Financial Resource

Verizon Wireless 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 plans to have this new option rolled out nationwide by the end of 2008. Any device that meets the minimum technical standard will be activated on the network.

This is a huge shift for the wireless industry known for protecting their networks and the apps and devices that work on them. Just a few weeks ago sources reported Verizon’s opposition to Google’s push for open access on the nascent 700 MHz spectrum re-allocation. Verizon even sued (and withdrew) the FCC who is imposing so-called open-access rules for parts of the spectrum.

So why the sudden turnabout? According to Verizon, there is no change.

In a July 19th statement Verizon reiterated its position on the auction: we oppose the rules not the idea. An email from company spokesman, Jim Gerace, confirms this is still the company’s position. “We still oppose the FCC rules for 700 MHz” says his email, “we said back in July that we supported the idea of open access, but again did not think that the FCC needed to dictate it.”

Fair enough. Anyone who has ever dealt with the FCC can agree they can be a little overreaching at times. Consumers definitely don’t want any branch of the government to dictate choice.

However, we don’t want Network Operators to control our choices either. Until this announcement Verizon’s business plan was to do just that: control devices and apps on its network. “Spectrum is a shared resource that needs to be managed efficiently in order to support the needs of all users” says a recent press release. In other words Verizon is saying “we limit and control what is on our network because it is in the best interest of the public who, by the way, really owns the spectrum”.

Since the first cellular network was built operators have fiercely protected their network so they could ensure no degradation in service and customer satisfaction. They, after all, are the protector of the wireless user.

So what recent discovery was made that suddenly enables Verizon to open its network to everyone?

None…no new technical discovery, they could have given open access years ago. Recent developments, however, have helped top brass to “discover” their vulnerability in staying with an antiquated operating model.

Here’s what I think.

The bold move was a necessary preemptive strike. Verizon is not afraid of opening its network; the capability to technically protect and ensure the service quality of the network exists. They don’t care about the devices; any carrier would gladly give up the need to manage a huge supply chain for little to no bottom line gain.

Verizon’s concern is what a competing open network would do to its business. Google, who plans to bid in the upcoming 700 MHz auction, could pose a threat if they somehow got their hands on nationwide licenses. Add to that the announcement of the Open Handset Alliance (which includes Verizon competitors T-Mobile and Sprint/Nextel) Android developer platform a few weeks ago. Mix in the fact that Google and the 32 companies in the OHA have billions in cash and you have a few very nervous Cellular Network Operators.

It could have been termed a brilliant move if it was done 6 months ago. Now, however, it just looks like a forced strategic decision. In any event, long term this will prove to be good for consumers and ultimately good for Verizon.

Some call it a ploy, some feel its simply a move to dissuade Google from bidding on the 700 MHz spectrum, still others have applauded the move. It could be all three, but as Lowell McAdam, Verizon Wireless president and chief executive officer says “This is a transformation point in the 20-year history of mass market wireless devices”.

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