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Open Sesame


April 15, 2008 - 0 Comments

ctia2008logo_home.gif With all the “open” talk at at CTIA recently, Ali Baba might have thought Las Vegas was home of the forty thieves (not to mention casino odds). The FCC was concluding the 700 MHz auction, which included rules for the C Block that require “a platform that is more open to devices and applications.” Google had agitated for such a requirement, but Verizon Wireless won the auction, bidding $4.7 billion (for the C block, bidding a total of $9.4 billion in the auction overall).How will Verizon Wireless comply with the openness rules? They revealed some plans in New York city, on March 19, when they unveiled their Open Development initiative. I arrived at the event with some skepticism. I’ve written before about how the Internet business model challenges the culture of the mobile industry (see Where Worlds Collide). But after an enthusiastic welcome by Tony Lewis, the vice president of Open Development, the Verizon chairman and CEO Ivan Seidenberg gave a keynote that addressed these issues directly. He recognized the intersecting megatrends of mobility and the Internet as prompting a new wave of applications, which no single company can create by itself. Instead, Verizon embraces an ecosystem approach, which motivates this new Open Development activity.After his speech, he spent the rest of the morning participating in the meeting, including conversations during breaks with participants like myself. Senior members of the Verizon Wireless team also spoke, including president Lowell McAdam, chief marketing officer Mike Lanman, who described both retail and wholesale commercial models, chief information officer Ajay Waghray, who described self-service activation options, and chief technology Tony Melone, who along with members of his team, spoke about the device certification requirements. The main session concluded with remarks by James Piwowarsk of OnStar, which is built on the Verizon Wireless network. Many questions remain, but clearly this initiative arrived with much energy and attention at senior levels of Verizon. What are their motivations? To some extent, they must want to seize the initiative in defining “open.” Market-driven moves towards open mobile networks will yield more flexibility than top-down government regulation, as envisioned by the Skype petition to the FCC. The Apple iPhone terms with AT&T defined a new business arrangement, and Google Android promises more to come. But fundamentally, Verizon must expect the Open Development initiative will be good for their business. OnStar has generated millions of incremental dollars for Verizon, and they surely hope for similar innovation from the Open Development program. This business motivation will disappoint some, who think “open” should mean “free” (as in, “no charge”). But it’s unreasonable to expect that Verizon Wireless would give away its services after investing billions in spectrum and equipment (including some excellent Cisco products!). Verizon Wireless will need good return on investment, while leaving room to prosper for those using its Open Development program. Let me offer some guiding principals for this balanced openness:

  1. Open means open. In other words, you can do what you want, unless you objectively harm others, presumably by harming the network.
  2. Objectively harmful behavior will be discouraged or prevented, but competitive behavior will not.
  3. When possible, excess resource consumption will be controlled by billing (“economics”), not blocking (“regulation”).
  4. Egregious behavior may result in immediate blocking or deactivation (“jail”), but the definition of such behavior will be technically objective and well documented in advance.
  5. Compliance testing will be decentralized and competitive, to avoid bottlenecks and encourage reasonable costs.
  6. You get what you pay for, with clear public commercial terms.
  7. A network operator may offer value-add services (quality of service, text messaging, etc.). But such offerings are optional, not part of the base definition.

Whether Verizon and other operators embrace such principals will determine the real-world impact of all this talk of openness. With the right balance, the mobile industry could say “open sesame” to more riches than in Ali Baba’s cave.

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