ATandT's Open Network Claim Questioned By Partners

Just weeks after Verizon Wireless sent shockwaves with its announcement that by next year it will open up its wireless network to non-Verizon devices and applications, ATandT CEO Ralph de la Vega battled back claiming that ATandT's network is and has basically always been open.

In a USA Today article, de la Vega said "you can use any handset on our network you want." Later, he added: "We don't prohibit it, or even police it" and: "We are the most open wireless company in the industry."

According to Jack Gold, principal and founder of J. Gold Associates, a Northborough, Mass.-based wireless research and advisory firm, de la Vega's claims are half true, "disingenuous" and likely in response to Verizon's announcement last month that it plans to open up its network next year.

"If you're assuming that you can take an ATandT SIM card out of an ATandT device and plug it into any other GSM device, then it is open," Gold said. "The problem arises when you want to do anything more than make a phone call."

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The idea of openness, Gold said, can create a conundrum for VARs and channel partners, since opening networks to any devices allows the end user to walk into any store, buy any device and have it work on whichever network they choose, essentially cutting out the middleman.

However, an open model also lets VARs offer a wider variety of devices and services to their clients, having the potential to not limit them to certain carriers, manufacturers or networks.

Steve Brumer, president, CEO and founder of Wireless Rain, a Suwanee, Ga.-based wireless VAR and managed service provider, said it's too soon to know what impact openness will have on the channel, especially since there is yet to be a clear cut definition of what ATandT and Verizon consider open.

Brumer added, however, that openness could let VARs launch more managed service offerings, allowing businesses to rely less on carriers for support and rely on their VARs directly.

"From a VAR perspective it will open up more opportunities to sell more products or different products," he said. "It could get to a point where customers are relying on you for more products."

Still, Brumer added, it's too soon to know when any level of openness will take true effect.

"As a VAR, you have to sell what you have in your bag today," he said. "I don't think anybody should be waiting around to find out what open really means."

Gold said ATandT's network has always been open on the voice side, meaning phone calls are no problem as long as the SIM card is swapped between unlocked GSM-powered devices. But when various Web browsers and other mobile applications come into play, that's a different story altogether.

NEXT: Trying To Define Openness

In many cases, Gold said, when a device pops up on ATandT's network and authenticates to it, the type of phone being used may not support certain applications or functions, such as Web browsing, which is typically pre-loaded onto ATandT handsets. If that's the case, the device will be used to make and receive calls and nothing more.

"They can control their network," Gold said. "They can control access. They can control connectivity. So it's really a crapshoot as to whether or not it will be open."

Gold called de la Vega's comments nothing more than spin, likely brought about to downplay Verizon's announcement last month that it will open up its wireless CDMA network to other non-Verizon devices and applications.

In a statement released in November, Verizon said by late next year it would open up its wireless network to outside devices and applications.

"In early 2008, the company will publish the technical standards the development community will need to design products to interface with the Verizon Wireless network," the statement said. "Any device that meets the minimum technical standard will be activated on the network."

While exactly what that "minimum technical standard" entails remains uncertain, Gold said Verizon is basically saying that it's network will be completely open, unlike ATandT's, which could be open for some and not others depending on device choice, data plan and the like.

Burton Group senior analyst Paul DeBeasi said as it stands, it's not really feasible to walk into a store, buy any device and have it work on any network.

"This forces people to define openness," he said. "And no one's really there yet. It's semantics. They're playing games with words."

The true definition of openness, DeBeasi said, would be similar to the Internet, meaning someone can buy a computer from anywhere, plug it into a cable modem and it will work. Mobile devices aren't and won't be there.

And while Verizon and ATandT are only the first to boast openness, Gold said others will soon have to follow suit or be left in the dust.

"Everyone's eventually going to have to do it," he said. "They don't have a choice. Everyone has to compete. There will be intense pressure, if this really sticks, for everyone to join in."

DeBeasi said that competition could drive down the prices on phones and services, which could eventually lead to less money for everyone in the mobility supply chain. He cautioned VARs to enjoy wireless success now, because the future is uncertain.

"They better consider this the golden age, because it is," he said.