Verizon To Open Nework to Outside Devices

by Mark Walsh, Nov 28, 2007, 7:00 AM

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Adapting to a shifting mobile landscape, Verizon Wireless said Tuesday that it will allow customers to connect to its network with any device or application that meets minimal technical standards starting next year.

The move comes only weeks after Google announced an alliance with a group of wireless carriers and handset manufacturers, including Sprint and T-Mobile, to create a new mobile platform that will be open to third-party developers.

During a conference call, Verizon Wireless CEO and President Lowell McAdam said the decision to open up its network was driven by a rapidly expanding universe of options for mobile consumers. "We're constantly monitoring market forces, and have seen the accelerated pace of innovation and expanding degree of customer demand for multiple business models," McAdam says.

McAdam and other Verizon executives emphasized that its "Any Apps, Any Device" initiative would not change its existing "walled garden" business model. "We believe most customers still want the full-service model that exists today," McAdam says. "This will complement, not replace, our successful full-service model."

But he acknowledged that subscribers increasingly want more choices as cell phones turn into mini-multimedia players. "What this separate and distinct model does is really tap into those customers looking for complete control of their device," McAdam says.

Through its V Cast data service, Verizon already offers subscribers a variety of content from music to video clips to mobile TV at an additional charge. But the major carriers' own media offerings compete with a growing selection of "off deck" applications provided by outside companies and developers.

The largest U.S. wireless carrier plans to unveil open access nationwide by the end of 2008. Early next year, it will publish technical standards that allow outside developers to create mobile products that will run on Verizon's CDMA-based network. Any device meeting the criteria will be approved for use, and will allow consumers to run any application they choose.

Customers will be able to activate devices either online or by calling an 800 number set up by Verizon. Otherwise, responsibility for troubleshooting problems with devices or applications will rest with device makers themselves.

Verizon intends to host a conference early next year to explain standards and receive input from the development community on how best to meet consumer needs. In seeking to attract developers to create new devices and applications for its network, Verizon will be competing with Google's planned Android platform.

Google has already begun offering cash prizes to developers who come up with applications that are included its own mobile platform. The first Android-powered phone is scheduled to come out in the latter half of 2008 from T-Mobile.

During the conference call, John Stratton, chief marketing officer for Verizon Communications, said the company's move toward open access has no bearing on whether it will join Google's Open Handset Alliance of more than 30 carriers and device makers. But he added that any devices or applications created for the Android platform would not necessarily be precluded from using them on Verizon's network.

Some mobile analysts speculated yesterday that Verizon's initiative was prompted--at least in part--by the open access rules built into the upcoming auction of 700MHz wireless spectrum. The rules are intended to increase consumer choice on devices and applications used on the new spectrum. Google and various activist groups pushed for adoption of open access rules by the Federal Communications Commission.

But McAdam denies that regulatory pressure had any influence over its decision to open up its network. "What goes on Capitol Hill or what's being discussed about potential 700MHz rules really doesn't play into this," he says. "It's really focused on meeting customers' needs."

Analysts said the move could position Verizon well to expand its offerings while maintaining its traditional closed network. "Verizon Wireless' upside is that it will sell services to users that it wouldn't have had access to in its more traditional development and distribution model," said William Ho, a wireless analyst for technology research firm Current Analysis.

But they say questions still remain about how Verizon will monetize its open access business model and what impact it will have on quality of network service. "More devices mean more network usage, which means degradation of quality," wrote Om Malik, founder of the popular GigaOm technology blog. "Will Verizon keep investing ginormous amounts of money to keep the moniker, "America's most reliable network"?

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