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11/28/2007
05:52 PM
J. Gerry Purdy
J. Gerry Purdy
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Why Verizon Wireless Opened Its Network

A few years ago, I attended an analyst meeting at Verizon Wireless. One of the analysts asked about the future of adult content in mobile data services. There was a hush over the room -- you could hear a pin drop. Then CEO Dennis Strigl hesitated and said, "That will never happen while I'm CEO. It's our network and we plan to supervise everything that runs on it that we feel is in the best interest of our subscribers." Why did Verizon Wireless change course?

A few years ago, I attended an analyst meeting at Verizon Wireless. One of the analysts asked about the future of adult content in mobile data services. There was a hush over the room -- you could hear a pin drop. Then CEO Dennis Strigl hesitated and said, "That will never happen while I'm CEO. It's our network and we plan to supervise everything that runs on it that we feel is in the best interest of our subscribers." Why did Verizon Wireless change course?Why did Lowell McAdam, current Verizon Wireless CEO, state what appears to be 100% opposite from his counterpart? What caused this change of heart in such a short period of time?

I believe the answer, as is typically the case, is based on money. Verizon Wireless sees the writing on the wall: in 5 to 10 years devices, networks, and services will form an open ecosystem in which devices are manufactured to run on multiple networks and connect to almost any service. Humm, I think I've seen this kind of business model before ... it's called the Internet where PCs and Macs (and millions of other devices) connect to services through networks run by ISPs. You don't have to go buy a PC that will only run on one ISP's network like you do when you get a cell phone today.

The upcoming 700-MHz auction has provisions to specifically create totally open wireless networks. Often called the Google initiative, this FCC mandate will simply create in wireless what already exists through the rest of the Internet: Open networks with devices, networks, and services all open and accessible.

I believe that Lowell and his management team simply sat down and looked out a number of years and saw that wireless networks will become Internet Protocol-based open networks and they had better take the lead rather then be outcast as followers. And, if they're good at creating open networks, they will facilitate as many devices as possible and help get them connected to as many services as possible. They may, in the end, make more money than they do today ... ah, as I said, it all comes down to money. And, good thing that financial incentives are the reason for this move rather than government mandate or policy.

Now, the challenge for Verizon Wireless is to deliver on the promise. Firms such as Apple, Google, Yahoo, and many others will soon see the wireless market behave more like the way the desktop Web behaves over time. This will spur growth and allow many more billions of devices and services to all interact wirelessly. Sure, the screens and systems of mobile are different from the desktop. But, mobile -- with 3 or 4 or 5 billion devices -- may likely be the largest ecosystem for Web services in the world.

We commend Verizon Wireless for its leadership in migrating toward open networks. We look forward to seeing how it actually rolls out in the marketplace in the years to come.

Gerry Purdy is VP and chief analyst of mobile and wireless communications for Frost & Sullivan. He is a guest blogger with Over The Air.

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