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Verizon Wireless to Open Network to 3rd Party Apps, Devices

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NEW YORK (Dow Jones) Verizon Wireless said Tuesday that it would allow any device or software to run on its wireless network as it heeds the industry call for more openness.

It's a reversal for the No. 2 U.S. carrier, which is known to be the most protective of its network, and an acknowledgment of the direction of the wireless industry. Google is spearheading a similar move with an open-standards software platform - dubbed Android - and already counts Sprint Nextel and Deutsche Telekom's T-Mobile USA as allies. Apple has also relented on its closed approach and will allow third parties to develop software for its iPhone.

"I think it's a reaction to Google," said Tole Hart, an analyst at Gartner Inc. "I think it'll help them. It gives customers more options."

Verizon Wireless said it will publish early next year technical standards for the development community, which are necessary for designing software, applications and devices that can run on its network. The carrier said that any device that meets the minimum technical standards will be activated on the network. It hopes to have new devices and applications available to customers by the end of next year.

New Connected Devices

John Stratton, chief marketing officer for Verizon, said he envisions devices beyond the standard cellphone being created for the network. This includes gaming devices or appliances.

"It's subject to imagination," he told reporters in a conference call on Monday in regard to the different possible devices. "It encourages anyone who wants to get in the game to get in the game."

Verizon Wireless plans to talk to different hardware manufacturers. It's a model similar to what Sprint has envisioned for under its WiMax network Xohm, in which devices as different as laptops to refrigerators would be connected to a wireless Internet network. The carrier didn't discuss potential pricing plans for the new devices.

On the software side, Verizon Wireless Chief Executive Lowell McAdam said the separate model will be "additive" to its current service, and that it will cater to subscribers looking for complete control of their device.

"We pay attention to our customers," McAdam said. "We see an opportunity to tap into a huge development community."

Hart said the move should benefit Verizon Wireless because its customers will be more interested in data usage and mobile programs. The carriers have increasingly looked at data revenue as a growth opportunity as voice revenue matures.

The news shouldn't be taken as an indication in either direction of whether Verizon Wireless will join Google in its alliance, Stratton said. But devices using the Android operating system that pass its test could run on Verizon Wireless' network.

McAdam noted that Sprint phones that passed Verizon Wireless' standards would also work.

Rival AT&T, meanwhile, believes it is still the standard when it comes to open access.

"In terms of openness, we think we have defined the term in ways that really matter to people," said Mark Siegel, a spokesman for AT&T's mobile division. "We think we're the most open company in the industry."

Siegel added that AT&T is open to Android if the operating system pans out, but that there remains many questions over how it will work.

Auction On The Horizon

Verizon Wireless' announcement comes just two months before the Federal Communications Commission auctions off a large chunk of lucrative radio spectrum, which wireless networks are based on.

Whatever company acquires a swath of that airwaves will have to allow any phone and any software to operate on the wireless network it builds. Verizon Wireless had strongly opposed the rules requiring open access, as it had become known. But it had been one of the companies expected to ultimately bid for that spectrum, which would allow it to substantially bolster its national wireless network.

If it decides to bid for the 22 megahertz chunk of spectrum, Verizon Wireless would almost certainly be competing with Google, which has already announced it will bid in the auction.

Harold Feld, of the public interest group Media Access Project, said that it was likely Google's earlier announcement that forced Verizon's hand.

"I think the announcement by Google that it plans to bid for the spectrum forced Verizon to make a decision," said Feld. "It's a large block of spectrum that Verizon needs."

Feld said the decision "almost certainly" means that Verizon Wireless will bid for the spectrum. It wasn't required by the FCC to extend the open access conditions to all its customers, but the fact that it now has, said Feld, means it will "aggressively bid" for the spectrum.

In a statement, FCC Chairman Kevin Martin welcomed Verizon's announcement. "I continue to believe that more openness - at the network, device, and application level - helps foster innovation and enhances consumers' freedom and choice in purchasing wireless service," said Martin.

A Long Way To Go

Despite the Verizon Wireless' move, the industry is a long way off from truly open networks. Such an environment is complicated by the disparate networks running in the U.S. In Europe, cellphones roam seamlessly from network to network because all of them run under the same standard. But Verizon runs under a standard called CDMA, which differs from much of the world and that of the nation's largest carrier, AT&T. As a result, the iPhone, designed to run on AT&T's network, can't work with Verizon service.

The carrier said it will continue to provide its full-service offering - a so-called walled garden approach where the carrier provides music, news and other mobile programs to its user.

"Most customers want the full service model," McAdam said. "This additional option will complement, not replace, our successful full-service model."

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires

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