Are Subsidized Netbooks Bad News for Open Networks?

Written by admin on April 13th, 2011

AT&T’s plan to offer subsidized netbooks for (and more, depending on which model the subscriber opts for) raises interesting questions. The most basic is what means to the open access debate. 

As the name implies, open access is the ability of customers to link any device that passes technical muster to a carrier’s network. Verizon Wireless and AT&T have paid homage to the concept and, indeed, some devices – mostly in the machine-to-machine sector – employ it. 

This week, as reported by PC Magazine and others, AT&T said that customers opting for two-year Wi-Fi and a 3G plans will be able to buy an Acer Aspire One, a Dell Inspiron, LG Xenia or Mini 9 or Mini 12 for between .99 and 9.99, though the precise price of each was not revealed.

Of course, the fact that carriers are moving the subsidization concept from phones to netbooks doesn’t mean that open access is dead. However, it shows that the carriers still like the proprietary concept, and probably are willing to spend a lot of money in order to marginalize approaches that make it easier for customers to come and go. PC Magazine puts it like this:

Subsidizing phones has been the norm for a number of years, with mobile vendors eating the cost of the phone hardware in exchange for the ability to charge users for voice and data plans, and to upsell them on services. But subsidizing netbooks is relatively new, and it remains to be seen whether consumers will look upon a netbook as another device that they’re willing to lock themselves into a contract to own.

Verizon Wireless also is onboard with selling subsidized netbooks, though details are sketchy. InformationWeek reports that the carrier confirmed a previous Reuters report that it was going to offer the devices. The piece says that no other information was offered. It is fleshed out with speculation that the carrier is considering the Dell and HP products, including the latter’s HM Mini 1000. 

Smartphones and netbooks may be drawing closer, as well. Datamation’s Mike Elgan indulges in well grounded speculation. He says that netbooks are great sellers, but that they wear out their welcomes rather quickly. He describes why, and says that the challenges would be met by eschewing PC operating systems in favor of the OSes used to power smartphones. He describes the rationale for this, and it seems convincing. Again, using a smartphone OS in a netbook isn’t a smoking gun pointing to the death of the open network concept. It certainly seems like a step in the other direction, however. Says Elgan:

The cell phone model – giving away or heavily subsidizing cell phones in exchange for a two-year commitment on a wireless contract – will work great for netbooks. AT&T and other carriers have announced special divisions to look at such deals.

The bottom line is that open networks are not in carriers’ best interests because they loosen the reins they hold on subscribers. Carrier’s game plan will be to cajole the FCC — something that got a lot harder for the industry due to the election — and use their significant public relations machines. They also will offer customers a terrific deal on the hot device de jure in exchange for fealty to their networks.

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