Verizon Won. Now What?
If you thought that the debate about open access was over, it’s really just begun.
Last week the FCC announced that Verizon and AT&T were the big winners in the 700 MHz auction, as expected. In particular Verizon won the ‘C’ block, the nationwide license to which open access conditions apply.
Now the regulators have to decide what the open access provisions really mean, and how they’re going to be enforced.
For most of us, open access means ‘any application on any device’: you can attach any compatible device to the network and run any application that the device is capable of running. Verizon used similar language last year when the company announced that it was going to open up its existing network to ‘any application, any device.’
They appear to be quite sincere about the ‘any device’ part. At a developer conference last week Verizon promised a straightforward testing process and several different business models for manufacturers. They also promised almost no restrictions on the applications that consumers can run on these new devices.
However, Verizon wants to go on selling crippled cell phones as well. No matter how powerful the phone, if you buy it in a Verizon store they want to limit what you can do with it.
In Verizon’s new world you can run some applications on any device, and you can run any application on some devices, but you can’t run any application on any device.
Why? Because their business model is to give away the RAZR and sell the blades.
They give you a crippled phone for free, and make their money back when you realize that it’s difficult or impossible to buy international calling and roaming, voicemail, email, web browsing, ringtones, 411 and the rest from anyone but them. Often you can’t even get your address book or photos off the phone without paying them a fee.
If consumers are entitled to run any application on a Verizon phone that it is capable of running, this business model goes away. In theory, the ‘any device’ part means that an independent retailer could sell you a phone that runs any application you wish, even if Verizon won’t. But ‘independent’ retailers make more money in commissions from Verizon for signing up customers than they do selling phones, so why would they sell you a phone that Verizon disliked?
Naturally, Verizon would like to use the same business model for their shiny new 700 MHz spectrum. Last September they began lobbying the FCC to persuade them that their version of ‘any application, any device’ is consistent with the rules of the auction. The FCC refused to rule on the issue before the auction began. Expect the battle to resume shortly.