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1938 Media’s distribution deal with Verizon, announced just a week ago, is history.

Yesterday a group of “civil rights activists” protested the deal and threatened to boycott Verizon. The reason? A 2007 video that Feldman created called “TechNigga” that the groups say is racist.

The video was not included on Verizon, and television reports that Verizon financed the video are incorrect. But Feldman confirmed to me that all 1938 Media videos were removed by Verizon yesterday and that they terminated the relationship today.

There is almost certainly a back story to this that may unwind over the coming days. Feldman has been in the spotlight recently for a set of puppet videos that originally mocked new media consultant Shel Israel (and later others including me, Loic LeMeur and Dave Winer). A lot of people were angry with Feldman over the parodies (and I drew criticism for covering the story) - and it wouldn’t surprise me if someone helped organize the early stages of this protest.

So what’s your opinion? Is the video racist? Should Verizon have stood by Feldman? Tell us in the comments.

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During the FCC’s recent auctions of the 700MHz wireless spectrum, Google risked owing the government slightly more than $4.6 billion simply to ensure that the open access rules it fought for would be imposed on whoever won. Verizon won, and now it must allow allow any device and any application to run on the future wireless broadband network it will build on top of that spectrum. Or does it?

Google is so worried that Verizon wlll try to find a loophole that it filed a petition with the FCC on Friday asking it to preemptively enforce the rules on Verizon. Excerpt (and full text embedded below):

The Commission’s open access rule is clear that C Block licensees “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice….” The rule also is explicit that C Block licensees may not “disable features on handsets it provides to customers.” The rule thus plainly proscribes a C Block licensee from selling handsets to customers that hinder a customer’s ability to use applications of their choice, and applies to all customers of a C Block licensee.

Notwithstanding the clarity of the rule, Verizon has taken the public position that it may exclude its handsets from the open access condition. Verizon believes it may force customers who want to access the open platform using a device not purchased from Verizon to go through “Door No. 1,” while allowing customers who obtain their device from Verizon access through “Door No. 2.”

Is Google just paranoid? Not exactly. There is a huge, gaping loophole in the rules. Namely, Verizon can block any device or application it deems to have a negative impact on the performance of its network.

While Verizon hasn’t explicitly said one way or the other how it will abide by the open access rules since winning the auction, it’s actions in the past do not inspire confidence. Before the auction, it tried to sue to stop the rules.

And when it announced that it would “open up” its existing network last fall, what it really meant was that it would create a two-tier system. Verizon phones and apps will continue to get preferential treatment, and everyone else’s will be relegated to a separate part of the network. The justification was—guess what?—to make sure that pesky unapproved apps and devices don’t mess up the network.

It should not surprise anybody if Verizon tries to use the same logic to de-fang the open access rules whenever it decides to build its 700 MHz network. Google can petition all it wants. But it might not do any good.

(Photo by Jurek Durczak).

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Update: It looks like some of us jumped the gun on calling this, including the New York Times. It turns out that there are still enough bidding units left in the C-Block for one or two deep-pocketed companies to still make a bid. So it is not necessarily over yet. Because of the secrecy surrounding the auctions—companies are not allowed to talk about it until it is over—we can only guess what is happening. The post below is entirely speculative.

The most closely-watched part of the wireless auction for the 700 MHz spectrum that started earlier this week appears to be over. The auction for the coveted C-block of spectrum, which is a nationwide license and is subject to special open-device/application rules, might have been won by a $4.7 billion bid—just a smidgen above the $4.6 billion minimum required by the FCC. Until the entire auction is over for the other blocks of spectrum, the FCC won’t disclose who the winner is. But the consensus is that the winner is either Google or Verizon. Update: We’ll see in the following days whether any other bids emerge. This could just be a pause in the bidding.

Bits blogger Saul Hansell at the NYT has been watching the spectrum auction like a hawk. His theory, after looking at the pattern of bidding for the C-block, is that either there were two bidders playing a drawn-out game of chicken or only one bidder slowly raising its price, almost reluctantly. That one bidder could have been Google, which showed its hand earlier by publicly stating it would bid the $4.6 billion minimum to support its suggested open access rules (and stuck by that pledge even though only two of its four suggested rules were adopted ).

Verizon could have sat the auction out, deciding not to bid and instead watch Google squirm as it realized it was the only one in the game. There is a lot of skepticism about how serious Google really is in its desire to actually win the auctions as opposed to influence their outcome and the rules of the game. When it became apparent that there was only one other bidder in the early rounds of the auction, Verizon could have calculated that Google would bid just shy of the $4.6 billion if it realized it was on its own. If that had happened, the FCC would have almost certainly re-auctioned the C-block at a later date without any of those pesky open-device and open-application rules that Verizon really doesn’t like.

But somebody did make the minimum bid, and those rules will be in effect. If Google indeed was the lone bider, it might have just swallowed hard and decided to go ahead and buy the spectrum. Maybe it was worth more to Verizon to see Google pay a $4.7 billion penalty for stepping on its turf than to have the spectrum for itself. Or maybe it wanted the spectrum all along, and it waited until the last minute to put in the minimum bid, betting that Google wouldn’t respond. Either way, Verizon might feel like it snookered Google on this one.

But we’ll all be better off for it because whoever builds the next wireless network on this spectrum won’t be able to discriminate between devices or applications. And if it turns out that Google did in fact win, there would be nothing stopping it from pursuing its two other goals of opening the network up to other service providers through wholesale leasing and other networks (both wireless and wireline) as well. That would help make the wireless world less a collection of silos and more Internet-like.

So who snookered who?

(Photo by Steve Jurvetson)

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