Why Verizon Went Open & What It Means

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?

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