Verizon Wireless to
Open Access to Network
November 27, 2007 1:19 p.m.
In a major break with industry practice, Verizon
Wireless said it will allow consumers to use any compatible cellphone
on its network and allow open access to the Web and third-party
It's is a reversal for the No. 2 U.S. carrier,
is known to be particularly protective of its network, and an
acknowledgment of the direction of the wireless industry. Google
Inc. is spearheading a similar move with an open-standards software
platform -- dubbed Android -- and already counts Sprint Nextel
Corp. and Deutsche Telekom AG's T-Mobile USA as allies.
Devices would still have to be compatible with
Verizon's technology, and for now, that excludes Apple
Inc.'s popular iPhone. Verizon's service runs under a cellular standard
called CDMA, which differs from much of the world and that of the
nation's largest carrier, AT&T Inc. Sprint is the other
major wireless carrier that uses CDMA, and Verizon Wireless CEO Lowell
McAdam said Sprint's phones could work on the Verizon network if they
pass Verizon's testing procedure.
Verizon Wireless, AT&T and other incumbents
sell phones and service as a package, limiting the types of devices
customers can use. Carriers traditionally have decided what
applications most consumers see on their cellphones, setting rules and
negotiating fees for software developers to gain access.
Along with Google's foray into the wireless
and Apple's recent decision to allow third parties to develop software
for its iPhone, regulators have been pushing for increased openness.
Rules approved by the Federal Communications Commission for its coming
auction of radio spectrum set aside a portion of those airwaves for
wireless networks that allow customers to use any mobile device, not
just those approved by the network owner.
Verizon Wireless, jointly owned by Verizon
Communications Inc. and Vodafone Group
PLC, said it will publish early next year technical standards for the
development community, which are necessary for designing software,
applications and devices that can run on its network. The carrier said
that any device that meets the minimum technical standards will be
activated on the network. It hopes to have new devices and applications
available to customers by the end of next year.
Verizon Wireless plans to talk to different
manufacturers and the carrier didn't discuss potential pricing plans
for the new devices. On the software side, Mr. McAdam said the new
model will be "additive" to its current service, and that it will cater
to subscribers looking for complete control of their device. "We see an
opportunity to tap into a huge development community," Mr. McAdam said.
John Stratton, chief marketing officer for
Verizon, said he envisions devices
beyond the standard cellphone being created for the network. This
gaming devices or appliances. "It's subject to imagination," he told
reporters in a conference call. "It encourages anyone who wants to get
in the game to get in the game."
Mark Siegel, a spokesman for AT&T said, "In
of openness, we think we have defined the term in ways that really
matter to people… We think we're the most open company in the
industry." Mr. Siegel added that AT&T is open to Android if the
operating system pans out, but that there remains many questions over
how it will work.
Verizon Wireless' announcement comes just two
before the FCC auctions off a large chunk of lucrative radio spectrum,
which wireless networks are based on.
Whatever company acquires a swath of that
will have to allow any phone and any software to operate on the
wireless network it builds. Verizon Wireless had strongly opposed the
rules requiring open access, as it had become known. But it had been
one of the companies expected to ultimately bid for that spectrum,
which would allow it to substantially bolster its national wireless
If it decides to bid for the 22 megahertz chunk
spectrum, Verizon Wireless would almost certainly be competing with
Google, which has already announced it will bid in the auction.
Harold Feld, of the public interest group Media
Project, said it was likely Google's earlier announcement that forced
Verizon's hand. "I think the announcement by Google that it plans to
bid for the spectrum forced Verizon to make a decision," said Mr. Feld.
"It's a large block of spectrum that Verizon needs."
Mr. Feld said the decision "almost certainly"
that Verizon Wireless will bid for the spectrum. It wasn't required by
the FCC to extend the open access conditions to all its customers, but
the fact that it now has, said Feld, means it will "aggressively bid"
for the spectrum.
In a statement, FCC Chairman Kevin Martin
Verizon's announcement. "I continue to believe that more openness - at
the network, service, and application level - helps foster innovation
and enhances consumers' freedom and choice in purchasing wireless
service," said Mr. Martin.
Microsoft Corp., in a separate statement,
it supports the move. "Microsoft is very excited to see Verizon
Wireless make such a bold move to satisfy the demands of wireless
customers," said Peter Knook, head of the company's mobile
communications business. Microsoft's Windows Mobile is the most popular
mobile operating system for U.S. smartphones.
Verizon Wireless tested the waters a bit with a
phone earlier this year that could run on both network standards -- a Research
in Motion Ltd. Blackberry that had both a CDMA chip and one that
runs on the GSM network, which is more widely used throughout the world.
"I think it's a reaction to Google," Tole Hart,
analyst at Gartner Inc., said of Verizon's latest move. "I think it'll
help them. It gives customers more options."
Mr. Hart said the move should benefit Verizon
because its customers will be more interested in data usage and mobile
programs. The carriers have increasingly looked at data revenue as a
growth opportunity as voice revenue matures. However, the industry is a
long way from having customers roaming freely between networks, and
that long-term contracts will still be the standard, he added.
Verizon, which boasts the highest customer
rate and the best financial metrics in the industry, said it will
continue to provide its full-service offering -- a "walled garden"
approach where the carrier provides music, news and other mobile
programs to its user.
Write to Roger Cheng at roger.cheng@xxxxxxxxxxxx5