In case you haven't noticed, Verizon Wireless and Google (NASDAQ:GOOG) have been playing tit-for-tat lately, taking thinly veiled swipes at each other as the two companies wrangle for leverage in the next generation of mobile services.
The rivalry picked up steam when Google pushed the U.S. Federal Communications Commission (FCC) to obligate the winner of a particular block of spectrum auctioned in January to deploy an "open network" architecture that would allow any device and any application. Verizon Wireless -- a joint venture between Verizon Communications (NYSE:VZ) and Vodafone -- initially protested and eventually won the bidding for the spectrum block, but not before committing to an open network path it devised itself.
Google then lobbed the next grenade, with a $500 million investment into the new Clearwire (NASDAQ:CLWR) venture, where partners such as Intel (NASDAQ:INTC) and Comcast (NASDAQ:CMCSA) hope to cut into Verizon and AT&T's (NYSE:T) dominance via a nationwide WiMAX network.
Now Verizon has responded by joining the LiMo Foundation (LiMo is short for Linux Mobile), embracing an open operating system for mobile devices based upon Linux. The move snubs Google's forthcoming Android operating system, which was supposed to lead the revolutionary charge to keep any one company from cornering the mobile-software market the way Microsoft (NASDAQ:MSFT) has done with PCs.
But Verizon obviously sees heavyweight Google's push into mobile platforms as a potential threat. While Verizon noted that it is open to a number of different operating systems for phones, it was clear that the company would encourage manufacturers and developers to look to LiMo first as a platform for new devices.
In the future world of open networks, carriers have no problem with companies developing creative new applications for mobile devices. New applications make them more money, since they profit from providing the wireless pipe for data and voice. But carriers don't want any company to too tightly control the operating system and the applications for devices -- that could potentially drive up their cost of delivering products and services.
In short, wireless carriers want to keep their current level of control. As long as no "outside" company gains too much leverage in any part of the value chain, the carriers will continue to write the rules in wireless services. With hundreds of billions at stake, though, I'd expect more epic battles in the future.
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