March 20, 2008 / 5:55 AM / 12 years ago

Verizon outlines open network device plan

NEW YORK (Reuters) - Verizon Wireless, the No. 2 U.S. mobile service, aims this year to support a “few hundred thousand” devices from outside vendors this year through its open network initiative, Chief Executive Lowell McAdam said on Wednesday.

A Verizon Wireless store is seen in a 2005 file photo. REUTERS/Peter Morgan

The wireless venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L) has promised to open its service to any device capable of connecting to its network, potentially creating more choices for consumers and boosting sales for device makers.

The move came after companies such as Web search leader Google Inc (GOOG.O) put pressure on U.S. operators to loosen controls on the types of devices their networks support and after U.S. regulators set an open device requirement for the winning bidder of airwaves sold in an auction that ended this week.

McAdam said Verizon Wireless aims to boost revenue by opening its network to everything from wireless cameras and music players to phones with Web browsers or carbon-monoxide detectors.

With the first devices expected to come onto the network in the third quarter this year, McAdam expects the service to grow gradually.

“If we can just get a few hundred thousand (devices) on this year we’ll be happy,” McAdam told Reuters during a Verizon Wireless developer conference in New York.

“We’ll grow from there,” he said at the conference where the company launched an Internet site where developers can register to work with Verizon Wireless. Certification for new devices will start in mid-May and will take about four weeks or more, the company said.

McAdam said the initiative has sparked interest from a range of potential partners, spanning entrepreneurs to the world’s biggest technology companies such as Cisco Systems Inc (CSCO.O), Intel Corp (INTC.O), Dell Inc DELL.O, Microsoft Corp (MSFT.O) and Google Inc (GOOG.O), McAdam said.

“There is a broad spectrum of companies that are at least considering their options,” said McAdam on the sidelines of the Verizon conference in which about 300 developers participated. He said talks had been “general” and did not give specifics.

NO IPHONE TALKS

McAdam told a group of reporters at the event he has not had discussions about the open network initiative with Apple Inc (AAPL.O), which makes the high-profile iPhone.

He told Reuters that about 60 percent of the developers that have talked to Verizon are entrepreneurs who expect to sell about 10,000 to 50,000 devices. Verizon had 65.7 million customers at the end of 2007.

Under the new project, device makers could sell their products independently of Verizon Wireless, with the option of having the phone company bill customers at the same rates as Verizon Wireless charges its direct customers.

But unlike most Verizon Wireless customers, who commit to a contract for a year or two in exchange for a discount on the phone price, the customers of these third party devices would not sign a contract nor receive a device discount.

Sprint Nextel (S.N), the No. 3 U.S. mobile service, has outlined a similar plan to accept a wide range of devices for a new high-speed wireless network it is building.

McAdam said that Verizon is also looking at creating new options where customers could use several wireless devices on the Verizon Wireless network for a single monthly rate.

Device makers can also rent network space on a wholesale basis from Verizon Wireless and bill customers directly.

While the initiative may bring new business to small device makers, analysts noted that its success may be limited by the fact that the Verizon Wireless network can only support devices based on CDMA, a wireless technology that is popular in the United States but used much less in the rest of the world.

For example iPhone, currently sold exclusively for use over AT&T Inc’s (T.N) network in the United States, does not support

CDMA.

“It’s a huge ‘Gotcha,”‘ said Current Analysis analyst Avi Greengart. But he sees the initiative as a boon for niche CDMA vendors that were previously unable to attract large operators, who tend to look for devices with mass market appeal.

For example, the initiative could help Chinese handset maker TCL Communication 2618.HK enter the U.S. market when it launches a CDMA phone this year, TCL business development executive Karel Bourgois told Reuters at the conference.

It may also help leading global mobile phone maker Nokia NOK1V.HE, which is looking to boost its presence in the United States, where it trails Motorola Inc MOT.N.

Attendees at the developer conference included executives from companies such as Motorola and Nokia, chip maker Intel Corp, and media companies such as Walt Disney Co (DIS.N) and AOL, owned by Time Warner Inc TWX.N.

“We’ve had a tidal wave of interest,” McAdam told Reuters.

Reporting by Sinead Carew; editing by Andre Grenon, Phil Berlowitz

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