The U.S. Wireless Wall is crumbling. This time next year, the wall may have fallen.
Metaphorically, the Wireless Wall is not unlike the Berlin Wall, which separated East Berlin and West Berlin from 1961 until 1989. Only in the U.S. wireless industry, the Wall separates the protect-their-turf carriers from the we-want-freedom consumers.
There’s been a steady assault on the Wireless Wall this year; it’s cracked but not fallen. Yet. The latest blow comes from the No. 2 U.S. carrier, Verizon Wireless, which plans to support the Google-led Open Handset Alliance and its new, open-source software platform Android. Together OHA and Android seek openness that will allow any phone and any application to be used on any network.
Initially, Verizon was not a member of the OHA when it was announced in early November, while two other U.S. carriers — Sprint and T-Mobile — had joined the alliance. Verizon and the No. 1 U.S. carrier, AT&T, were conspicuously absent.
Verizon, however, surprised the industry last week by announcing that it is opening up its network to any phone and any application as long as its meets minimum operational standards. Following that announcement, Verizon declared that it will migrate to the 4G wireless data standard, which is more in line with much of the world’s data networks.
Verizon says it hasn’t been sitting on the sideline looking to protect its turf at all costs. Verizon CEO Lowell McAdam told BusinessWeek that the company has been looking to open up its network for the past year.
Verizon didn’t join the OHA, McAdam said, because at the time of the announcement it was just that — an announcement. Once Verizon engineers got their hands on the Android SDK, they liked it and decided it was a platform that could work for them.
“We’re planning on using Android,” McAdam told BusinessWeek. “Android is an enabler of what we do.”
Why did Verizon relent? Some might think it’s because of the upcoming auction of 700MHz spectrum by the U.S. Federal Communications Commission. Those who successfully bid on the spectrum must open up the new networks to any device and software application.
But the decision to support Android — and the move toward an open network – is something of great importance to the future of Verizon. The U.S. wireless industry is changing, and the carriers must grow with it or find themselves as also-rans as Google gobbles up spectrum and builds (most likely with partners) new-generation networks.
McAdam noted that Verizon currently has its hands full supporting roughly 50 phones on its network, with 800 software applications available. To support its customers, Verizon runs 25 support centers of about 1,000 employees each and has 2,300 stores (staffed by 23,000 people), all of which is costly to operate.
Under an open network scenario, Verizon provides the mobile cellular and Internet connectivity but no longer has the burden of supporting the handset manufacturers and software developers. It’s not unlike the computer industry today: You don’t call Apple or Microsoft when you have a Photoshop question.
McAdam, like Google and other OHA partners, hopes that the large, open scale of Android-driven phones and applications will slash development costs and bring consumers something they want — wireless freedom.
“Five years from now the industry will be open like us,” McAdam said. “I think we could be at an inflection point.”
The Wireless Wall is crumbling.