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Verizon CEO Wants to Spur Innovation With Open Model

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NEW YORK (Dow Jones) In unveiling the technical specifications for its open network, Verizon Wireless said it will make the process to get any program or device certified simple, quick and inexpensive.

The No. 2 U.S. wireless provider is opening its network to third-party developers and manufacturers in an effort to spur the creation of new services - as well as revenue streams. It is a strong showing of support for the open concept, which has recently attracted many major players.

"For us to participate fully in the growth in the wireless industry, we need to partner with inventors like you," said Verizon Communications Chairman and Chief Executive Ivan Seidenberg at the company's Open Development Device Conference on Wednesday.

The technical specifications aren't rigorous and are based on industry standards, said Tony Melone, chief technology officer for Verizon Wireless. Certification fees will be based on marketplace rates, and isn't considered a profit-center for the carrier, he added.

The certification process won't be lengthy, costly or complicated, said Tony Lewis, vice president of open development for Verizon Wireless.

The carrier unveiled two business models: A retail partnership in which Verizon still bills customers for the device; and a wholesale partnership where the third party handles all of the customer service and billing infrastructure. Verizon Wireless said it was open to customized models.

The process will begin soon - certification will begin at the end of the second quarter, and the process could take as little as four weeks.

"We've developed a model that is executable instantly," said Mike Lanman, chief marketing officer for Verizon Wireless.

Motorola executive Bill Alberth, meanwhile, said there was an opportunity to create phones on two tracks: the traditional Verizon Wireless-brand route and the new open one. He added there was an opportunity to help smaller third-party developers get through the certification process.

While this may be significant for the direction of the industry, most consumers will continue to sign up for traditional wireless plans and won't feel the impact.

While "open" to anything, the devices and programs will still be developed exclusively for Verizon Wireless, said Avi Greengart, research director at Current Analysis. The devices won't have a subsidy, so they may cost several hundred dollars.

But anyone hoping the Apple Inc. (AAPL) iPhone will suddenly work on Verizon Wireless will be disappointed. The iPhone runs on a different technology, so no amount of openness will allow the device to run on Verizon's network.

In opening its network, Verizon Wireless is addressing one of the biggest knocks on the network: its limited device selection.

For all its talk of network quality, the carrier has always lagged behind rivals AT&T and Deutsche Telekom's T-Mobile USA in the number of handsets it can offer. That is because it - along with Sprint Nextel - runs on a technology called CDMA, which is used in only a few countries. AT&T and T-Mobile argue that their service, which runs on a more widely used technology called GSM and offers more cellphones, is more open.

Later this year, Verizon Wireless plans to test out its fourth-generation network, called Long-Term Evolution, or LTE, Seidenberg said. The company plans to maintain its open network concept when it moves to LTE.

While seen as a sign of progress, the industry still lags behind more open international markets.

"The U.S. market is still far behind the rest of the world," said Kazahiko Shirai, a technical planner for mobile devices at Sony Electronics, a division of Sony Corp. (SNE). He added that the move provides opportunities to think about different wireless devices.

When Verizon Wireless said in November it would allow any device or software to run on its wireless network, it was seen as a reversal for the carrier, which had been known as the most protective in the industry. Many saw the move as a reaction to Google's Android operating system - an open source platform designed to run on any phone.

It was also seen as a way of pre-empting regulators who were pushing for more open networks.

"They are getting ahead of the regulatory body and defining what 'open' is before they do," Greengart said.

Others have glommed onto the open concept.

Earlier this month, Apple introduced its software development kit, allowing third parties to create programs such as games and other features for its iPhone.

Last week, AT&T posted guidelines for creating applications for its service on its Web site, expanding its potential base of third-party developers. AT&T, however, isn't giving away its technical code, but it is taking steps towards a more open environment by providing a helpful roadmap for aspiring developers. AT&T, which runs the nation's largest carrier by subscriber base, has said it would be open to working with alternative devices and applications looking to run on its network.

Verizon Wireless' notion of an open network covering any device or handset echoes the strategy that Sprint has embraced with its WiMax network, coined Xohm. The carrier envisions multiple devices - beyond cellphones - ranging from laptop computers to portable videogame players and cameras to connect to Xohm.

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

(END) Dow Jones Newswires

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