Blog > US Stocks and Markets > Blog article: Technology Investing: Verizon goes open network
 | Email This Article Email This Article  | 

Technology Investing: Verizon goes open network

Posted December 4, 2007

“Verizon is making the move to become the only provider that will allow new customers to transfer their service without buying a new phone, turning the ‘keep your old phone number’ ploy into ‘keep your old phone’.” — Stephanie Grimmett

by Stephanie Grimmett

Baltimore — (TFN): Verizon (VZ: NYSE) may have whiplash after this week. The cellphone services company just announced that it will open its network by the end of 2008.

This is a major policy change for Verizon. Up until this declaration, the wireless carrier was one of the most vocal lobbyists against an open network. And the company whined and complained as loud or louder than its industry compatriots when the Federal Communication Commission (FCC) decided to require open access on a sizeable chunk of the wireless airwaves its auctioning off in January.

But Verizon can tell which way the wind is blowing in the industry and has decided to get out in front of its competitors. As chief executive Lowell McAdam said, “We’re motivated to make this announcement for two reasons: to give customers a second option to connect to Verizon’s network and for the competitive advantage we believe it gives us.” Emphasis is no doubt on the latter reason.


The future of wireless access

Consumer groups and online phone companies have been calling for the FCC to force an open network for years, now. The advocates push the idea that cellphones are no different than landline phones and should have the same regulations, which means the FCC should make service providers allow any safe device or software onto their networks.

But until this week, carriers had their heels dug in and were insisting that the closed networks made competition between them possible. Verizon, AT&T and T-Mobile, among other companies, claimed opening the networks would eliminate all differences between the services they provide, meaning they’d have to compete on (horror of horrors!) price alone.

The FCC is leaning toward the consumer groups, though, and is requiring the cellphone company that wins 20 megahertz of the spectrum going on sale next month to keep it open access. And Verizon saw the writing on the wall, or the writing on the auction rules, as the case may be.

Open-access wireless network

The company decided to open its own network, ahead of any new regulations, and maintain more control than the FCC would probably like, while still coming out as the good guy in the cellphone wars.

By control, I mean that, with the excuse of safety issues when using non-Verizon phones, the company will still be able to dictate which devices are allowed to connect to its network. Verizon is requiring every cellphone and PDA to be tested in its laboratory facilities. And it says you can’t use AT&T and T-Mobile phones on its network at all because the two companies are on a different standard.

Verizon is being run by some very savvy folks, it seems. The company is making the move to become the only provider that will allow new customers to transfer their service without buying a new phone, turning the “keep your old phone number” ploy into “keep your old phone.”

Wireless community service

But, along with the new phones, Verizon will also allow any application or software onto its network, meaning cellphone users can download their preferred programs for e-mail, news and even phone calls, regardless of the software Verizon likes.

The company has yet to announce a pricing schedule, which may null and void its new openness. If Verizon decides to charge significantly more for phones it didn’t sell or programs that aren’t among its “preferred partners,” few regular customers will take advantage of its new policy.

But for a small number of technogeeks, probably the same kids who hacked the iPhone, another device that can’t be used on open-access Verizon, the unrestricted network is great news.

In the meantime, Verizon is benefiting from the positive press, and it’s the FCC’s new best friend.

****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. Click here to pick your favorite reader. If you prefer to have the feed delivered to your email, just click here.


Related Articles


Posted by TFN-Tech · Filed Under US Stocks and Markets 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus