I wrote about innovation on Android yesterday and today there is already more reason to write about innovation in mobile.  This time the news is decidedly mixed.  On the plus side, Amazon has opened their Android App Store (despite Apple suing them over the use of the words App Store).  On the minus side, AT&T customers can’t (yet) participate because their Android phones don’t let them install apps outside of Google’s Android Marketplace.  AT&T has created a website (no joke) where people can sign up to be notified when this restriction has been lifted (why not just push an over the air update to the phones?).

This raises the questions why AT&T imposed these restrictions in the first place.  One possibility – and a nice little conspiracy theory – is that they did it in an attempt to keep Apple appeased and maintain iPhone exclusivity for longer.  It is in that context that the further consolidation among US wireless carriers is so problematic.  If AT&T’s purchase of T-Mobile is allowed to go through, the US will be reduced to three carriers with some significant questions surrounding the viability of Sprint as the third (hence the 2.5 in the title).  It will tilt power back to carriers even more than before and will make independent mobile innovation more difficult.

I had been a T-Mobile customer from before there was a T-Mobile – I got my current phone number and contract when it was still Omnipoint.  T-Mobile had many detractors for their initially rather poor network.  But they always had terrific customer service and more importantly were rolling out innovative devices and services.  I was a particular fan of UMA, which allowed me to roam onto my WiFi network at home and maintain my regular phone number (including SMS access).  I never understood why T-Mobile wasn’t pushing UMA as a differentiator and recently started withdrawing it altogether.  Now I understand: they were gearing up for T-Mobile’s sale and prospective buyers didn’t want this service which untethers phones from the network.

So what should be done about it?  The answer is pretty simple in theory (I say “in theory” because I am afraid we lack any and all political resolve to make this happen):

1. Require all handsets to be either unlocked by default or be unlockable by the enduser in a couple of easy steps.  An unlocked handset should be fully capable of installing new apps over the air without being tied to a particular app store.  And yes, that should include all iPhones and iPads.
   
   

2. Require wireless net neutrality so that carriers can’t make their own apps faster or cripple non-carrier-approved apps at the network layer.  That includes making all traffic count equally towards bandwidth caps in wireless data plans (so that carriers can’t favor someone or themselves by excluding some app traffic from counting towards the cap).

Why would this work?  Because with these two requirements in place, AT&T and Verizon would have to compete on actually having a better network and better data plans.  That would benefit all of us and would allow for independent innovation at the handset and applications levels.