Verizon To Open Its Wireless Network
Wednesday, November 28, 2007
Verizon Wireless said yesterday that it would allow customers to use any compatible device or software on its network, responding to growing pressure on the wireless industry to give people more control over how they use their phones.
Consumer groups, federal regulators and software developers have called on wireless carriers to open their networks to more devices and applications, a departure from the current business model in which carriers largely decide which phones and features will be available to customers.
Yesterday's announcement is an about-face for the nation's second-largest wireless carrier, which until now has vocally resisted such change. But by the end of next year, consumers will be able to connect to its network using any device, as long as it is compatible with its technology. Apple's iPhone, however, will not work on the network because it runs on a different standard. Third-party software developers will also be able to sell their applications directly to consumers without getting permission from the carrier -- a move Verizon Wireless says will help it keep up with consumer demand for new features.
"We're motivated to make this announcement for two reasons: to give customers a second option to connect to Verizon's network and for the competitive advantage we believe it gives us," chief executive Lowell McAdam said in a conference call.
Verizon Wireless's new approach acknowledges that the wireless industry is moving to a model similar to that of the Internet, where users can access and download whatever they choose, analysts said. The Federal Communications Commission adopted rules that will require the winning bidder on a large piece of wireless airwaves to be auctioned off in January to build a network that allows use of any device or application. It also follows Google's announcement this month that it is partnering with developers, handset makers and carriers, including T-Mobile and Sprint Nextel, to offer a more open system.
"This gets Verizon [Wireless] out in front of potential regulation and competitive pressures so they can set their own terms," said Avi Greengart, a wireless analyst for Current Analysis, a market-research firm based in Sterling. "This positions the company well, regardless of who wins the auction."
Verizon Wireless said it would publish technical standards by early next year to help developers design software for the network. The company will charge a fee to test outside devices in its lab, which will recieve an additional $20 million in invesment, to make sure they are compatible with its technology. But the company will not accept phones sold by T-Mobile and AT&T, including the iPhone, because they use a different technical standard.
Charles Golvin, an analyst at Forrester Research, said Verizon Wireless's plan represents a compromise that satisfies the FCC's auction requirements without giving up as much control as Google's new system would require.
"They want to be open," he said, "but not that open."
The company said it also would continue selling phones with pre-determined features. The "bring-your-own" phone service is meant to cater to customers who want to switch to a new service provider without having to buy a new phone, McAdam said.
Verizon Wireless's new policy also opens the network to a host of other devices, such as video game consoles, digital cameras and home appliances equipped with special chips, a system similar to the WiMax network proposed by Sprint and the WiFi-enabled service touted by T-Mobile.
"Verizon [Wireless] is facing a serious threat by other carriers that have been making noise about networks that are more open," said Shahid Khan, a partner at IBB Consulting, a media and telecom consulting firm. "It's small step for Verizon but a pretty big step for the wireless industry."
FCC Chairman Kevin J. Martin and Rep. Edward J. Markey, chairman of the House subcommittee in charge of telecommunications issues, praised the announcement as a victory for consumers. But some consumer groups, including Public Knowledge and Media Access Project, say it may be too limited to bring real change. Through its testing process, Verizon will still ultimately decide which phones and applications can work on its network, they say, and customers could end up paying more to use outside products. "When more details are out, we'll discover what all the 'gotchas' are," said Amol Sarva, chief executive of Txtbl, a start-up that hopes to provide mobile e-mail service to cellphone users.
While Verizon's move could create an outlet for tech-savvy people with enough know-how to pick their own phones and download their own products, typical wireless customers may not care to opt into the new plan.
"It's not like you're going to walk into a Verizon store and see a bazaar of new products," Sarva said. "But it's a good sign that the glacier of mobile control is starting to melt."