Verizon's Now Playing on Google's Team

If you doubt the influence that Google (Nasdaq: GOOG  ) wields in numerous markets -- not just paid search -- you only have to look to the news item yesterday that has the wireless sector buzzing. In an abrupt change of course, Verizon Wireless, a joint venture between Verizon Communications (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) , announced that it will adopt an open-network policy next year.

The plan is to deploy what Verizon Wireless calls an "Any Apps, Any Device" option for consumers and wireless-device manufacturers by the end of 2008. Under the new plan, Verizon will activate and support any device on its network that meets a basic set of technical criteria. In addition, no limitations will be placed on the device's software applications, in an attempt to address consumers' complaints about "walled gardens" that major carriers such as Verizon, AT&T (NYSE: T  ) and Sprint Nextel (NYSE: S  ) employ.

The announcement is a marked departure from Verizon Wireless' previous stance on open-network policies that Google and the Federal Communications Commission are promoting for a new spectrum auction in January. For months, Verizon has been protesting, arguing, and in any and all ways kicking and screaming about the downsides of open-network business models and all the problems it will bring to the industry.

Yesterday's about-face shows Verizon concluding that it has more to gain from driving the changes rather than fighting them. It also signals the beginning of the end of the status quo that the operator has spent so much effort to protect. Thanks to innovations and efforts from newcomers to telecom such as Intel's (Nasdaq: INTC  ) promotion of Wi-Fi and WiMax, Apple's (Nasdaq: AAPL  ) iPhone, and Google's Android open software platform, the industry is moving farther away from the tightly controlled model that the carriers head up.

Still, I'm sure Verizon's new model for an open network will have its hitches. Activating a device on the network will definitely not come free, and devices will be far more expensive, since a carrier will not be subsidizing them. And, no, current iPhone users cannot switch from AT&T to Verizon -- the phone-signaling technology is completely different between the two.

At least initially, the vast majority of cell-phone users will stick with the status quo and rely on full service support from Verizon. But if the carrier offers attractive open-access prices to its network, that will open up a potentially significant new revenue stream.

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