FEDERAL COMMUNICATIONS COMPLAINT AGAINST VERIZON WIRELESS

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FEDERAL COMMUNICATIONS COMMISSION

----------------------------------------------------------------
X


In re Verizon Wireless

FCC Complaint #:

Jason W. Klimek
, Esq.






Complainant,



-
against
-


Cellco Partnership d/b/a
Verizon Wireless

----------------------------------------------------------------
X


STATE OF
NEW YORK

)


)ss:

COUNTY OF
SUFFOLK

)










FEDERAL COMMUNICATIONS COMPLAINT AGAINST VERIZON WIRELESS















i


TABLE OF CONTENTS

INTRODUCTION

................................
................................
................................
................................
........

1

PRELIMINARY STATEMENT
................................
................................
................................
...................

1

STATEMEN
T OF FACTS

................................
................................
................................
...........................

2

I.

GOOGLE WALLET

................................
................................
................................
......................

2

II.

ISIS PARTNERS

................................
................................
................................
............................

2

ARGUMENT

................................
................................
................................
................................
................

4

I.

VERIZON’S POLICY IN REGARD TO GOOGLE WALLET HAS VIOLATED BLOCK C
REQUIREMENTS

................................
................................
................................
................................
......

4

A.

Google wallet’s interaction with a smartphone’s secure element does not provide grounds for an
exception to 47 C.F.R. §27.16

................................
................................
................................
..................

5

B.

The technical standards outlined in 47 C.F.R. §§27.16(c)(1)
-
(3) as they pertain to Google
Wallet do not afford Verizon an exception to Block C regulations

................................
........................

6

i.

Google Wallet does not deviate from the technical standard of 47 C.F.R. §27.16(c)(1).

.............

6

ii.

Google Wallet does not deviate from the technical standards of 47 C.F.R. §27.16(c)(2)

............

8

iii.

Google Wallet does not deviate from the technical standards of 47 C.F.R. §27.16(c)(3).

.......

8

C.

Any action on behalf of Verizon Wireless to block or cause to be blocked an application from
being installed on Verizon branded devices is a violation of 47 C.F.R. §27.16

................................
.....

9

II.

VERIZON HAS FAILED TO CARRY ITS BURDEN WHEN CONFRONTED WITH
ALLEGATIONS OF C BLOCK VIOLATIONS

................................
................................
...................

10

CONCLUSION

................................
................................
................................
................................
...........

12









ii


TABLE OF AUTHORITIES

Cases

Carterphone
,
Use of the Carterphone Device in Messaging Toll Telephone Service,
13 FCC.2d 420
(1968)

................................
................................
................................
................................
........................

3


Regulations

47 C.F.R. §27.16

................................
................................
................................
.............................

1, 5, 9, 10

47 C.F.R. §27.16(b)

................................
................................
................................
................................
......

4

47 C.F.R. §27.16(b)(1)

................................
................................
................................
..............................

4, 5

47 C.F.R. §27.16(c)(1)

................................
................................
................................
................................
..

7

47 C.F.R. §27.16(c)(2)

................................
................................
................................
................................
..

8

47 C.F.R. §27.16(c)(3)

................................
................................
................................
..............................

8, 9

47 C.F.R. §27.16(f)

................................
................................
................................
................................
.....

11

C Block Order,
22 F.C.C.R. 15289 (2007)

................................
................................
................................
...

4



1


INTRODUCTION



This complaint is in
response
to Verizon Wireless’s
1

(“Verizon”)

potential breach of the
requirements of Block C of the wireless spectrum also known as Verizon’s fourth
generation
(“4G”) Long Term Evolution network (“LTE”). Verizon’s 4G devices operate on the upper 700
MHz spectrum and are therefore subject to Block C Requirements. Verizon selectively chose to
disable, block or caused to be disabled or blocked the mobil
e payment application known as
Google Wallet, created and distributed by Google, Inc.

(“Google”)
.


PRELIMINARY STATEMENT



The instant complaint is filed pursuant to alleged violations of 47 C.F.R. §27.16

by
Verizon Wireless in regard to its policy

of requesting Google block access to

the mobile
application Google Wallet created and distributed by Google
.












1

Verizon
Wireless is the business name (“d/b/a”
) of Cellco
Partnership, a joint venture of Verizon Communications
and Vodafone.

2


STATEMENT OF FACTS


I.

GOOGLE WALLET

Google Wallet, created and distributed by Google, is a
mobile payment application in
which any device
2

equipped with a Near Field Communication (“NFC”) chip can be put into
close proximity with another NFC enabled device and information can be passed wirelessly
between the two devices.
The
Google Walle
t
app


stores
[ ]
payment cards on highly secure Google servers, instead
of in the secure storage area on your phone. A wallet ID (virtual
card number) is stored in the secure storage area of the phone, and
this is used to facilitate transactions at the point of
sale. Google
instantly charges your selected credit or debit card.
3


Further, when a user charges an item to Google Wallet, Google actually pays the merchant, then
charges the user’s credit card, thereby not revealing the user’s credit card information fro
m the
merchant and the Android OS.
4

Additionally,
Google’s approach allows users to

to remotely
disable your mobile wallet on a lost phone


which allows for greater security to the user and
merchants involved in the transaction.
5


II.

ISIS PARTNERS

Verizon
,
AT&T and T
-
Mobile have invested $100 million
6

and
created ISIS, an NFC
payment system that directly competes with Google Wallet.
7

Since that time, Verizon, along



2

The device that is the subject of the complaint is the Samsung Galaxy Nexus. A full list of all NFC equipped
devices can be obtained f
rom
http://www.nfcworld.com/nfc
-
phones
-
list/

3

Google Commerce
http://googlecommerce.blogspot.com/201
2/08/use
-
any
-
credit
-
or
-
debit
-
card
-
with.html

4

http://www.google.com/wallet/why/security.html

5

Google Commerce,
supra

note 4

6

http://spectrum.ieee.org/podcast/at
-
work/innovation/verizon
-
versus
-
google
-
wallet

3


with its partners, have been forming relationships with various credit card companies
8

to dep
loy
their own mobile payment system using
SIM cards

embedded with NFC technology.
9

Currently
ISIS is not available on any carrier or device

in the United States
. However, ISIS is scheduled
for a limited release in test markets starting October 22, 2012.
10

The fact that ISIS
, at the writing
of this complaint,

is not available, and Verizon has disabled Google Wallet access, Verizon’s
users are left without the ability to use an inherent ability of their devices
. Verizon’s stance in
regard to Google Wallet
is counter to the Commission’s expressed positions of openness in
Carterphone
,
Use of the Carterphone Device in Messaging Toll Telephone Service,
13 FCC.2d
420 (1968)
,

and reiterated
in the
Commission’s
C Block Order
.
11
















7
The joint venture was announce in April 2011.
http://news.paywithisis.com/2011/04/04/isis
-
advances
-
mobile
-
commerce
-
with
-
first
-
market/

8

http://news.paywithisis.com/2011/07/19/isis
-
forms
-
relationships
-
with
-
visa
-
mastercard
-
discover
-
and
-
american
-
express/

9

http://news.paywit
hisis.com/2011/09/27/manufacturers
-
add
-
support/

10

http://www.droid
-
life.com/2012/10/12/isis
-
mobile
-
wallet
-
launch
-
details
-
nfc
-
sim
-
cards
-
free
-
cash
-
and/

subsequently, Verizon Wireless has redacted the ISIS payment system for the update
.
http://www.droid
-
life.com/2012/10/15/verizon
-
tweaks
-
changelog
-
for
-
incredible
-
4g
-
2
-
17
-
605
-
2
-
update
-
removes
-
isis
-
support
-
section/
.

H
owever T
-
Mobile has indicated that ISIS will be debuting shortly
.

http://www.bgr.com/2012/10/15/t
-
mobile
-
isis
-
mobile
-
wallet
-
launch
-
october
-
22nd/

11

C Block Orders,
22 F.C.C.R. 15289 (2007),

¶¶ 189
-
230

4


ARGUMENT


I.

VERIZON’S POLICY
IN REGARD
TO GOOGLE WALLET

HA
S

VIOLATED
BLOCK C REQUIREMENTS


“Licensees offering service on spectrum subject to this section shall not deny, limit, or
restrict the ability of their customers to use the devices and applications of their choice on the
licensee’s C Block network…”
47 C.F.R. §27.16(b)
.
In the
C Block Order

the Commission
elaborated on this
,

stating
that a
licensee may not “
interfere
with the ability of end users to
download and utilize applications of their choosing.”
C Block Order

¶ 206 (emphasis added).
The

Code of Federal Regulations lists two exceptions to section (b), the applicable of which
states “[i]nsofar
as such use would not be complia
nt with published technical standards
reasonably necessary for the management or protection of the licensee’s networ
k….”
47 C.F.R.
§27.16(b)(1)
.
As explained in sections A and B below, the 47 C.F.R. §27.16(b)(1)

exception
does not appl
y in the context of Google Wallet.

Google Wallet is available to non
-
Verizon branded S
amsung Galaxy Nexus smartphones,
as well as other smartphones

such as the Samsung Galaxy SIII
.

Specifically, the mobile carrier
Sprint pre
-
installs Google Wallet on their Galaxy Nexus devices

and both AT&T and T
-
Mobile
officially support Google Wallet on the Samsung Galaxy Nexus
.
12

Additionally, US Cellular has
added official support for Google Wa
llet on the Samsung Galaxy SIII.
13

At this point in time,
Google Wallet cannot be installed from the Play Store on Verizon devices and
an attempt to



12

List of all devices and carriers that officially support Google Wallet
http://www.google.com/wallet/get.html

13

http://www.engadget.com/2012/10/03/us
-
cellular
-
galaxy
-
s
-
iii
-
update
-
adds
-
google
-
wallet
-
support/

5


install Google Wallet
i
s met with a message stating “this application is not available on your
carrier at t
his time
.



Pursuant to an inquiry regarding their decision to block or caused to be blocked Google
Wallet, Verizon stated:

I
can tell you that Verizon does not block applications. Google
Wallet is different from other widely
-
available m
-
commerce
services.

Google Wallet does not simply access the operating
system and basic hardware of our phones like thousands of other
applications. Instead, in order to work as architected by Google,
Google Wallet needs to be integrated into a new, secure and
proprietary ha
rdware element in our phones. We are continuing our
commercial discussion with Google on this issue.
14


As detailed below, Verizon’s statement is based on
semantics

and does not give a wholly
accurate descr
iption of Verizon’s involvement with denying access

to Google Wallet.


A.

Google wallet’s interaction with a smartphone’s secure element does not
provide grounds for an exception to 47 C.F.R. §27.16

The Block C
Rules

do not address
interaction

of applications

with hardware elements
within
its text
.

Specifically, §27.16(b)(1
)

states an exception to the prohibition on carriers
blocking the installation and use of applications: “[i]
nsofar as suc
h use would not be

compliant
with published technical standards reasonably necessary for the management or protection of the
licensee’s network
.”

47 C.F.R. §27.16(b)(1) (emphasis added).

The gravamen of this exception
is predicated on providing carriers with a way to address concerns that an application may affect
the security or integrity of
their

network. Verizon, in their response, indicates Google Wallet is
not available on their de
vices because the application interacts with a
proprietary
secure element



14

This response was from Samatha from Verizon Wireless Customer Service 9/26/2012



WFM96264707

6


chip in the device. This secure element chip in no way interacts with Verizon’s network.
15

The
chip’s sole purpose is to locally store
the encrypted Google Wallet ID

on the user’s d
evice.
16

The user’s credit card information is stored on Google’s secure servers.
17

The
Google Wallet
application only
i
nteracts with Verizon’s network by using

Verizon’s data connection to allow
the application to communicate
the Google Wallet ID, stored
on the secure element,

to the user’s
credit card information on Google’s secure servers.

This function of communicating data over
Verizon’s network is a process
all applications requiring a d
ata connection perform.


The secure
element chip

do
es

not
interac
t at all

with Verizon’s network
, as the Google Wallet ID is stored
on the secure element, but passed to Google’s servers through the application itself, which
requires the data connection.
18

Therefore, Verizon’s response indicating that the secure element
chip and its interaction with their network is the reason Google Wallet is not available to Verizon
customers is patently false and an invalid reason to deny Verizon customers access to Googl
e
Wallet.


B.

The technical standards outlined in 47 C.F.R. §§27.16(c)(1)
-
(3) as they pertain
to Google Wallet do not afford Verizon an exception to Block C regulations

As described below, Google Wallet is compliant with the technical standards outlined in
47

C.F.R. §§27.16(c)(1)
-
(3).

i.

Google Wallet does not
deviate

from
the technical standard
of

47 C.F.R.



15

The Secure Element only stores data and is required to open the Google Wallet app. The Secure Element memory
is sepa
rate from the device memory. The chip is designed to only allow trusted programs on the Secure Element
itself to access the payment credentials stored therein. The secure encryption technology of the credit card issuing
institution protects your payment ca
rd credentials as they are transferred from the phone to the reader.
http://www.google.com/wallet/why/security.html

16

Google Commerce
,

supra

note 4

17

Google Commerce,
supra

note 4

18

Google
Commerce
,

supra
note 4

7


§27.16(c)(1)
.

Section 27.16(c)(1) states:

Standards shall include technical requirements

reasonably
necessary for third parties to access a licensee’s network via
devices or applications without causing objectionable interference
to other spectrum users or jeopardizing network security. The
potential for excessive bandwidth demand alone shall

not
constitute grounds for denying, limiting or restricting access to the
network.


47 C.F.R. §27.16(c)(1)
.
The technical standard described in 47 C.F.R. §27.16(c)(1)

refers
specifically to third parties’ access
to
a “licensee’s network via devices or applications without
causing objectionable interference to other spectrum users or jeopardizing network security.”

Id
.
The Sprint branded Samsung Galaxy Nexus comes pr
e
-
l
oaded with Google Wallet and, upon
knowledge and belief,
has never caused an issue in regard to interference
to other spectrum
users
or
has
jeopardized network security.

Additionally, as referenced above, both AT&
T and T
-
Mobile officially support Google Wallet on the Samsung Galaxy Nexus.
19

Further, Google
Wallet
users have been

able to side load
the application
on the Galaxy Nexus

with no negative
impact to Verizon users and Verizon’s network security.

Moreover
, b
ecause 47 C.F.R. §27.16(c)(1)

specifically refers to “network security”
Verizon cannot argue that the potential for compromised
device

security, in that a user’s credit
card information may be obtained through unlawful mea
ns, affects or could ever affect Verizon’s
network security as these are two wholly independent concepts. In order to gain access to a
user’s credit card information,
the secure element would have to be unencrypted and the
user’s

Wallet ID would have to b
e matched to
the corresponding credit card information stored on



19

Supra
,
note 13
.

8


Google’s secure servers
.
20

Th
e secure element

chip is heavily encrypted and once tampered
with, is completely inaccessible
, requiring a user to obtain a completely new device. Even if this
c
hip were to be compromised, there is no connection between the security breach of the secure
element and Verizon’s network security.

ii.

Google Wallet does not deviate from the technical standards
of

47 C.F.R.
§27.16(c)(2)

Section 27.16(c)(2) states:

To the extent a licensee relies on standards established by an
independent standards
-
setting body which is open to participation
by representatives of service providers, equipment manufactur
ers,
application developers, consumer organizations, and other
interested parties, the standards will carry a presumption of
reasonableness.


47 C.F.R. §27.16(c)(2)
.
Upon

knowledge and belief, no such standards
-
setting bo
dy exists and
therefore §27.16(c)(2) is inapplicable in the instant complaint.

However, such an organization
would provide much needed inp
ut and guidance and would relieve

some of the burden on the
Commission to adjudicate matters such as this complaint.

In regard to the specific issue of
Google Wallet, there is not even industry consensus on whether Google Wallet should be
disallowed
.
21

iii.

Google Wallet does not deviate from the technical standards of 47 C.F.R.
§27.16(c)(3)
.

Section 27.16(c)(3) states:

A licensee shall publish its technical standards, which shall be non
-
proprietary, no later than the time at which it makes such standards
available to any preferred vendors, so that the sta
ndards are readily



20

Google Commerce,
supra

note 4

21

Supra
,
note 13
.

9


available to customers, equipment manufacturers, application
developers, and other parties interested in using or developing
products for use on a licensee’s networks.


Upon knowledge and belief, Verizon has not published technical stand
ards in regard to mobile
payment applications. Even if Verizon has published technical standards, based upon knowledge
and belief, Verizon does not make these standards available to “parties interested in using or
developing products for use on a licensee
’s networks.” 47 C.F.R. §27.16(c)(3)
.


Verizon may argue that it has published standards in the form of its crafted response
22

to
Google Wallet issues and inquires. This statement by Verizon is not a “technical standard”
within the industry meaning and falls short of
requirement of §27.16(c)(3).


C.


Any action on behalf of Verizon Wireless to block or cause to be blocked an
application from being installed on Verizon branded devices is a violation of 47
C.F.R. §27.16

FCC Regulation 47 C.F.R. §27.16

specifically prohibits a wireless carrier who is subject
to Block C regulations from blocking the installation of an application on a user’s device
operating on that c
arrier’s spectrum. As indicated above, Verizon affirmatively states they “do
not block applications.”
In a response from the Google Wallet team, pursuant to an inquiry
regarding the responsible party for Google Wallet being disabled on Verizon branded de
vices,
the Google Wallet team stated:

Unfortunately, Verizon has chosen not to support Google
Wallet at this

time. Google is in active conversations with
all carriers and hopes to

make Google Wallet available on



22

Verizon

Response
,
supra

note 1
5
.

10


more devices, and across more carriers

soon.
23



While the plain language of the regulation sets a prohibition on blocking applications
from installation by a carrier subject to Block C regulations, implicit in the regulation is the
prohibition on causing an application to be blocked. Verizon
does
not have

direct control over
blocking applications as this is done either at the application level by the creator of the
application or at the
Google Play Store

level

which is done by Google, Inc. The FCC’s decision
of July 31, 2012 stated that Verizon’s
policy of blocking tethering applications was in violation
of C Block regulations. The FCC has recognized that Verizon’s request to Google to block an
application on the Google Play Store from being downloaded by Verizon users is a violation of C
Block re
gulations.

In the matter of Cellco Partnership d/b/a Verizon Wireless
, File No: EB
-
11
-
IH
-
1351 ¶4.

The FCC’s July 31
, 2012

decision affirmative
ly

shows that Verizon’s actions in
requesting Google to block wireless tethering applications from being downloa
ded from the Play
Store violates 47 C.F.R. §27.16

regardless of that fact that Verizon was not the entity to actually
block the applications from being downloaded and installed on users’ devices.

Requesting
Google’s assistance in blocking Google Wallet, even though Verizon has not actually and
directly blocked access to Google Wallet, clearly violates the C Block Rules’ on prohibition
against “limit[ing] or restrict[ing] the ability of… customers

to use the devices and applications
of their choice.


47 C.F.R. §27.16
.



II.

VERIZON HAS FAILED TO CARRY ITS BURDEN WHEN CONFRONTED
WITH ALLEGATIONS OF C BLOCK VIOLATIONS




23

Google Wallet Team Response, 9/28/2012

11



Once a complainant sets forth a
prima facie

case that the C Block licensee has refused to
attach a device or application in violation of the requirements adopted in this section, the licensee
shall have the burden of proof to demonstrate that it has adopted reasonable network standards
and reasonab
ly applied those standards in the complainant’s case. Where the licensee bases its
network restrictions on industry
-
wide consensus standards, such restrictions would be presumed
reasonable
.” 47 C.F.R. §27.16(f)
. After countless complaints against it,
Verizon has

yet to
demonstrate it has adopted and applied reasonable network standards. Verizon instead, chooses
to insult its customers and this Commission by stating
Google Wallet does not simply

access the
operating system and basic hardware of our phones like thousands of other applications. Instead,

Verizon states “
in order to work as architected by Google, Google Wallet needs to be integrated
into a new, secure and proprietary hardware element

in our phones.

24

Verizon fails to cite
one

specific example of how
Google Wallet
would negatively
impact the

wireless experience of
other customers or impact network connectivity.


Finally
, Verizon may try to rely on the last clause of §27.16(f)

in defense that it has
adopted and applied reasonable network standards

that have an industry wide consensus
. Yet
this exculpatory clause remains suspiciously absent from Verizon’s response.

This is because it
is evident t
hat the policy of
disallowing Google Wallet

does
not

have an industry wide
consensus. One only has to look at
Sprint or Virgin Mobile

and see the fact that Google

Wallet

is allowed with no negative impact

on
their

network
s
.








24

Verizon Response,
supra
note 1
5
.

12


CONCLUSION


WHEREFORE,
based on the foregoing it is respectfully requested that this Commission
find Verizon Wireless to have violated the requirements of Block C as codified in the Code
Federal Regulations at §27.16. Further,

due to Verizon’s flagrant and continued violations
of
§27.16 it is respectfully requested the Commission
fine Verizon treble damages and require
Verizon
to unblock

Google Wallet on its devices operating on the upper 700 MHz C Block, in
addition to any other damages the Commission sees fit.



Dated:

October

19
, 2012


New York


Respectfully submitted,




Jason W. Klimek
, Esq.

Complainant


To:

Federal Communications Commission


Consumer Inquires and Complaints Division


Consumer & Governmental Affairs Bureau


445 12
th

Street, SW


Washington, DC 20554


Fax:
1
-
866
-
418
-
0232



Chairman Julius Genachowski


Julius.Genachowski@fcc.gov



Commissioner Michael J. Copps


Michael.Copps@fcc.gov



Commissioner Robert McDowell


Robert.McDowell@fcc.gov



Commissioner Mignon Clyburn


Mignon.Clyburn@fcc.gov




JWK