Fortune Magazine
by Stephanie Mehta
December 7 2007: 5:16 PM EST
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Opening up 'open' wireless

Everybody from Google to Verizon says they want 'open' mobile systems. But what exactly does 'open' mean?

By Stephanie N. Mehta, senior writer

So-called open mobile systems may lead to a richer wireless experience, but not everyone means the same thing by 'open.'

NEW YORK (Fortune) -- The wireless world is buzzing with talk of openness.

Search giant Google is heading up the Open Handset Alliance, which is developing Android, an open platform for creating applications and services for mobile devices. AT&T, the nation's largest wireless operator, this week told USA Today its network is already open to any handset designed to work on the GSM wireless standard. A week earlier, Verizon Wireless, a joint venture of Verizon and Vodafone, announced plans to open its mobile network to any device that meets its technical standards. And the Federal Communications Commission is about to auction wireless spectrum that requires licensees to be "more open to devices and applications."

Openness these days is so trendy that Linda Barrabee, a program manager at consultancy Yankee Group, quipped: "Open is the new black."

But exactly what does it mean to pry ajar the U.S. wireless networks - and what does it mean for consumers? At times, executives from Google, Apple and other insurgents seem to be using "open" as a synonym for "Internet-like." The Google founders and many others would like the mobile web to operate more like the wired web, in which consumers can readily get any content they want on any 'Net-connected device. To accomplish that goal, there are, broadly speaking, three different aspects of the wireless world that need to be unlocked (we'll get to those in a moment). But even if the wireless world goes open, there's no guarantee that most consumers will see - or want - a different mobile experience.

Verizon (Charts, Fortune 500) executives privately maintain, for example, that even as the company opens its network to new devices and applications, a big swath of customers will continue to go into Verizon Wireless stores and buy their Verizon-approved phones already loaded with Verizon-assigned features. "I would argue that Verizon's decision to open its network is a vote of confidence in its existing business model," agrees John Jackson, a vice president for emerging technologies at Boston-based Yankee. "I would not expect any rapid dissolution of the current model."

That current model is comprised of different areas - distribution, devices and platforms - that are in the process of being unleashed here in the U.S. (For simplicity's sake, we broke these into three categories; for a more granular look at what's closed and open in the wireless ecosystem, you might want to check out this blog post by John Puterbaugh, founder of wireless vendor Nellymoser. Puterbaugh delves into six degrees of wireless openness.)

Open devices: In some other parts of the world, such as Asia, wireless phones and service are sold separately. A consumer buys the cool device he or she wants, then goes down the street or across the mall to a kiosk run by a mobile operator to get the device activated. Some consumers have multiple phones -- fashion phones for going out to dinner, a smart phones for work -- all with a single wireless service subscription. They simply transfer what's known as a SIM card (a smart card that contains subscriber ID information) from one device to another. Verizon is promising to do something similar to this -- up to a point. The company has said it will open its network to devices that meet its minimum testing standards. Depending on what those standards are, consumers might not end up with a whole lot more choice than what they have today. Further complicating matters is Verizon's use of a wireless standard called CDMA. Phones that were built for the competing GSM standard, such as Apple's (Charts, Fortune 500) iPhone, can't simply hop on the Verizon network. (And AT&T told USAToday that the iPhone won't be part of its open initative; customers still have to sign a two-year contract with AT&T for the Apple's wireless device.)

Open platforms: Today, according to John Puterbaugh, whose technology helps media companies deliver content on mobile devices, a whopping 90% of the mobile phones worldwide use proprietary operating systems, such as Research In Motion's (Charts) Blackberry operating system. An open platform such as Android would give third-party applications developers all the tools - the operating system information, interfaces, even access to the device software - needed to write applications that consumers can download and use on mobile phones. Proponents of open platforms believe this kind of environment will unleash the creativity of the 'Net onto the wireless world, giving consumers many new applications and gizmos to play with on mobile devices.

Open access to content: When most people refer to the wireless operators' "walled gardens," they usually are talking about the fact that the phone companies manage the content and applications that customers can access on their wireless devices. Most of the stuff Americans download to their wireless phones, including ringtones and games, are procured from the carriers' "decks" -- a menu of approved applications provided by the carrier. Content companies would like to be able to market their products directly to consumers, without going through the carriers, and open platforms (described above) should help that.

But carriers may still have some degree of control over consumers' initial experience. A carrier, for example, probably will still program what the "opening screen" looks like when the customer turns on his or her phone. And those "decks" of carrier-promoted content aren't going away any time soon. Handset makers "and carriers are going to customize it and put their own proprietary garbage on top of the operating system," says Nellymoser's Puterbaugh. "I think that's they are still going to be able to exert a lot of control."

Sure, an open wireless world will make it easier for some savvy wireless users to customize their welcome screens, and ignore wireless operators' portals altogether. But it may be some time before the masses take advantage of wide-open wireless - that seems to be what carriers such as Verizon and AT&T (Charts, Fortune 500) are betting on.  To top of page

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