Updated: VZW throws open its network gates to all comers

Verizon has taken steps recently to lower those walls, allowing selected off-deck content transaction and opening up the WAP browser’s capabilities, but it is still considered one of the most restrictive carriers by content developers. Verizon has maintained it needs to protect its customers from fraud, its network from malevolent content and its under-aged customers from inappropriate material. The dual-service approach will allow Verizon to effectively offer both models: a highly controlled platform of full-service VZW-branded applications for the majority of its subscribers, and a hands-off connectivity platform akin to the wireline broadband model where more sophisticated customers merely get Internet access.

Most of VZW’s customers will be perfectly happy with the full-service offering, said Verizon Communications Chief Technology Officer Dick Lynch, and Verizon expects only a small proportion of its customer base to opt for the open-connectivity plan. Those customers will be charged based on data usage rather than for individual services, and will likely be heavy users of VZW’s 3G EV-DO network. Lynch, however, said he does not expect that influx of network traffic to overtax the network as the initial subscriber base will be small.

“To the point we are successful and we expand our customers, we’ll expand our capacity,” Lynch said.

The announcement floored many industry observers, many of whom expected Verizon Wireless to be the last operator to embrace open access. While Internet companies and industry critics in the last year have stepped up their demands the wireless industry open up their networks, Verizon Wireless has often been the first carrier to challenge the notion of open access. When the FCC delegated a portion of the licenses in the upcoming 700 MHz auction as “open” spectrum, VZW went on the offensive accusing the FCC as well as the provision’s chief proponent Google of trying to hamstring operators. It went so far as to challenge the FCC in court. Verizon eventually dropped the suit, but the CTIA picked it up in Verizon’s place.

Verizon Wireless officials denied that its new stance on open-access had anything to do with the open-access rules being debated in Austin. And McAdam was quick to point out its open-access initiative would apply to its entire CDMA network, not just over networks built with spectrum acquired from the 700 MHz auction. Current Analysis wireless services analyst Bill Ho said Verizon is undoubtedly trying to score public relations points in the open-access controversy, but, he added, the operator is doing far more than paying lip service to FCC.

“The writing is on the wall: This is the way the industry is going,” Ho said. “They’re trying to control their own destiny. … They’re positioning themselves as a leader in open-access.”

Verizon Wireless is playing it smart, Ho said. Though the Internet industry is screaming for open access, only a small percentage of wireless customers are likely to take up or even understand the service—at least initially. VZW keeps its old walled garden in place yet gets the added boost of new customers flocking to its wide-open network. If the open-access model fails, Verizon has lost nothing, Ho said, but if it takes off, it finds itself on the forefront of a revolution.

“If it goes down all of the roads, it benefits no matter what,” Ho said.

However, Wireless research analyst Jack Gold said that Verizon’s change of heart on open access is precisely about the 700 MHz auction. Verizon Wireless does see new business opportunities in running such a network, Gold said, but it definitely wants to take the lead on open-access on its own terms, rather than have the government force it do so.

“This has as much to do with proposed legislation aimed at the 700 MHz options for openness that the FCC put in place as it does with Verizon's new found ‘open religion’,” Gold said in a research note. “This is a shot across the bow at Google, who is pushing network neutrality big-time. Verizon wants to say it is neutral with respect to devices and this proves it, and also to the FCC and Congress who might be considering new rules. So this is also about PR and positioning against Google, and by the way, against Apple as well, with its sealed-in-concrete closed ecosystem.”