The about-face taken by Verizon Wireless today when it said it will open up its network and platform is, at first blush, a good thing for consumers and developers. But I just got off the company’s conference call, and there are certain details that have left […]

The about-face taken by Verizon Wireless today when it said it will open up its network and platform is, at first blush, a good thing for consumers and developers. But I just got off the company’s conference call, and there are certain details that have left me with eyebrows raised. Here is my quick take on the news, and what it means (or doesn’t mean.)

Why is Verizon is doing this?

1. I think it’s because they don’t want to make open network concessions on the upcoming 700 MHz auctions, but be able to say, “Look, we’re already open.” Verizon needs to make some public concessions — there is a lot of competitive pressure coming from Google (GOOG), meanwhile the FCC and those on Capitol Hill are in a belligerent mood.
2. Bye-bye subsidies: now you buy your own phone and deal with the headaches. Company executives were pretty clear that they expect the distributor/direct purchase model to become popular. This is good for Nokia, at the very least. They can now make CDMA devices and not have to beg and kneel in front of the Verizon masters.

What it means for wireless customers:

1. A phone with Wi-Fi doesn’t need approval from Verizon, apart from making sure it works with Verizon’s network.
2. As the company executives explained on the call, you can make any device — as long as it’s CDMA network-based, Verizon has no problem with you selling it.
3. Chinese handset makers can now bring $25 phones to the U.S.
4. Theoretically, Apple can do a CDMA-based iPhone and sell it in its own stores.

Why I am still skeptical (but will change my mind if change does happen)?

1. Press call didn’t clarify how much network access will cost. They currently charge $60 for plain vanilla wireless broadband access. From a network perspective, this could be expensive.
2. They didn’t clarify the business models here. I think this needs to be explained better.
3. No clarity on what the real bandwidth limitations are and what kind of quality of service Verizon will impose on the network. Will they raise similar arguments to the ones they have been making with regards to network neutrality?
4. More devices means more network usage, which means degradation of quality. Will Verizon keep investing ginormous amount of money to keep the moniker, “America’s most reliable network”?

Why my inner cynic says: Don’t believe the hype (but disregard if you think I am, by nature, a pessimist).

1. It doesn’t seem very open to me, because it’s all about devices based on CDMA technologies, which really props up Qualcomm’s CDMA monopoly. More devices put more dollars (and I mean serious dollars) into Qualcomm’s (QCOM) pocket. The rest of the world is going down the post-GSM path and opting for other open standards, so betting on a CDMA- and post-CDMA-based platform is fraught with risk.
2. How many platforms can developers really develop for? Come on, people! Announcing a platform is easy, getting real developers to come on board — not so much. Verizon is thinking in API terms!
3. Verizon can go back on its word, citing security concerns. And then you’re basically left there to whistle, “Sittin’ on the dock of the bay…”
4. Do we really believe that Verizon is going to be happy being Pipes-R-Us?

  1. Thanks for the analysis. As a Verizon customer, I find myself completely cynical about anything they do benefiting me in any way.

  2. [...] advantage for companies in relatively mature markets such as mobile. That said, Om Malik seems somewhat skeptical of Verizon’s motives, and says open access could prove to be [...]

  3. They are way off of they think they are “open” but at least the dinosaurs are thinking the right way.

  4. Om,
    What about applications/deck? If the so called ‘open’ approach results in uncontrolled, open decks for apps, users benefit. As for #4 above (pipes-r-us), I am highly skeptical that VZ (or ATT) seriously think they will be content with selling pipes and not trying to control the high $ bits flowing through the pipes.

  5. Om, Perhaps I’m missing something, but isn’t Verizon (and Sprint) entire network “All CDMA”? How could they possibly support GSM phones, open or otherwise, without equipment upgrades?

  6. Perception is reality. People perceived Verizon to be more closed than ever and Verizon got a beating for that all the time. Looks like they want to start atleast by changing their image. That is a plus for all. I am glad to know Verizon is realizing it has to change.

  7. Even after it’s “open”… it’s still CLOSED!

    In other words, CDMA is such the minority, that what they’re really saying is:

    1. Sprint customers, C’mon over! you can keep your handset.

    2. Nokia, et all – please don’t abandon CDMA and make some cool phones for us.

    3. Oh, OK – want to leave our “open” network? Your only choice is Sprint. We’ll take our chances that this will be a minority decision vs. the other way around.

    Now… if AT&T follows suit, then it would be more interesting.

  8. I’ll give the benefit of doubt. They are being proactive and becoming a wireless ISP. Phone plans will go away in the future of 4G. It will all be data (or ISP) plans.

  9. Another interesting twist is the recent acquisition of Firethorn (mobile banking) by Qualcomm for $210 million. Qualcomm is branching out into new services with presumably tight integration into their chipset. That may (will?) make it harder to provide new stand alone apps that are competitive on CDMA networks. That being said, I think this announcement is the tipping point and whether Android crushes Verizon as a platform doesn’t really matter. New apps and devices are coming and this just increases the stakes.

  10. If you’re complaining about the CDMA limitation, you don’t understand wireless networks. Besides, multi-mode handsets are now becoming available and this decision could provide incentive for more options. I have a BB8830 “world phone” which has CDMA and GSM radios built-in. I could theoretically use it on an open CDMA network or an open GSM network.

    OK, now I’m going to return to my fantasy world involving world peace and Swedish Bikini Models… ;-)


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