Verizon Opens Its Network

Any device, any application sounds impressive, but skeptics see a play for new spectrum.
Executing a neat reverse-field, Verizon declared last week that it will throw open its cellular network to third-party devices, applications, and services. Once considered to be one of the strictest gatekeepers of its network, the No. 2 U.S. wireless carrier is now setting an example for other carriers to open their systems to outside hardware and software.

Industry observers remain skeptical, to put it mildly. Verizon will never let itself become just a dumb-pipes provider for other companies' devices and services, they maintain, and anyone who says otherwise is either a fool or a liar. Tactically, Verizon's move could be another maneuver on the chess board that is the FCC auction of valuable 700-MHz spectrum for wireless broadband networks, now scheduled for January. On Dec. 3, companies planning to bid must file a "short form" license application for that auction, which is seen as the last, best chance for fully open and accessible wireless broadband networks in the United States.

Verizon CEO Ivan Seidenberg: You build it, we'll connect it. -- Photo by Zuma Press

Verizon CEO Ivan Seidenberg: You build it, we'll connect it

Photo by Zuma Press
"This could all be bogus posturing before the filing deadline next week," says Amol Sarva, a Silicon Valley entrepreneur and founding member of the Wireless Founders Coalition for Innovation, which has lobbied the FCC to ensure that networks built on the 700-MHz bands are open to a range of devices and services. "Verizon is trying its best to discourage the allies of Google and Frontline [Wireless] from competing for the spectrum."

Former FCC chairman Reed Hundt, now a Frontline principal, sees Verizon's new open stance as "an attempt to discourage bidding on the C-block," the largest and most highly prized slice of 700-MHz spectrum up for sale.

Verizon also has an incentive to make sure that developers and handset manufacturers produce equipment to run on its network, including the swelling wave of nonphone wireless devices such as Internet tablets, ultramobile PCs, and gaming devices. Many of these third-party devices come with 3G network capability based on UMTS technology, rather than the EV-DO system that Verizon uses.

With Verizon's technical specs in hand, not only can manufacturers such as Sony Ericsson, Samsung, and LG Electronics add the necessary capabilities to allow their phones to work on Verizon's CDMA network, but niche vendors also can produce a much smaller number of devices aimed at early adopters.

Regardless of the ulterior motives, the net effect is one less brick in the wall of carrier-dominated markets in the United States. Business travelers could get more options for wireless access via their laptops, manufacturers will be able to do more with portable consumer electronic devices, while government agencies and big utilities will be able to connect any device to the network for various tasks such as meter reading and public safety. Most important, other carriers inevitably will follow suit.

"No one can afford to be perceived as the last purveyor of closed-network topology and practice in a market that's increasingly moving the other way," says Carmi Levy, senior VP for strategic consulting at AR Communications. "It's akin to still supporting communism as the Berlin Wall comes tumbling down."

One of the biggest winners is Google, which in early November announced a mobile-phone platform called Android. Verizon's commitment to open networks almost certainly means the search company won't feel compelled to spend billions in the 700-MHz auction.

"We think this is a great step forward," said Google CEO Eric Schmidt in a statement. "As the Internet has demonstrated, open models create better services for consumers and stronger businesses for providers. We are excited to work with Verizon and other industry leaders to achieve this vision."