Now That The Bidding Is Over, Let The Debate On The Definition Of ‘Open’ Begin

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Now that the auction is over, and we know Verizon Wireless (NYSE: VZ) has won, the attention will quickly focus on how the FCC will enforce the open-access requirements, and it’s likely not go down without an interesting fight. Verizon will likely argue that open access is defined as its “Any Device, Any App” program, which, based on early reports, is still a closed-door or two shy of matching up with the FCC’s original interpretation.

FCC’s definition: Simply put, the FCC said open access means letting consumers download whatever content they want on whatever device they want. It does think operators should have to provide wholesale network access to other companies.

Verizon’s definition: We learned more about Verizon’s “Any Device, Any App” program this week via a developer conference it hosted in New York. Verizon said certification of new devices will be simple and cost effective, and it will even allow companies to buy minutes wholesale. But when it comes to applications, it’s still fuzzy. From first glance, the program appears to favor devices, and so far, Verizon said customers of these non-Verizon devices will be able to download applications directly from developers instead of going through Verizon. But there’s no word on how open Verizon devices will be to third-party applications.

What can the FCC do about it?: Not much. For consistency’s sake, the FCC may agree to Verizon’s interpretation. For example, it’s fair to assume that Verizon will only have to comply with the FCC restrictions on its newly purchased 700 Mghz spectrum holdings. If Verizon wanted to, it could follow different regulations for different airwaves. The outcome would create a fragmented and confusing situation for the customer (and for Verizon). The FCC may bend its rules to encourage Verizon to provide a consistent somewhat-open experience across its entire network.

Will competition make the industry open?: Nope, probably not. The auction was designed in part to be a perfect opportunity to get a fresh player into the business. When Google (NSDQ: GOOG) dropped out, that didn’t happen, and Verizon and AT&T (NYSE: T) placed 84 percent of the winning bids.

Change is happening fast: Verizon, which once arguably had the stiffest network restrictions, is opening up quickly, and could change on its own. Sound impossible? It wasn’t that long ago that Verizon sued the FCC over the auction’s open-access requirements. At the time, it said: “Imposing any such requirements in the competitive wireless market would reduce the revenue the government will receive from the spectrum auction and limit the introduction of new and innovative wireless services.” Funny how that turned out. Verizon is paying big bucks to be open. It spent $4.71 billion on the C-block, and a total of $9.4 billion in the auction. So, if open access works, Verizon may elect to take it a step further on its own.

Who really won?: Some reports are suggesting the real winner is Google because it is getting the open-access provisions it wanted. But based on the theories above, that would not hold true. That makes the biggest winner the government. Even though the D-block did not sell, the government garnered $18.96 billion in bids to make the auction the largest in FCC history. At that total, it easily surpassed Congress’s best hopes of raising $10.2 billion.

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Paul

So where does Verizon allowing mobile internet access to 3rd party mobile sites come into this "Open" discussion? As I understand it Verizon blocks access to 3rd Party mobile websites.

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