Verizon’s (NYSE: VZ) big open network play is unlikely to have a big effect on the handsets available for use in the US, with several analysts pointing out that most of the CDMA handsets available in the world are already in the US, and those that aren’t may not run on Verizon’s network anyway. It’s on GSM technology that there is a wide range of handsets and other devices which could connect to the network. “Analysts said, however, that with an announcement that carries certain public-relations advantages, Verizon has bought itself time to see who wins spectrum in the upcoming 700 MHz auction and what the resulting competitive landscape may look like. Verizon then can speed up or slow down its move toward offering open access depending on whether it seeks primarily profit or greater market share in a changing industry” reports RCR News. It basically takes away the charge of “closed network” with which Verizon and other carriers have been harangued.
Jan Dawson, VP US Enterprise Practice at Ovum, sent some comments through saying that in addition to the promotional aspect of the announcement a move to an open movement may bring further development into the CDMA market, which may then find its way into Verizon’s main business…and I guess if it doesn’t there’s no big loss to Verizon. Dawson outlined several barriers to people actually adopting the new model, including the common argument that there’s more benefit for customers if an open network is GSM, the general unwillingness of people to pay full retail price for their handsets (aside from those chasing the iPhone) and the removal of Verizon’s customer support.
Software innovation? Still, while there’s little chance of an influx of cool/advanced handsets, there is some scope for software innovation. If companies (Google (NSDQ: GOOG) springs to mind, but there could be others) want to go straight to the manufacturers they arrange to buy handsets which are already being produced for Verizon’s network and stick their own software on there. Then they’ll need to convince customers that there’s enough added value in their software to warrant buying the full-priced handset rather than the Verizon-subsidized one, and the economics of that will depend largely on Verizon’s pricing plans.
Patent protection: Just as an aside — I’m not sure how relevant this is to the open network — but Verizon has licensed the patents that Broadcom is suing Qualcomm (NSDQ: QCOM) over, and seeking an injunction against. That patent protection is unlikely to extend to third-party handsets on the open network…so depending on how that plays out it’s possible that Verizon will have easier access to higher-end phones than companies seeking to use its network.
{"source":"https:\/\/gigaom.com\/2007\/11\/28\/419-verizons-open-network-unlikely-to-result-in-influx-of-new-handsets\/wijax\/49e8740702c6da9341d50357217fb629","varname":"wijax_c2632c5b6c9ff052f504dc9b8c069fcc","title_element":"header","title_class":"widget-title","title_before":"%3Cheader%20class%3D%22widget-title%22%3E","title_after":"%3C%2Fheader%3E"}