Very surprising and welcome announcement from Verizon Wireless yesterday:
“Verizon Wireless today announced that it will provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications not offered by the company. Verizon Wireless plans to have this new choice available to customers throughout the country by the end of 2008…
“ ‘This is a transformation point in the 20-year history of mass market wireless devices – one which we believe will set the table for the next level of innovation and growth,’ said Lowell McAdam, Verizon Wireless president and chief executive officer.”
Lowell’s right. And Verizon Wireless is right to open up. There’s plenty of room to be cynical about this; after all, Verizon Wireless is trying to STOP the FCC from putting an openness requirement on the 700Mhz spectrum to be auctioned. Very well-informed Om Malik posts: “Do we really believe that Verizon is going to be happy being Pipes-R-Us?” He point out many ways this there may be less to this announcement than meets the eye.
As an optimist, I think Verizon’s acting in enlightened self-interest which is just great. Here are some of the factors which may have influenced their decision:
- They DO have the best network coverage in the US – especially for data coverage. Best way to capitalize on that is to have developers build appliances and apps which run on their service.
- Because they are CDMA (a protocol NOT used in most of the rest of the world), they run the risk that no new stuff will be developed for their network, especially if it remains a walled garden. The US is a big market but the rest of the world is even bigger.
- The next time somebody develops an iPhone-like breakthrough – and somebody will – they want it run on their network, not be locked to AT&T.
- Amazon’s Kindle, which could but doesn’t run on Verizon’s network, is a clear example of how usage may be sold bundled with a device. They’re not going to be a better bookstore than Amazon. They need these innovations to be on their network.
- They know that the next year or so will bring huge device innovation including (I think) wireless connectivity in almost every GPS and associated services. They know that their network and their data service – EVDO – which can do handoffs at 80mph is well positioned to benefit greatly from this
- As voice minutes turn to VoIP minutes and WiFi minutes, they’re better off keeping some of that traffic onnet even as simple bits rather than losing it all. Note that, to their credit, they DID change their terms of service to allow VoIP over their data service.
- The FCC has said that the huge chunks of 700Mhz spectrum going up for auction have to be used “openly” by the winner. It would be hard for Verizon to operate a network which is half open and half closed. Maybe they DO want that spectrum, don’t think they can change the rules, and want to be ready for it.
If you’re torn between my optimism and Om’s pessimism, Galeal Zino suggests a test:
“Let's see which comes first:
“1. Articles about the millions of dollars of deep packet inspection and payload-based billing systems that Verizon is going to incorporate in order to "manage" their soon to be "open" network.
“2. Articles about third-party mobile devices that interop with Verizon's network, using CDMA for voice when necessary, and using unrestricted IP to place VoIP calls using third-party solutions when more appropriate.”