Verizon Wireless stunned the wireless world on Tuesday when it announced it would open up its wireless network to third-party devices and applications toward the end of 2008.
"This is a transformation point in the 20-year history of mass market wireless devices, one which we believe will set the table for the next level of innovation and growth," said Lowell McAdam, Verizon Wireless president and chief executive officer. "Verizon Wireless is not changing our successful retail model, but rather adding an additional retail option for customers looking for a different wireless experience."
In a statement, Verizon said it would publish minimum technical standards for devices to operate over the Verizon network. "Any device that meets the minimum technical standard will be activated on the network," the statement said.
Verizon said it had pumped investments into a $20 million state-of-the-art testing lab to gear up for the anticipated new demand. Any application the customer chooses will be allowed on these devices.
Verizon Following Market
"It's a surprise," Greg Sterling, principal analyst with Sterling Market Intelligence, said in a telephone interview. He said the move shows Verizon has recognized the direction of the market, including Google's recent launch of Android, an open platform for mobile phones. "It's also a response to consumer reaction to the iPhone," he said. "They're wisely embracing the direction of the market."
While the move might help Verizon acquire some more customers "on the margins" in the short term, "it's not entirely clear that openness on its own will win them customers. What this does at the margins is it tips the scales," Sterling said, noting that this announcement is targeted more at developers than customers.
What's more important is the signal this sends to the wireless industry, Sterling said. "It puts pressure on others to open up. It's a continuation of something that was started with the iPhone and continued by Google."
Will Others Follow Suit?
Sterling said that it's "possible" that AT&T and Sprint would follow suit. "Probably in the end, we'll have a situation more like Europe where you can use any phone on any network. At that point, you're pushing toward greater commoditization of access," which creates a problem for the carriers, who then have to compete on add-on services.
The Verizon plan will create new specifications for handset makers, which could mean the platform will compete with Google's Android. But, Sterling said, most likely Android phones will work on the open Verizon network.
Verizon said that after it publishes the standard, it will host a developers conference "to explain the standards and get input from the development community on how to achieve the company's goals for network performance while making it easy for them to deliver devices."