Tuesday, November 27, 2007

Verizon Wireless opens its network 

In a press release today - Verizon Wireless To Introduce ‘Any Apps, Any Device’ Option For Customers In 2008 - Verizon promises to open up its network, saying that the New Open Development Initiative Will Accelerate Innovation and Growth.

"BASKING RIDGE, NJ — Verizon Wireless today announced that it will provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications not offered by the company. Verizon Wireless plans to have this new choice available to customers throughout the country by the end of 2008.

In early 2008, the company will publish the technical standards the development community will need to design products to interface with the Verizon Wireless network. Any device that meets the minimum technical standard will be activated on the network. Devices will be tested and approved (aha) in a $20 million state-of-the-art testing lab which received an additional investment this year to gear up for the anticipated new demand. Any application the customer chooses will be allowed on these devices.

This new option goes beyond just a change in the design, delivery, purchase, and provisioning of wireless devices and applications.

“This is a transformation point in the 20-year history of mass market wireless devices – one which we believe will set the table for the next level of innovation and growth,” said Lowell McAdam, Verizon Wireless president and chief executive officer. “Verizon Wireless is not changing our successful retail model, but rather adding an additional retail option for customers looking for a different wireless experience.”

Verizon Wireless will continue to provide a full-service offering, from retail stores where customers can shop, to 24/7 customer service and technical support, to an easy-to-use handset interface and optimized software applications.

While most Verizon Wireless customers prefer the convenience of full service, the company is listening through today’s announcement to a small but growing number of customers who want another choice without full service.

Both full-service and “bring-your-own” customers will have the advantage of using America’s most reliable network.

Following publication of technical standards, Verizon Wireless will host a conference to explain the standards and get input from the development community on how to achieve the company’s goals for network performance while making it easy for them to deliver devices."

The highlighted parts are added by me.
This an interesting move on Verizons part. What could be the reasons. Fred Goldstein sees three things behind it:

1) They have spent the past seven years trying to whittle down the number of competitors to the point where they could maintain strong cartel control. The magic number is probably "three". Powell and Martin failed to deliver -- T-Mobile didn't roll over dead, and upstarts like Metro and Leap kept showing up. T-Mobile is taking a more open position in the US and Sprint's moving that way too. ATT Mobile has the iPhone for a short-term halo effect. So Verizon recognized the way the wind was blowing.

2) Bring-your-own phones cost them $0 in subsidies, a lot less than they pay when you buy the phone from them with the usual contract. So this really helps their bottom line. The unsubsidized price of phones has fallen to a level where a significant number of buyers is willing to pay full fare (again, see iPhone). This makes Verizons network attractive to those very profitable customers.

3) The timing is critical here -- the Short Form deadline for joining the 700 MHz auction is next Monday. The big C block license has this as a rule. Verizon really doesn't want a big new player (Google) to win the license. But in order to bid on it, they have to accept these terms for that one license. It's easier to just accept them for all licenses, rather than confuse matters, especially in light of the other two big reasons. So Verizon is likely to bid on the C block, in order to bank it and keep competitors from using it to really disrupt things.


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