Someday, users may be able to buy any mobile device they want and hop onto any cellular network, in the same way they now buy a PC and plug into the Web. Taking a small step toward such an open, mobile world, Verizon Wireless announced last week that it will open its network to any compliant device starting sometime next year.
Some hailed the move as the beginning of the end for the walled gardens cellular carriers have tended to date, igniting a new wave of innovation in handsets, software and networks.
Others said the stranglehold that carrier subsidies exert over handsets will maintain the status quo.
All sides expressed some skepticism about how open Verizon will really be. Details of the carrier's plans are still sketchy, and many analysts last week took a wait-and-see stance.
The company will publish technical specifications for linking to its CDMA-based cellular network before April, a Verizon spokeswoman said. It will also hold a technical conference to provide details and will seek feedback from hardware and software developers.
"If someone wants to build a phone in their basement, put some new apps on it and get it on our network, they will be able to do that," the company's spokeswoman said.
The carrier will certify devices only, leaving others to take responsibility for the applications and services that run on them. But the company promises to put certification on an accelerated track that will take "weeks, not months," compared with the process for Verizon's own handset and software offerings.
Despite speculation to the contrary, the spokeswoman denied the move was a ploy to curry favor with the Federal Communications Commission. The FCC will require anyone participating in an auction early next year for spectrum in the 700-MHz bands to provide open access on at least some of the bands. Most carriers as well as many new entrants are expected to bid on what is seen as prime cellular real estate.
The 700-MHz auction is just one of several forces pushing for a more Web-like openness on cellular networks. Google has petitioned the FCC to mandate that the 700-MHz bands be open to any device, app or carrier, and has followed that up with the release of its open-source Android platform for cell phones, backed by a broad consortium of companies.
Many lobbyists and handset makers have been calling for more openness on cellular networks. Even AT&T's exclusive deal for the iPhone required that the carrier give Apple a freer hand than most handset makers enjoy to control its own software and services.
Click here for larger image
The most bullish observers said Verizon's move could accelerate competition in both handsets and wireless networks. "The ground is starting to move, and if this is real it will shake the foundations of the wireless industry," said Tim Wu, a professor at Columbia Law School who has widely advocated more openness in cellular networks.
Wu sees opportunities for both established and new handset makers. "A company like Nokia could establish its own retail presence and sell directly to consumers. Right now they have to sell through a relatively strange channel," he said. "It could also lead to new, nontraditional handset entrants, such as an HP or a Dell."
In the long run, "that's got to be good for the industry, although if I were a Motorola I might be a little nervous right now," Wu said, referring to one the largest handset makers, which is currently slipping in the market standings.
For carriers, more-open networks mean the competition would cease to revolve around exclusive deals such as AT&T's tie-up with the iPhone. Instead, carriers would have to compete directly on the quality of the coverage and bandwidth of their underly- ing networks.
"If things go in that direction, America will become a leader in cellular," Wu said.
Loring Wirbel, director of EE Times' Market Intelligence Unit, took a similarly upbeat view of the news, coming just weeks after Google's Android announcement.
"The combined pressure of Google and Verizon now will make open hardware and software interfaces the implied standard for all wireless networks, both at handset and basestation level," Wirbel said. "Now that the European courts are telling Apple they must open up the iPhone, the days of closed links between hardware developers and wireless operators are numbered."
Will Strauss, principal of market watcher Forward Concepts (Tempe, Ariz.), took a more skeptical view of Verizon's move and the trend toward open cellular networks in general. "This is only good news to someone willing to spend $600 for the latest gadget that is not subsidized by carriers," said Strauss.
The typical cell phone is sold to carriers wholesale for about $220, and without a subsidy based on a two-year service contract, it could cost an end user $300, Strauss estimated. Nokia has boutique outlets in New York and Chicago where it sells its high-end GSM handsets to gadget lovers for $400 to $700, said a Nokia spokesman.
"Given the choice, most people will go for a [seemingly] free phone," Strauss said.
Observers estimate that less than 2 percent of all phones sold today come from someone other than a carrier. "The carriers will continue to be the biggest handset customers, and people will buy from them, because no one wants to pay full price," said Strauss.
Even Wu of Columbia was unsure just how open Verizon will be. "Testing [de- vices] could become a way to continue to control the network, so there is a question of whether this is a rebranding or a genuine change in direction," he said. "But I am inclined to give them the benefit of the doubt."
Wu has documented cases where carriers dictated feature sets of phones that included disabling file sharing on Bluetooth. Strauss said he was also aware of such restrictions. "I know for a fact that Nokia was forced to remove Wi-Fi from a high-end handset before AT&T would carry it," he said.
"We think [Verizon's move] is designed to please the FCC in advance of the 700-MHz auctions" and to attract investors to join the company in a bid on the spectrum, said Richard Doherty, principal of market watcher Envisioneering (Seaford, N.Y.).
To some extent, that was one of the early effects of the news. In a prepared statement, Kevin Martin, chairman of the FCC, said the recent moves from both Verizon and Google were a "significant step" toward the more-open wireless nets that the FCC foresees with its 700-MHz auction rules.
"I continue to believe that more openness--at the network, device and application level--helps foster innovation," Martin said.
Whether other carriers will follow suit remains to be seen.
A spokesman for T-Mobile noted the carrier has joined Google's Open Handset Alliance to provide consumers with more choice. Most unlocked GSM phones supporting U.S. frequencies can already be used on the AT&T network, the spokesman said.
Representatives from Motorola, No- kia and Palm declined to comment until Verizon releases further details of its plan.