Ever since Verizon announced that it was going “open,” OPEN has become the new buzzword. For instance, this morning USA Today ran a story on AT&T being open, with extensive commentary from AT&T Wireless CEO & President Ralph de la Vega. The headline, “AT&T flings cellphone network wide open,” made it seem that AT&T was doing something new.
It isn’t a pretty sight to get up in the morning and find such a major development on your beat and not know a thing about it. But after reading through the piece, it was much ado about nothing. After all even today, once your contract expires, you can continue to use the AT&T network on a month-to-month basis. You can use any unlocked device which you can buy from anywhere, as long as it’s a GSM device and supports the frequencies used by AT&T. The phone can use any operating system — Windows Mobile, Symbian, Linux or whatever.
When I spoke with de la Vega following the Google Android announcement , he made precisely the same statements and said that AT&T (T) was already doing what Verizon (VZ) was announcing. He said pretty much the same thing in an interview with Ryan Block of Engadget a few weeks ago. I think the most recent story overstates the case. Just to make sure that I wasn’t missing something, I spoke to an AT&T spokesperson, and basically was told what de la Vega had said previously.
I think the bigger issue here is that we really need to get companies to define what they mean by OPEN. Open handsets, open networks, open applications, open operating systems — some combination of those, or all of them? Otherwise, I might have to start translating OPEN to “We’re Scared of Google.”
AT&T and T-mobile’s networks are already open, in the sense that all unlocked GSM/UMTS phones will work on their network without any problems (provided that it supports their frequency).
The problem is there’s not enough retail outlets selling unlocked GSM/UMTS phones without any subsidy and the value proposition for buying phones with contract is very strong.
At the same amount of voice/text/data usage, contract plans will be cheaper than prepaid (part of US carriers’ pricing strategy). Under the same condition, contracting a phone for free is cheaper than paying $200 for an unlocked phone that works only on AT&T/T-mobile.
Wireless industry in the US will remains much the same unless all US carriers significantly lowers their prepaid voice/text rates to the level of contract rates (similar to Europe or much of the developing worlds).
On the topic of open handsets/applications/OS, Google certainly generated a lot of PR but its propaganda will likely to fail, as it is trying to enter a mostly integrated place of the wireless value chain.
I think the operators are betting that the existing model where they are the primary channel for handset distribution is not going to change for majority for the customers. They are paying lip service to being open, just to make sure the FCC or the politicos do not make it an issue…
Operators do provide some value in terms of customer service for handset makers, and I am not sure why or how transitioning to a PC/consumer electronics will be so great for users….
When it comes to the US GSM networks being “open”, it’s more about marketing and packaging than anything else. Yeah, I can drop my AT&T SIM card into any GSM phone I want and go. But it is never presented that way to the consumer. They are never told or offered just a SIM card with a voice and data plan on it; then told: go buy any GSM phone you want, pop this card in and go to town.
And device makers (other than Apple and possibly Palm) don’t have REAL retail presences for their unlocked GSM phones. They don’t aggressively promote to consumers that they can buy their products and put their SIM card in them. In Europe, it is pretty common in carrier retail stores to have three prices EXPLICITLY advertised for a device: contract price, locked price and unlocked price. Consumers get to chose.
Next is the carriers who have to take their weird pricing plans and rationalize them. All the texting and MMS packages stuff has to go away. Make it like the iPhone (or any landline broadband contract): you have a price for voice and a price for data. Simple. (Yes, I know they want to keep their high margin, proprietary messaging offerings, but the way the pricing is done is destructive overall.)
For GSM networks in the US, this whole “openness” thing could be made very clear with a few alterations in business plans and a couple of months of marketing. And the carriers could still maintain the margins they are used to. There is no reason I shouldn’t be able to pop into an AT&T store and buy my HSPA broadband SIM with a reasonably priced plan. Then go buy whatever GSM phone I want (assuming the manufacturers actually marketed them to me), and then just go. People are making this hard, the technology is not making this hard.
This is classic Roveian PR: Drape yourself in the flag of “Openness” as a ruse to continue locking in the customer and locking down the walled garden.
The only way they’re ever going to truly open their networks is if Google overpays in the Spectrum auction, prostrate themselves before the marketplace with flat-rate pricing for voice and data, and let you bring-your-own-phone.
Even then, the notion of “Phone-as-PC-platform” that we’re all dreaming of is unlikely to occur thanks to the difficulty for small, innovative developers to build and distribute software into the ongoing diaspora of Mobile phone OS platforms, which Google has now merely worsened.
The only thing worse than no common framework at all is a common framework that sucks: Seen J2ME?
-Ian.
Opening up your network to any phone only represents that these companies are open to receiving your money. Developer should have access to the services available on the handsets and networks. Users should be able to install anything they want without needing to worry about digitally signed content.
Charging subscription fees for data that is freely available on the web is not a sustainable business model as the two platforms converge. The Network Operators are all scrambling to figure out how to continue controlling these services without becoming obsolete in the face of Google’s actual openness.
They’ve found the right word (open), but they had better start taking some action before Google pwns mobile phone software and services.
I think AT&T and T-mobile are closer to being open than others in the US, but being closer doesn’t mean they are “all open” yet. It does help attract customers, because I’m one of them. I got tired of waiting 2 years to extend my contract and get another crappy phone so I went to a carrier where I could buy what I wanted online (usually ebay) and just pop my sim card in and go. More open than Verizon right now? Absolutely. Completely open and allowing customers true choice? No.
I have to agree with the scenarios Steve Haney laid out, with one exception:
Apple has their own stores, but they’re not selling any unlocked phones that I’m aware of.
I think the day will arrive sooner than later when the carriers will truly open their networks and yes maybe we will have to thank Google for it. Verizon’s recent announcement to switch to LTE for its 4GL implementation is one step closer to being open IMO(LTE belongs to the GSM family).
http://tinyurl.com/2znnro
Buzz words usually mean confusion. (Like WiMax). Open doesn’t mean that it is easy to use a phone you own, but that is as open as it gets in the States. Since cellular penetration is approaching 90%, it is now a flat market. Now the carriers start playing take-away.
Two things become important: Acquisition Costs and Customer Retention. Carriers don’t look at Retention metrics because the Street doesn’t. But that should change. Acquisition costs in a flat market are big. (Look at VZ FiOS costs to get TV customers, another flat market).
One of the biggest acquisition costs is the phone subsidy. It would make sense to let the customer buy his/her own phone. No subsidy cost.
Plus it is a “Green” maneuver. No phone added to the landfill.
After many years of work in the telecommunications industry I now see exactly why I got out. The proprietary networks of the past are giving way to open networks. The question is, when will I be able to use my iphoneto make calls over the internet?