Who's open now?

When Verizon Wireless started talking open, I was suspicious. Traditionally, Verizon has maintained strict control over its mobile data services — from what applications customers could access to how much data they could download over their broadband access plans — partly to protect its customers, partly to protect its multibillion-dollar investment in 3G. Whether for good or bad, few people expected that model to change anytime soon.

Not only is Verizon changing the way it thinks about mobile data, it's been planning that change for a lot longer than we give it credit. Piece by piece, Verizon has been letting out the details of a new wireless data strategy. It isn't discussing the big picture much, but how the pieces are fitting together gives us an idea of the overall image. Verizon is opening up — not just cracking the door, but swinging it wide.

It started last fall when Verizon revealed it would adopt the global long-term evolution (LTE) standard for 4G and earlier this year bought the 700 MHz spectrum to build it over. That LTE would encourage new business models was a no-brainer. The big honking channels and low cost per bit of the network obviates the need for a miserly approach to network capacity. But what came after is more telling. Verizon announced its open development initiative, which created a middle ground between its strictly retail and strictly wholesale business models. And last week it announced its intentions to adopt the LiMo Foundation's open-source Linux platform for its future phones.

So why do all this? After all, Verizon's current mobile data strategy seemed to be working just fine. It invested early in its 3G network and aggressively pushed EV-DO handsets into the hands of its customers. The result: It leads all U.S. operators in mobile data revenues. Why change a good thing? The answer is the iPhone. I'm not suggesting that Verizon's recent moves are merely a reaction to the iPhone's success. Obviously a lot of these changes were set in motion long before the iPhone came out last June. But just three quarters into the iPhone's release, AT&T's data revenues are now almost on par with Verizon's. The iPhone isn't a 3G device, and it's certainly not an open device. It's an innovative data-centric handset with a tightly controlled but very useful set of applications, and it's blowing away the competition.

Verizon's new open strategy doesn't give it the iPhone, per se. What it gives Verizon is the ability not just to react quickly to new innovations and new applications in the market, but to get ahead of them. If a new hot device hits the market, Verizon can plop it on the network through its open developer initiative without the year-long testing process that its retail handsets undergo. The same goes for new applications and content. Having an open-source operating system not only encourages the development of new applications, it allows Verizon to get them to its customers much more quickly — even allowing them independent access. Instead of betting on what application will be a hit or what partnership will be a success, Verizon gets them all.