Verizon: Open Access and LTEFriday, November 30, 2007
Verizon made two announcements this week that will have an impact on the world of wireless. The first was that by the end of 2008, Verizon Wireless will "provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications not offered by the company." This announcement is being hailed as a "win" for the Internet community.
The second announcement is that Verizon Wireless will use LTE (Long Term Evolution) for its next generation instead of UMB (Ultra Mobile Broadband). This announcement is seen by the GSM/UMTS/LTE community as Verizon Wireless breaking with the CDMA community (CDMA2000 1X, EV-DO and UMB) and moving closer to its part owner, Vodafone, for next-generation services deployment.
The open access announcement is interesting, but devices will still have to meet the minimum technical standard set by the FCC and Verizon in order to qualify for activation on the network. This makes sense since network operators' main concern when opening up their networks is to make sure they do not permit devices on the network that could harm the network or might cause problems for other customers. Verizon will be using its "state-of-the-art" testing lab to verify the proper operation of these devices.
At a recent WCA panel session held in Palo Alto, the Google representative stated that Google's Android operating system would work "above" the wireless interface layer and have no access to the software and hardware that controls the phone on the network. I certain that confining the operating system and capabilities of the device and isolating them from the technology is the right approach to making the devices "good citizens" on the network. As for software and applications, we will have to wait and see the Verizon published specifications.
Getting back to Verizon's next-generation technology choice, first, this will have little or no effect on Qualcomm since it has intellectual property for both flavors of next-generation technology. Further, Verizon has stated that it will continue to run and expand its existing CDMA network and use LTE only on its AWS spectrum (East Coast mostly) and whatever spectrum it wins at the 700-MHz auction "if Verizon decides to bid" according to the Verizon Wireless Analyst call on Wednesday.
Will this spell the end for UMB, the CDMA version of the next-generation wireless technology? I have seen a number of reports jumping to this conclusion, but I am not so sure. I believe that the future of wireless is about multiple-technology-capable chipsets in wireless devices, and that both LTE and UMB have a place moving forward. However, neither of these announcements was surprising. What I think the analysts and the press missed is this―
Dick Lynch, Executive Vice President and Chief Technology Officer for Verizon, made some statements that I think are the most important part of both of these announcements. First, Verizon is much more concerned about bandwidth issues than almost any other network operator in the world and I happen to believe that its concerns are well founded even with next-generation technology on tap for 2010.
On the analyst call, Dick answered one question by talking about use-based pricing―When you open a network, or when you sell data on an all-you-can-eat basis, how do you provide fair and equal access to all of your customers? I see this as a big issue and one that must be addressed because of the limitations of wireless bandwidth. One way is by making use of Quality of Service (QoS) and selling data services at several different data rates and charging differently for them. This is already a standard practice for both DSL and cable access. However, it still does not address the issue of the data hog who starts downloading streaming video for hours on end.
Dick's answer is something I believe will become the norm in wireless data pricing moving forward. You pay for what you use. If you use wireless data services to read and answer a dozen or so emails a day and perhaps visit a website or two, what you pay for data will be lower than someone who is downloading a movie. If you are a typical customer, you will pay typical prices. However, if you really need that 50 MB file right now, you will be notified of additional charges and they will be added to your bill. If, on the other hand, you can wait until 2 a.m. when data traffic is much lighter, the cost to download that file will be cheaper.
Market pricing is not only necessary to help make bandwidth available for all customers, it is the fairest way to make sure that the bandwidth we have is available to all customers. According to a recent report in Broadband Properties Magazine, Internet traffic grew at a rate of 57% last year and Internet bandwidth grew 68%. There is no way that I know of to increase wireless bandwidth in the United States by 68% in five years, let alone one.
I think that open access within limits is a good for all, but by "all" I mean all of the customers on a given wireless network, not only the 10% who believe they should have totally unrestricted access and who don't have any consideration for the rest of us as long as they get theirs!