Verizon Wireless to Support Google’s Android

– An Open Access Cellular Network Followed by Selection of LTE for High-speed Wireless Broadband
– Integration of FiOS and LTE: Wireless Meets Wireline
– Verizon Could Offer Seamless High-speed Wired & Wireless Broadband Services

Last week Verizon Wireless said it would open its network to third-party devices and Internet applications and services. Then it said it would begin testing a wireless networking technology called LTE next year that will directly compete with WiMAX. This week the cellco said it will support devices that use Google’s new Linux-based Android operating system on its current and future cellular network.

Verizon Wireless, 55% owned by Verizon, is the second-largest US mobile phone service in market share, barely trailing AT&T, and is the most profitable. It is the largest mobile phone service to publicly promise support for Android. Adding to Verizon Wireless’ clout is that Vodafone, the world’s largest mobile phone operator by revenue, owns the other 45%.

Android competes directly with operating systems for mobile devices such as Microsoft’s Windows Mobile, Nokia-backed Symbian, Palm and several Linux-based operating systems. Apple in its iPhones and RIM in its BlackBerries use proprietary operating systems that they developed, own and control. Apple recently promised to open up its iPhone operating system to third-party developers

Google promised that any mobile device maker can use Android for free as long as the general rules of open source software are followed, such as making improvements available to other developers for free.

Verizon Wireless CEO Lowell McAdam told BusinessWeek that once the company decided to open access to its cellular network, it made sense to support Android. “We’re planning on using Android,” McAdam said in the magazine. “Android is an enabler of what we do.”

Despite Verizon Wireless’ promises, there is still doubt in the industry as to how much the company is really opening its network. One reason for the doubt could be that the company has been among the most restrictive, the most closed to third-party devices, by creating a walled garden around the sites that its subscribers could access. Its transition from closed access to open access is as remarkable as mankind’s transition from a constant and continuous hunt for food and warmth to, seemingly, full-time search for media.

Two events may have prompted Verizon Wireless’ moves. One is Apple’s announcement that it will open the iPhone to third-party developers. That’s particularly alarming considering how much success Verizon Wireless rival AT&T has had selling iPhones. Then there’s Google’s statement that in January it will bid on spectrum that can be used to build a wireless network. Whether Google would build and operate its own network or farm it out to a more experienced wireless network operator remains to be seen. Verizon Wireless may think that by making its cellular network open and supporting Android that Google will have less incentive to build its own wireless network.

There’s also the threat from WiMAX technology, which Sprint is using to build an open access network that will provide subscribers access to any and every Web site and online service plus allow any WiMAX-certified device to connect.

One difference between the Sprint and Verizon Wireless approaches is that WiMAX gear will be certified by an industry group that Sprint does not control, but Verizon Wireless will certify devices in a $20 million certifications lab that it’s building and will control. In a world of level playing fields, Verizon Wireless would turn its testing over to an industry body or contract it out to an independent lab.

BusinessWeek reported that Verizon Wireless has spent upwards of a year considering and planning its move to open access. The magazine said McAdam held numerous meetings with the chairman of the FCC and many late night sessions with top executives at Verizon and Vodafone.

Reportedly, McAdam kept with him at all times a well-worn piece of paper that listed seven bullet points that defines what an open-access policy would mean to Verizon Wireless. BusinessWeek said that Verizon Wireless decided that moving to an open access network would allow it to continue growing but hold costs down. One of its biggest costs is customer support. Verizon Wireless operates 25 call centers, each of which has about 1,000 employees. Additionally, 20,000 employees in its 2,300 stores are estimated to spend only about 10% of their time signing up new subscribers. The other 90% is spent assisting existing customers with such things as technical support and billing issues. The magazine quotes McAdam as saying that the current business model is not sustainable. “If we get to 150 million customers, boy, that’s a lot of overhead,” he said.

Open Access
When most people think of open access, if they think of it at all, they think about what they have at the office and at home – the ability to use any PC or other device that can connect to the Net and the ability to access any and every Web site and run any and every Web-based service (like search) or software (like instant messaging). The mobile phone companies have by and large prevented that from happening with their cellular networks.

There are downsides to open access networks. If there’s a problem, consumers have to call the device maker. The broadband service only has to verify that there’s live broadband at the router but doesn’t have to check to see if the devices that are connected to it are functioning properly. Verizon Wireless’ plan for its open access approach means that it will only confirm that an open access device can connect to its network, not that every feature on the device works or that every third-party application and service is working.

The device makers will have to spend the money to support their products, not Verizon Wireless.

Verizon Wireless will test each model of a mobile device before it certifies the device for use on its network. Beyond that, McAdam said its subscribers would “have to talk to their handset provider or their application provider if they have particular issues.”

Another major difference between Sprint’s planned WiMAX network and Verizon Wireless’ current approach is that Verizon Wireless subsidizes every handset that it sells so that the user pays in many cases less than what Verizon Wireless paid for the handset. The company said it does not intend to subsidize open access devices. This would give it the benefit of having thousands of devices with wide variances of capabilities available for use on its network – without the burden of testing, inventorying and subsidizing them. That, plus the reduction in its customer support operations, could be worth billions.

Wireless Meets Wireline as LTE Connects to FiOS
There’s another major piece in the remaking of Verizon Wireless that involves its adoption, at least for testing purposes, of LTE (Long Term Evolution) as its future network technology – the so-called 4G network that would be the equivalent in speed and access of what consumers now have in their wireline broadband at home.

Verizon Communications is considering integrating LTE into its fiber-optic based FiOS network. According to Verizon CTO Dick Lynch, LTE offers speeds fast enough that Verizon could offer on Verizon Wireless’ network what had previously been only available over wireline broadband.

“We don’t expect people are going to download [high-definition] video over the LTE network, but there will be other services that tightly integrate with FiOS,” Lynch said. “This is a Verizon ‘big picture’ decision. One of the reasons I made the move from Verizon Wireless to Verizon is because there is this belief that the future is about the converged network.”

Vodafone and Verizon Wireless won’t begin testing LTE until late 2008, with a full-blown rollout not expected until the 2010 to 2012 time frame. Sprint says it’s on schedule to begin testing its WiMAX network by year-end (only a few weeks away) in the Chicago and Washington, DC-Baltimore areas.

Verizon’s LTE announcement, according to Lynch, is not a sign of an immediate launch, only a signal to device makers of where Verizon and Verizon Wireless are headed.

“4G is not about voice services,” Lynch said. “It’s not about ‘light’ broadband services. It’s about high-speed IP data services.” He expects hundreds of consumer electronics makers to develop a variety of devices that offer different functions. By announcing now, Lynch said, the telco is enabling the device and network gear makers to develop future products to a specific standard, one that they know Verizon, Verizon Wireless and Vodafone will support.

It’s much the same strategy that Samsung, Intel, Motorola, Google, Sprint and others have used to make WiMAX the world’s most-awaited mobile network.

Nortel, Alcatel-Lucent, Ericsson and Nokia Siemens are expected to be the big winners to supply LTE network gear to Verizon and Vodafone.

Google Confirms It Will Bid on Wireless Spectrum

– Will Bid Alone

Google this week confirmed that it will indeed bid on wireless spectrum in the US on January 28, starting at $4.6 billion. The spectrum could be used to build an open access wireless network that would compete with the more closed cellular networks that the likes of AT&T, Verizon Wireless, Sprint and T-Mobile operate. The bidding could continue into March before one or more winners are determined.

Google’s announcement this week is that it will try to assemble a national block of wireless spectrum.

Estimates are that actually building a wireless network could cost another $17 billion to $20 billion. Google has not said, if it wins of course, whether it will build the network or turn it over to a more experienced network operator.

Google, as we have said often, wants to make sure the ads it carries on its global advertising network can be seen on any device that has Internet access. To that end, it has launched a Linux-based operating system for mobile devices, not just handsets, which mobile device makers can use for free.

The FCC will auction the spectrum in six regional chunks of the continental US. Another six regions cover Alaska, Hawaii, offshore areas and territories. Different bidders could win different regions.

Local TV stations currently use the spectrum for over-the-air analog broadcasts. The government has mandated that the TV stations switch 100% to digital broadcasts, which use less spectrum than analog broadcasts, by February 2009. That’s when the winning bidder can start using the spectrum.

“We could enter into partnerships with other companies, we could lease the spectrum and become a wholesaler or we could operate our own wireless network,” said Google spokesman Adam Kovacevich. Google said it will bid alone, with no bidding partners.

Google chairman Eric Schmidt promised in a written statement that, if it wins, the company will use the spectrum to increase Americans’ wireless choices.

“We believe it’s important to put our money where our principles are,” Schmidt said. “Consumers deserve more competition and innovation than they have in today’s wireless world. No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.”

The FCC has mandated that some of the spectrum that’s going up for bid be kept open to any devices or software compatible with the network technology the auction winner chooses. Google was the biggest supporter of the open access provision.

Google hasn’t said which wireless network technology it would use. WiMAX technology, which is almost completely developed, would seem to be a possible choice. However, Sprint and Clearwire have committed to building WiMAX networks. Verizon Wireless said last week that it will use LTE (Long Term Evolution) technology for its high-speed wireless network.

“We haven’t said anything about what network technology Google will use,” Kovacevich said. “We would consider that question premature because we don’t know how the auction is going to unfold.”

Cox, AT&T and Frontline Wireless have indicated they will also bid on the 700 Mhz. Verizon Wireless is believed to have bidding intentions as well. Sprint, Time Warner Cable, Sprint and Comcast have said they will not bid. The deadline for submitting bid applications has passed so no one else is allowed to say whether or not they intend to bid until after the FCC announces who the bidders will be.