I’ve been thinking some more about yesterday’s announcement from Verizon that it will open up its network to any compatible device, and let users access any service they want. There’s been a lot of analysis saying that this is Verizon’s response to Google’s recent launch of the Open Handset Alliance.
But Verizon’s move really has more to do with responding to the Amazon Kindle, in a sense, than to Google. As I said last week, the coolest thing about the Kindle, by far, is that it’s got a built-in EV-DO radio that’s used to download content, and it doesn’t require users to take out a subscription. This is the sort of model that Sprint’s been talking about for a long time for its forthcoming WiMAX network, while a future of all sorts of connected devices — devices that aren’t necessarily phones, PDAs or some other communications-specfic device — is one that’s been predicted for a long time. It’s this sort of future that Verizon wants to be able to cash in on; they’re probably less concerned — in the short term, at least — with offering a completely open service for users who just want to bring their own device and buy a data connection. But they’ll certainly not discourage that sort of use if they can monetize it.
The part of the market clamoring for consumer open access is very vocal, and this belies its actual size. And as I said yesterday, the early adopters and other people who really want it already have it from another operator. But Verizon sees the huge potential market for connected devices, and doesn’t want to miss out on that. Its talk of “minimum technical standards” and other info it will release for developers, along with its testing lab, seems geared towards this sort of device. After all, if a handset or similar device adheres to the CDMA standard, supports the proper frequencies, can accept Verizon’s OTA config and has already been through FCC testing, compatibility with Verizon’s network shouldn’t really be an issue.
The more I think about it, the more I think that it’s this connected device market Verizon is shooting for; its previous strategy would largely see it left out of this space to the likes of Sprint’s WiMAX network or GSM operators. Verizon’s announced the change in strategy; it now needs to explain the business models it will use and how it will charge for service for connected devices, as well as come up with some sort of activation and service management mechanisms.
Any openness in terms of consumers bringing their own handsets or other similar devices to Verizon’s network, getting them activated and getting service to them at a fair price will be a most welcome side benefit. If service providers can deliver VoIP devices or other hardware that replaces standard mobile phones and offer consumers more choices and better access to the services they want, we could be on the cusp of a new ear of innovation and competition, which would be fantastic.
The other side benefit for Verizon? Their announcement may keep Google out of the upcoming spectrum auction, and therefore hold down the cost of licenses. It’s becoming pretty clear that Google doesn’t want to be a network operator, it just wants wholesale, open access to a mobile network. One way to do that would be to buy a nationwide license, then lease it or loan it to a network operator in exchange for access. In this sense, Google would create its own competitive market in which it could secure access. But if Verizon joins other operators to create a competitive wholesale open-access market on their own, Google doesn’t need to spend its own billions on the licenses — meaning there’s one less deep-pocketed bidder Verizon needs to compete with.