What Verizon's Move Means

Cheat Sheet on Wireless Giant Opening Up Its Wireless Network

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Billing the move as a "transformation point in the 20-year history of mass-market wireless devices," Verizon last week told Americans they will soon be free to pick new phones, ringtones, games and other applications to run on its network, regardless of whether they buy them from Verizon. It's a move that could bring Americans closer to Europeans and Asians in the way they pick and use their mobile devices, and it may have far-reaching implications for consumers, the wireless carriers and their $6 billion-plus in marketing spend, advertisers hoping to capitalize on mobile marketing, and media companies and ad agencies working with them -- or not.

Here's the Ad Age cheat sheet on the move's effects.


It's generally a good move -- PR-wise, at least. It allows Verizon to position itself as the "more open" network at a time when open standards and platforms are all the rage and, of course, there's the potential to add to its base of 63.7 million subscribers new customers who want handsets not offered by Verizon or even other networks. The skeptics say the devil's in the details -- the technical specs haven't been released; it won't happen until 2008 or later; and the iPhone, in its current iteration anyway, won't work on Verizon's network.


This is likely to have little impact in the short-term. While all applaud freedom and choice, it won't be as simple as buying whichever device you want and hooking it up through Verizon. Verizon's restrictions and fees are undetermined, as well as whether American consumers will opt to pay likely higher prices for handsets (because they won't be subsidized by a carrier) and take responsibility for repairing the devices. Think of this new model as akin to a land-line system where the carrier takes responsibility for bringing service down the block, but the homeowner is responsible for wires inside the house and phones operating on the system.


This doesn't mean much, at least initially. The "opening up" does not apply to online content, websites and search engines, and media companies that want their offerings to reach all Verizon subscribers still will have to work through the carrier's early-AOL-like "walled garden." But in the future, marketers could offer consumers free applications that could provide things like mobile banking, gaming or real-time contacts to friends or other social networking. To be optimistic, said Mark Beccue, a mobile-marketing consultant, the move could "spark more consumers to buy data plans. Then the audience for the mobile web grows as well, which increases the market size for mobile-web-related advertising."


This is a good move for Google and its Android platform, which aims to make it easier for developers to create and distribute mobile applications such as games, ringtones and other wireless wonders. And because consumers who choose to bring their own devices to the network forgo the subsidized handsets that come with a contract, it could make a low-cost, ad-supported phone, which Google is rumored to be creating, more attractive. Skeptics say so far the handset rumor is just that. And it's unclear whether Verizon's network technology, coined CDMA, would support a Google phone.


Eventually carriers will have to think of a different way to sell their service instead of relying on reams of ads pushing the handset special du jour. "The notion of trying to market around a specific handset could disappear," one consultant said. If so, Verizon will be well-positioned. "Verizon's going all in on its brand of network reliability," said Doug Busk, who left Verizon early this year to head industry relations at Singlepoint.


Verizon's stated hope is to spur invention -- good news for handset manufacturers wanting to strut their stuff. Skeptics say it will undermine the current marketing model for handsets, where carriers subsidize sets with discounts for consumers and advertising to support the new sets. And, of course, it potentially could open the competitive floodgates, especially when other carriers join in. Roger Entner, senior VP-communications sector, IAG Research, cautioned further proliferation of mobile devices may only complicate mobile marketing. "Be careful what you wish for; you might get it," he said.
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