Why Open Is Important

The major news events of last week really show how the wireless market may start to develop in the U.S. From Verizon Wireless 's plan to open its CDMA and next-generation network to Google (Nasdaq: GOOG)'s intent to bid on the upcoming 700 MHz auctions -- these events will define the next few years of wireless.

It was clear that the stasis quo of "walled garden" services in the U.S. cellular market couldn't be maintained forever. The carriers were being outpaced by the development of mobile applications and devices and the move to more Internet-like services over the cellphone.

The pace of change might surprise some, however, particularly as Verizon -- widely seen as a fairly conservative player -- seems to be leading the charge. Even this week, the Basking Ridge, N.J.-based operator has said that it will swap spectrum with rival AT&T Inc. (NYSE: T) and use Google (Nasdaq: GOOG)'s Android operating system.

Now I read the Unstrung message board, and I realize that some readers are pretty cynical about the apparent opening up of the U.S. cellular scene. Plenty of questions remain, for sure:

  • How "open" will open-access really be, for instance? Even Verizon says it still has final say on what applications are available over its wireless network.
  • Will the potential break-down of the contract and minute-bucket system really be better for consumers? Or will they end up spending more on the initial purchase of handsets?
  • How quickly will things open up? And will consumers even notice?
Nonetheless, I believe this sea-change had to happen, and I believe Verizon was -- in part -- prompted to act by increased data revenues over the last few quarters. Phone users are already spending big money on ringtones, music downloads, and video clips. Opening up the networks makes it easier for developers to get on the network and for users to sniff out the next killer app -- then the operator reaps the rewards in additional downloads.

— Dan Jones, Site Editor, Unstrung

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