Many telecom observers were stunned this week when Verizon announced it would open up its network to “wireless devices, software and applications not offered by the company.” This change in policy is good for consumers and worth closer examination, especially on the business side.
Verizon’s “walled garden” required consumers to use a Verizon-chosen phone in order to get Verizon’s service. Consumers disliked that restriction, and the company took notice. Indeed, the company’s press release makes the point that Verizon has often parted with the “big telecom” mentality in order to serve consumer-driven demand.
For instance, “the company parted with the industry last year when it introduced prorated early termination fees and in 2004 when it refused to participate in a wireless directory when customers said they didn’t want one. Verizon Wireless also broke with ‘wireless tradition’ when it supported local number portability, because customers wanted the freedom to take their number if they switched service providers.” Now Verizon is breaking with tradition to offer consumers greater device choice.
Verizon also clearly sees large revenue opportunities in an open system. The success of the iPhone made it obvious that consumers are willing to buy their own phones at high prices instead of simply going with subsidized versions that the phone company offers. Right now, the iPhone can only be used on AT&T’s system, but if it could be used on any system, Verizon would certainly be better off. Of course, there is another business reason for Verizon to open up as fast as possible.
If it can get developers to start working on new devices for its system, it will be in a better position when Google’s Android open source mobile software project starts to take off. The market forces pushing open the wireless industry appear almost unstoppable, making one marvel that state utility commissions still hold hearings to question whether there is enough competition in the sector. That brings up the issue of politics, and wherever there is telecom, there are lobbyists.
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