like FCC? Or should we instead look to truly independent, apolitical arbitrators like the Internet Engineering Task Force or collaborative efforts like the Network Neutrality Squad? Such alternative dispute resolution mechanisms and fora need not have the power of law to be effective: The weight of their expert opinion, based on careful investigation of the facts, would likely resolve most disputes, because companies have strong reputational incentives to comply with reasoned rulings by truly neutral experts. And the white hot spotlight of public attention has a way of disciplining marketplace behavior as well.

Government would still have a role to play, of course, in enforcing antitrust laws where anticompetitive harm to consumers can be proven, and in enforcing the promises companies make to consumers. Ultimately, however, certain business models and technologies require non-neutral treatment, and the best remedy for concerns about non-neutrality is competition itself: In the high-tech sector more than any other, disruptive innovation makes it difficult for even the most successful companies to stay on top forever. Competitive entry—or even the threat of new entry—provides a powerful check on the power of so-called “gatekeepers,” but even more important is the prospect that today’s leaders will be tomorrow’s laggards: There’s little reason to think Google (search and advertising), Apple (smart phones and music) and Facebook (social networking) won’t someday find themselves playing catch-up, just as IBM (computers), Microsoft (desktop software and search), Friendster and MySpace (social networking), and Yahoo! and AOL (web portals) have had to do.

“Digital Détente” would require that all parties concede something and work constructively toward a more “peaceful” ( i.e., less regulatory) resolution. And yet, no Internet company wants to disarm unilaterally, foreswearing politics as a continuation of competition by other means. Only through multilateral disarmament could they break out of the current cycle of regulatory one-upmanship: If the companies in the Internet ecosystem could form a united front against increased government regulation and in favor of removing existing regulatory obstacles to competition, they could all return to their core competencies of creativity and innovation.

The alternative is a regulatory “nuclear winter”: high-tech titans turning their political fire on each other, catching innocent third parties in the cross-fire and bringing a dark cloud of government regulation over the entire Internet. Such increased regulation would stifle investment and innovation throughout the Internet ecosystem. Thus, it is consumers who will ultimately suffer most from the tech industry’s suicidal impulse, as their choices and digital lives are impoverished. For their sake, we hope all industry players will step back from the brink to avoid such high-tech mutually assured destruction.

The smell of high-tech regulation is increasingly in the air these days and many lawmakers and some activist groups now have the mobile marketplace in their regulatory cross-hairs. Critics make a variety of claims about the wireless market supposedly lacking competition, choice, innovation, or reasonable pricing. Consequently, they want to wrap America’s wireless sector in a sea of red tape.   Two important new studies thoroughly debunk these assertions and set the record straight regarding the state of wireless competition and innovation in the U.S. today. These reports are must-reading for Washington policymakers and FCC officials who are currently contemplating regulatory action.

First, Gerald Faulhaber and Dave Farber have a new report out entitled “Innovation in the Wireless Ecosystem: A Customer-Centric Framework.”  Here’s what Faulhaber and Farber find:

the three segments of the wireless marketplace (applications, devices, and core network) have exhibited very substantial innovation and investment since its inception. Perhaps more interesting, innovation in each segment is highly dependent upon innovation in the other segments. For example, new applications depend upon both advances in device hardware capabilities and advances in spectral efficiency of the core network to provide the network capacity to serve those applications. Further, we find that the three segments of the industry are also highly competitive. There are many players in each segment, each of which aggressively seeks out customers through new technology and new business methods. The results of this competition are manifest: (i) firms are driven to innovate and invest in order to win in the competitive marketplace; (ii) new business models have emerged that give customers more choice; and (iii) firms have opened new areas such as wireless broadband and laptop wireless in order to expand their strategic options.

They continue on to address the policy issues in play here and discuss the “consumer-centric” approach they recommend that the FCC adopt:

Having found that all three segments are highly competitive, we ask, where is the market failure? If none, then the principle of customer-centric applies: let customers make the key decisions regarding which products, services, open vs. managed business models, net neutrality, et al. will survive in the marketplace. While there is no shortage of pundits, advocates, lobbyists and academics advising the FCC that it, rather than customers, should be making these decisions and advising the FCC what those decisions should be, a customer-centric FCC must leave these decisions to customers in a competitive marketplace. Should the FCC decide to preempt customers and make choices for them, it follows as does night from day that the result will be (i) less customer choice, and therefore reduced customer well-being; (ii) higher costs for producers and therefore customers; (iii) lower incentives to invest and innovate, harming customers, producers and the American economy. In this case, economics and technology are on the same page: economists advise intervention only in the case of demonstrated market failure, and then only if there is evidence that the intervention will do more good than harm. The technologist’s advice is more pithy and down to earth: if it ain’t broke, don’t fix it!

Amen to that.  Let’s hope our lawmakers are listening.

Second, Everett Ehrlich, Jeffrey Eisenach, and Wayne Leighton have a terrific new paper out entitled “The Impact of Regulation on Innovation and Choice in Wireless Communications,” which reaches similar conclusions to those Faulhaber and Farber found in their report. Here’s the executive summary from the Ehrlich-Eisenach-Leighton report:

Proposals to increase regulation of mobile wireless services, for example, by applying “net neutrality” regulation, are often based on claims that such regulation would enhance innovation and increase consumer choice. In fact, they would have the opposite effect. The business practices that would be banned by such regulation are efficient mechanisms for spreading and reducing risk, lowering transactions costs, and enhancing marketing activities, all of which contribute to innovation and choice. Moreover, product differentiation increases competition and thus contributes both directly and indirectly to consumer choice. While some types of exclusive agreements and other “discriminatory” practices can theoretically harm competition, the precondition for such harm to occur – i.e., market power in one or more of the affected markets – generally is not present in wireless markets. Hence, the proposed regulations cannot be justified on grounds of market failure. Rather than increasing innovation and consumer choice, as promised, they would severely disrupt the wireless sector’s highly successful business model and significantly reduce innovation and consumer choice.

Like the Faulhaber-Farber paper, the Ehrlich-Eisenach-Leighton paper examines the major segments of the wireless marketplace — applications, devices, and networks — and shows them all to be vigorously competitive and experiencing significant innovation. Some of the following tables and charts help to illustrate this.

This first table shows how concentration ratios for the U.S. market (as measured by HHI) are among the lowest in the world.

The next two charts show that U.S. carriers have the lowest revenue per minute (60% lower than the average OECD country) even though average minutes per use are more than twice the amount of the next highest ranked country (Canada).

Finally, this final chart from their report offers a snapshot of mobile Internet penetration in 16 countries showing the U.S. on top:

Incidentally, the Faulhaber-Farber study also does a nice job listing the various mobile application stores out there today:

Device Manufacturer App Stores Apple’s App Store BlackBerry’s App World Palm’s App Catalog Nokia’s Ovi Store Samsung’s Application Store Sony’s PlayNow arena LG’s Application Store

Software Developers Google’s Android Market Microsoft’s Windows Mobile

Carriers AT&T’s MEdia Mall Verizon Wireless’ Tools & Applications Sprint’s Software Store US Cellular’s easyedge Cellular South’s Discover Center Cricket’s Downloads

Independent Stores Handango GetJar

And the Ehrlich-Eisenach-Leighton paper provides some addition perspective on innovation in the handset and applications space:

On the metrics that seem to be of greatest concern to regulation advocates – choice and innovation – the data also show the industry is performing well. For example, CTIA reports there are more than 630 different wireless handsets and devices available in the U.S., compared with only 147 in the United Kingdom, and notes that many of the most advanced handsets introduced in recent months have been launched in the U.S., including (among others) the iPhone 3G, the Google G1, and the Blackberry Storm. Amazon’s highly popular Kindle was also launched in the U.S. with connectivity provided by Sprint – while its European launch was delayed for a full year by Amazon’s inability to reach agreement with a mobile carrier there. As noted above, the number and variety of available applications is increasing rapidly: In addition to the Apple Apps Store, application downloads are now available from the Android Market (Google), the Palm Software Store, Blackberry App World and the Nokia Ovi Store, offering a total of more than 60,000 different applications. On July 14, 2009 Apple announced that more than 1.5 billion applications had been downloaded from its iPhone App Store since its launch in July 2008.

Actually, that number is even higher now.  As I noted here recently, in just a little over a year, Apple reports there’s been 2 billion downloads of over 85,000 apps from over 125,000 developers.  It’s just stunning when you think about it.

I encourage everyone to read both reports cover-to-cover.  They provide a comprehensive look at the reality on the ground — or in the air, as the case may be — in America’s mobile marketplace.

The Google juggernaut’s revenue growth has slowed steadily in the last five years, causing the Wall Street Journal to caution investors about buying Google stock. While much of the slow-down in Google’s revenue may be attributed to the recession, the WSJ cautions that:

• Microsoft is offering stiffer competition in search, which will only intensify once antitrust regulators approve its partnership with Yahoo! and the two companies actually implement their partnership (which could take another year);
• YouTube’s promise as an ad platform remains uncertain;
• Google lags behind Apple and Research in Motion in developing mobile phone operating systems, with Android still unproven;
• It remains unclear how successful the company will be in expanding beyond its existing lead in small text  ads into the potentially lucrative realm of banner ads.

Somehow I doubt Google’s fall to Earth will do much to allay the concerns of those who see Google as the kind of evil monopolist Microsoft was made out to be in the 90s.

As the Journal concludes, “It would be foolish to predict that Google won’t have another business success, of course… Google may itself discover the next Google-like business.” As long as someone’s out there working to turn today’s idle fantasies into tomorrow’s multi-billion dollar businesses, consumers win—whoever that bold innovator might be.

Seems like every week the tech rumor mills unveil some new smartphone that’s supposedly going to give the iPhone a run for its money. Over the past couple years, dozens of advanced handsets have been released with much fanfare — the LG Voyager, Palm Pre, Blackberry Storm, Samsung Omnia, to name a few — but time and time again, we end up with a device that can’t hold a candle to the iPhone’s amazing browser, massive app store, and sleek multi-touch interface.

But all this could change later this year. A number of handsets are due for release on several major networks over the next few months that run on Android, Google’s open source mobile operating system. Android is currently available on only a single device, the HTC G1. It’s a decent phone, but it lacks the polish of the iPhone and is only available with a contract from T-Mobile, which lags behind Sprint, AT&T, and Verizon in terms of 3G coverage.

I’m especially excited about the Android 2.0-based Motorola “Sholes,” a great-looking phone that’s supposedly due for release in November 2009 from Verizon. If rumors pan out, the Sholes should come with a slide-out keyboard, an extremely high-res display, a 5MP camera, and all-around solid specs. Via Android and Me:

The Motorola Sholes should include:

• OMAP3430 – 600 MHz ARM Cortex A8 + PowerVR SGX 530 GPU + 430MHz C64x+ DSP + ISP (Image Signal Processor)
• Dimensions 60.00 x 115.80 x 13.70 mm
• Weight 169 g
• Battery Li-ion 1400 mAh.
• Standby 450 hours, talk time 420 minutes
• 3.7-inch touch-sensitive display with a resolution of 854×480 pixels, 16 million color depth. Physical screen size is 45.72 mm by 81.34 mm.
• 512MB/256MB ROM/RAM
• microSD / microSDHC expansion slot
• Camera: 5.0 megapixel with autofocus and video recorder
• Connectivity: USB2.0, 3.5mm audio jack, Bluetooth 2.0 + EDR, Wi-Fi
• Supported audio formats: AMR-NB/WB, MP3, PCM / WAV, AAC, AAC +, eAAC +, WMA
• Supported video formats: MPEG-4, H.263, H.264, WMV
• GPS

Policymakers should take note of the coming onslaught of Android phones as a reminder that platform competition is alive and well in the U.S. wireless market — despite the claims of certain activists and academics whose definition of “consumer choice” encompasses only those devices that they deem sufficiently “open.”

Global handset manufacturing giant Nokia has purchased the shares they didn’t already own in Symbian, Ltd., the company formed in 1998 as a partnership among Ericsson, Nokia, Motorola and Psion and the developer of the Symbian mobile operating system, by far the world’s leading OS for “smart mobile” phones with 67% of the market, followed by Microsoft on 13%, with RIM on 10% (source).

But wait, there’s more (per Engadget)!

Here’s where it gets interesting, though: rather than taking Symbian’s intellectual private for Nokia’s own benefit, the goods will be turned over to the Symbian Foundation, a nonprofit whose sole goal will be the advancement of the Symbian platform in its many flavors. Motorola and Sony Ericsson have signed up to contribute UIQ assets, while NTT DoCoMo (which uses Symbian-based wares in a number of its phones) will be donating code as well. Other Symbian Foundation members include Texas Instruments, Vodafone, Samsung, LG, and AT&T (yep, the same AT&T that currently sells precisely one Symbian-based phone), so things could get interesting. The move clearly seems to be a preemptive strike against Google’s Open Handset Alliance, LiMo, and other collaborative efforts forming around the globe with the goal of standardizing smartphone operating systems; the writing was on the wall, and Symbian didn’t want to miss the train. Total cash outlay for the move will run Nokia roughly €264 million — about $410 million in yankee currency.

Other reports note that the Symbian Foundation will eventually take Symbian open source, and that this move is as much as response to Apple’s closed iPhone platform as it is to Gogole’s open Android and LiMo platforms.  (Although it is intriguing to note that AT&T, Apple’s exclusive U.S. partner for the iPhone, is among the backers of the new Symbian Foundation, perhaps indicating that even AT&T is hedging its bets.)

The fact that we will soon see three open source platforms (counting Google’s Android and LiMo) competing for market share provides yet another measure of the exceptionally high degree of competition in the wireless industry.  Even FCC Chairman Kevin Martin, hardly a “regulatory skeptic,” has recognized the significance of this aspect of wireless competition and widespread availability of wireless carrier choice in his recent statements indicating his intent to dismiss Skype’s Petition to impose open access requirements a la the FCC’s 1968 Carterfone decision, calling “wireless … the poster child for competition” and noting that “95 percent of the people in the U.S. can choose form at least three wireless operators competing to offer them service.”

Cumulatively, the increased competitiveness–and openness-of the wireless industry mitigates strongly against recent proposals for Carterfone-style requirements (see Tim Wu’s June 2007 piece); banning exclusive relationships between handset manufacturers and wireless carriers, as my colleague Barabara Esbin and I noted in our recent paper (PDF); heavy-handed regulation of early termination fees, as dicussed by Barbara (PDF) and other attempts to impose unnecessary regulations on an industry that is already the most competitive within the FCC’s purview and one in which open standards should facilitate continued innovation.

Nokia’s move is, in some respects, reminiscent of AOL’s 2003 decision to create the Mozilla Foundation.  If Symbian achieves even a fraction of Mozilla’s success with Firefox in growing a developer community that can build a strong product, the pace of wireless innovation could increase still further.