November 28, 2007 / 1:24 AM / 12 years ago

Verizon Wireless opens network, in win for Google

NEW YORK (Reuters) - Verizon Wireless said on Tuesday it will open its network to any phone or software application by the end of 2008, caving in to demands by Google Inc and other lobbyists for more open access.

The sign for the Verizon Wireless store is seen in Lakewood, Colorado September 11, 2007. REUTERS/Rick Wilking

Google had pushed for U.S. wireless operators to open up access to their networks by successfully lobbying the U.S. government to make that a requirement for companies bidding for some wireless airwaves in an upcoming spectrum auction.

Analysts said Verizon Wireless’s move was an about-face by the most protective of U.S. service providers, who often keep control of the devices, software and Web sites customers use in order to share revenues and ensure quality.

Verizon Wireless, a vociferous opponent of the open access auction rules, had said in July it would follow the guidelines but could not guarantee how well unknown software would work.

Now, the wireless venture of Verizon Communications Inc and Vodafone Group Plc said it would publish early next year technical network access standards any developer could follow for products running on its network.

The second-largest U.S. mobile service said devices meeting its standards would work on its network and “any application the customer chooses will be allowed on these devices.”

“We’re tapping a new market of what we think is significant growth,” Verizon Wireless Chief Executive Lowell McAdam told Reuters in an interview. It was not enough for the company to just sell devices and software directly, he said.

“Customers’ needs are increasing and diverging. Soon Verizon Wireless will not be able to meet every customer’s needs with our specific portfolio of devices and applications,” he said in a conference call with reporters.

OTHERS TO FOLLOW

Sprint Nextel Corp, the number-three U.S. player, has said it plans to support a range of devices on a network it is building, but not to open its existing network like Verizon.

“It’s clear this is the long-term direction the industry needs to move in. This is a small and incremental step along this path,” said Forrester Research analyst Charles Golvin.

Lawmakers and regulators applauded Verizon’s move, saying it improved consumer choice. But some analysts say it will take years before the United States sees enough improvements in the variety of services and devices to match Europe and Asia.

For example, alternative devices would likely cost more than consumers are used to paying as U.S. mobile providers normally subsidize the price of most phones that they sell.

Verizon could also charge these customers higher fees, making it prohibitively expensive to use advanced applications such as video downloads or Web phone calls, Golvin said.

He questioned how many devices would be specially created for Verizon’s network, based on Qualcomm Inc’s CDMA technology, which is little used outside the United States.

Verizon Wireless said it would create pay-per-use service fees, and alternative gadgets could include cameras, game consoles or home appliances.

LOBBYING

Verizon said it was responding to market forces rather than Google’s lobbying. But analysts saw the move as a response to Google and Apple Inc, which has said it will allow applications developed by third parties to work on its iPhone.

Banc of America analyst David Barden said Verizon’s move may lessen the need for Google, which is developing its own mobile phone software, to bid in an upcoming airwaves auction.

“In this instance, we see Google’s wide partnerships, and now the ability to put a future Google-powered device on the Verizon network, as diluting any economic incentive for Google to be a substantial spectrum auction competitor,” Barden said in a note to clients.

Verizon Wireless said it has yet to decide if it will sell devices with the Google software. Sprint and T-Mobile USA, owned by Deutsche Telekom, have said they would.

Verizon Wireless said the open access plan would also apply to its next-generation wireless network, for which it expects to announce its technology choice in coming weeks.

It said devices would be tested and approved in a laboratory in which it invested an additional $20 million this year. It also plans to hold a developer conference next year.

AT&T Inc and T-Mobile USA already allow customers to use any phone based on GSM technology on their networks, but neither actively encourages this. AT&T spokesman Fletcher Cook said there was no need to change its strategy.

Editing by Gerald E. McCormick and Braden Reddall

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