Verizon Executive Discusses Telecom’s Move To Open Access

By Kaitlin Mara for Intellectual Property Watch
NEW YORK – Verizon Wireless, in a surprise move for a company known to fiercely protect its network from outside use, announced on 27 November that it would adopt an “open-access” policy for the use of its wireless services. This means that third-party devices, including Google’s still in-development mobile-phone operating system Android, will be able to use the Verizon network, and opens the way for a global expansion for the telecommunications company.

Speaking at investment bank UBS’s Annual Global Media Conference in New York on 5 December, Verizon President and Chief Operating Officer Denny Strigl explained the choice.

“We think it’s a phenomenal new source of revenue for us,” he said. “Where is the wireless world going down the road? Think of the data applications, the developers, the people who can get behind providing new applications we can’t think of on our own. What we are doing is extending an open invitation, allowing others to earn revenue while earning us revenue at the same time.”

The move is expected to drive innovation in mobile device technology without requiring Verizon to be responsible for the research and testing of the new technologies.

Strigl said an added benefit of the open-access model would be dramatically reduced customer service costs. Questions and problems with outside devices would be handled externally, and would be distributed through channels outside of Verizon retail stores. Customers with these third-party phones would still pay Verizon for network usage, but customer care would be handled by the device manufacturers.

Outside commentators, however, believe the US Federal Communication Commission’s (FCC) January auction of bands of the 700MHz frequency spectrum is Verizon’s hidden motivator. The spectrum is valuable because it is a lower frequency than what is currently used by mobile phone providers. Being able to use the lower frequency radio waves, which can more easily bypass walls and thus provide better quality mobile access indoors, would give a service provider significant advantages over its competition. The FCC has stipulated that the auction winner must allow third-party access to the network, a decision that Verizon initially opposed and even filed suit over, though it was dropped earlier this fall.

Strigl said that Verizon had been “looking at this for a period of 18 months” and believed that the rest of the industry eventually would come to the same conclusion – that open access is the most profitable way to expand a wireless business.

The Switch to GSM?

Verizon also announced that it its next generation network would use technology developed by the Long-Term Evolution (LTE) project, a collaboration of global telecommunication groups, to expand its service capabilities. This is an important development as the LTE platform uses a network technology based on the Global System for Mobile Communications (GSM), which is has a significantly wider user base globally than Verizon’s current network technology. It is also important because GSM networks connect to phones via removable SIM cards, meaning that mobile phone users can run multiple accounts off of the same phone, or the same account off of multiple phones. Verizon’s current network technology embeds account information directly into the phone, making it impossible to upgrade or change network providers without purchasing a new phone.

The move to the LTE network, Strigl said at the conference, is intended to “signal to the developer world in particular” that Verizon plans to market worldwide.

An independent market in mobile devices will have to arise for the open network to be used effectively. Strigl did say that existing manufacturers, such as Nokia, want direct end-user relationships, and was hopeful that the market would continue to develop. Future plans to switch to GSM technology are critical as an incentive to developers who Strigl predicted would be attracted to the higher volume of users already on the GSM network technology worldwide.

Verizon’s open-access network system is expected to go into operation toward the end of 2008.

Kaitlin Mara may be reached at info@ip-watch.ch.