IP Democracy: Holy Cow! Verizon Wireless Opens Its Network

Verizon Wireless leapfrogged ahead of the whole 700 MHz open access debate and changed forever the mobile communications industry in the U.S. by announcing this morning that it will allow customers to use any application and any device on its network. Starting early next year, Verizon Wireless will publish the technical standards that developers need to design products that work on Verizon's network. Verizon hopes to offer the open network to all consumers by year-end 2008.

"We believe this move sets the table for the next big leap in wireless growth and innovation," CEO Lowell McAdam said during a press call following the announcement. "We expect new network capabilities with higher data speed and improved throughouput performance to usher in a new era of broadband wireless services and applications."

Calling this new service a "network-only" option, Verizon will not abandon its existing retail business model that requires consumers to lock into specific handsets and services. This open service is simply another choice for consumers. "The accelerating pace of innovation and the demanding needs of customers require multiple business models," McAdam said. "We're going to continue with a very successful retail model. This [new option] is additive."

Verizon maintains that the controversy over open access requirements in the 700 MHz spectrum auction had little to do with this move. "What goes on on Capitol Hill and with the 700 MHz rules doesn't really play into this," McAdam said.

iPhone owners, however, won't be able to jettison their AT&T subscriptions to jump on board Verizon's far superior network, but not because Verizon Wireless will isn't all for it. Apple's deal with AT&T is exclusive and the phones can't easily be unlocked so that customers can switch to Verizon. Moreover, the iPhone right now is designed for GSM technology and Verizon's network is CDMA-based.

Barring these limitations, however, Verizon would be glad to have iPhones on its network, execs said during the press call. In fact, so long as any application or device passes technical compatibility muster at a lab that Verizon will set up, anything device or application is fair game.

"If someone has the technical capability of building a device in their basement on a bread board...we'll test it and activate it on the network," Verizon Wireless CMO John Stratton said during the press call. This low barrier to launch could foster the development of far more niche services and technologies than are available today.

"With only the testing that needs to be done in Dick's [Dick Lynch, CTO] labs, it doesn’t matter if it [the new technology] sells 500 devices or 5,000 devices," Stratton said.

This radical step by Verizon will no doubt shake up the carrier's rivals and it's only a matter of time before they also follow suit. AT&T, T-Mobile and Sprint will be hard-pressed to cling tightly to their own closed business models in the face of Verizon's innovations.

The advent of an open network option will also likely, as McAdam predicts, accelerate the introduction of a host of new mobile options, including mobile video, particularly as Verizon continues to upgrade its network.

It's going to take some time to digest the ramifications of this development, but the far-reaching impact of Verizon's decision cannot be understated. At long last, the sluggish U.S. mobile carrier system has been jolted into the 21st century and maybe now Americans can start enjoying the wide range of wireless services that many other developed nations have known for years.

Update: No wonder Verizon dropped its legal challenge to the open access provisions in the 700 MHz option. Some folks speculated at the time that Verizon didn't have a strong legal case, which my sources told me wasn't true at all. In fact, Verizon probably came to the realization that open networks are inevitable and just gave up the fight.

Posted by Cynthia Brumfield on November 27, 2007 10:12 AM to IP Democracy