In a surprising about-face, Verizon Wireless announced that it would open its network to outside devices and applications...
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by late 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," a Verizon statement read. "Any device that meets the minimum technical standard will be activated on the network."
Verizon has promised "competitive pricing" but declined to release specifics, as the plan is still being finalized.
Jack Gold, of J.Gold Associates, said Verizon's move could prove disruptive to the United States' cellular industry.
"I also think this is going to fundamentally change the environment because the other carriers are going to have to do the same thing," Gold said. That is, barring an unlikely Verizon failure.
"The only way this can get screwed up is if Verizon puts so many restrictions on it that people can't get on its network," he said. Key to this point would be the "minimum technical standards" that Verizon sets. Gold said it is impossible to know what this standard is until the provider releases more information and actually begins to test potential products.
"Will they use that as just a means of regulating out the bad devices, or will they use that to regulate out what they decide they don't want on their network?" he asked. If it is the former, Gold sees the cellular service being commoditized, a situation from which consumers might widely benefit.
"That means that [providers] will actually have to compete on good service for their customers," he said, a benchmark on which carriers rarely score well.
Francis Sideco, senior analyst at iSuppli, said a variety of factors probably drove Verizon executives to the decision to open a network they had long fought to keep tightly controlled.
For one, Verizon's attempts to have the open-access provision removed from the upcoming 700 MHz spectrum auction failed, and it dropped its suit against the FCC.
Faced with either sitting out on what Sideco described as an auction for "beachfront" spectrum or saving face and garnering some positive press, Verizon may also be pre-empting further federal regulation by showing it is willing to be open on its own.
Verizon executives may also have seen the writing on the wall: Consumers are increasingly demanding more fluid, personal experiences on a broader and broader range of devices that providers could not hope to match. By leading the movement toward a more open ecosystem, Verizon could in one fell swoop strike a blow against AT&T's very closed iPhone and prepare to take on, and allow, Google's Android-enabled phones, which Sprint had signed on to support.
"This is just conjecture, but maybe Verizon is looking at these factors and saying … we're trying to hold back a tidal wave with a piece of paper here," Sideco said.
Once it is decided that open ecosystems will prevail -- in tandem with current closed offerings Verizon has emphasized -- two concerns remain: protecting the network and monetizing the network.
The first has largely been eased by Verizon's testing labs, which Sideco said are some of the best in their class. With continued investments in them, many critical problems could be headed off.
The second concern is trickier, he believes. The old model of a la carte services sold piecemeal no longer necessarily applies to an open-access network.
However, he said, proactive engagement, such as Sprint's arrangement with the new Kindle e-book service, could help create new partnerships and revenue streams and assure providers a slice of the pie as new markets open up.
Both Gold and Sideco noted that despite the announcement's importance Stateside, similar "open access" has been a fact of life -- without too many problems -- for years outside North America, with users simply popping new SIM cards in and out to change providers or cross national borders.