Verizon Opens Its Network

On Tuesday, Verizon Wireless, the nation’s second largest wireless carrier, announced that by the end of 2008 it would open its network to “any apps, any device.” This means customers will be able to use any phone, device, software, or application on Verizon’s network. (So long as the device meets the minimum technical standard.) The company’s reason for making this move, along with details regarding pricing and quality of service guarantees, are still unknown.

The timing of Verizon’s move is hard to ignore. It comes with the auction of the coveted 700MHz spectrum just around the corner, and in the aftermath of Google stating its intent to bid in that auction as well as announcing that it will support the development of an open source phone platform.

There are more or less two views on Verizon’s stance. Some suggest that the company has seen the light, the walled garden approach it has been supporting, wherein only selected devices and applications are allowed on its network, is a model of the past. While others see that the company is engaging in what amounts to little more than a public relations campaign. Reality more likely sits in the middle: Verizon might be using a bit of PR to take itself a long way.

Whatever the details and rationale turn out to be, the move represents a drastic about-face for Verizon, which went so far as to sue the FCC over a decision to require winners of the spectrum auction to open at least pieces of their network. Though they dropped the suit, Verizon has continued to speak out against the requirement. In doing so they have been in direct opposition to Google which lobbied to get the requirements adopted. The relationship between the two companies has not gone unnoticed.

Reuters reports that Verizon is, “caving in to demands by Google Inc. and other lobbyists for more open access.” This view would fall on the side of those believing that Verizon has seen their error and the weakness of their earlier approach. However, others see it differently. Verizon could be taking this stance as a way of calling Google’s bluff. By opening its network, something which Google strongly desires, Verizon is removing the need for Google to purchase the spectrum itself. According to Reuters, Banc of America analyst David Barden said in a note to clients, “In this instance, we see Google’s wide partnerships, and now the ability to put a future Google-powered device on the Verizon network, as diluting any economic incentive for Google to be a substantial spectrum auction competitor.” Verizon, therefore, becomes open more on its own terms, wins favor with the FCC and consumers, and possibly takes Google out of the equation. Of course this still amounts to Verizon acknowledging the threat of Google.

Analysts have also suggested that Verizon is responding to Apple which will be allowing developers to create applications for the iPhone beginning in January. A blog featured on the New York Times‘ website notes that Verizon’s “move helps attract devices that could compete against the Apple iPhone.” Interestingly enough, a popular Google phone competing with the iPhone but running on Verizon’s open network might be just what the company is looking for.

Beyond the immediate questions of why Verizon made its decision is the question of the impact it will have on other wireless network operators. On this issue the camps are also divided.

InformationWeek quotes wireless analyst Jack Gold, principal with J. Gold Associates: “Ultimately, the other carriers will have to open up as well. Too many market forces are aligned and the days of the totally walled garden are coming to an end.” Not all share that view. The Wall Street Journal reports that, “There was little sign Verizon’s rivals were planning to follow suit. Verizon’s biggest competitor, AT&T, said it wasn’t contemplating a similar move.” The Journal also pointed out that ” Sprint and T-Mobile, touted their openness to new features and phones but stopped short of saying they would duplicate Verizon’s move.”

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