November 27th, 2007

Apple Wins: Verizon Is First Wireless Carrier To Open Network


When Apple launched the iPhone exclusively on AT&T’s crumby edge network — and I refused to buy one for that reason — I predicted that Apple’s real endgame was to break the wireless carriers’ stranglehold on handsets, so that Apple could sell iPhones on any network. Sure enough, Verizon just announced that next year it would allow any phone — and any application on any phone — to be used on its network.

I held my ground with Verizon, but many people eagerly switched over to AT&T to get an iPhone — many of those probably abandoned their Verizon accounts and gladly paid the termination fee. You can be sure Verizon was keeping count. And you can be sure this is what Apple told Verizon would happen when Apple refused to accept Verizon’s terms for the iPhone launch. AT&T was just a pawn.

This also puts into perspective Apple’s cracking down on open iPhones — it’s not that Apple doesn’t want iPhones used on every cell network — it’s just that they needed to break the back of the industry first, using consumer demand as a blunt instrument.

Steve Jobs always has a plan.

At Silicon Alley Insider, Dan Frommer observed:

But if you’re a Verizon subscriber drooling for one of Apple’s iPhones, don’t get your hopes up: the iPhone — and its exclusive U.S. carrier, AT&T (T) — use a different kind of cellphone network, called “GSM.” Apple (AAPL) would have to design a new phone to work on Verizon’s (VZ, VOD) “CDMA” network.

What makes you think they aren’t already working on one?

Of course Verizon’s move isn’t just about the iPhone — Om details the other factors (and is rightly skeptical — there’s probably a lot more drama to unfold). But this unprecedented move by Verizon a mere five months after the launch of the iPhone is unlikely to be a coincidence.

To quote Om once more, open carrier networks means “Bye-bye subsidies” for handsets — you can see Steve Jobs smiling.

  • While the iPod touch and iPhone share the same platform there are many significant differences which make the iphone much more expensive to build. Of course, there's the radio, but you can add a much more powerful battery, Bluetooth, speaker, and so on. Hold an iPhone in one hand and the iPod in the other, and you can feel the difference (I own both)

  • For a variety of odd reasons ... I wound up in western new york with three phone plans ... an expiring Verizon plan, a new Sprint plan for my wife's phone, and a Sprint plan through work.

    My cost to switch my own phone was zero. I just needed to wait another month for that old Verizon plan to expire, but when I canceled as I planed to do anyway, I said, "yeah, I got an iPhone." (dig).

    Because I've experienced both Verizon and Sprint in this market, I have some idea of what their service is like here.

    I'm so, so, so happy with both my iPhone and AT&T's service here (as compared to Verizon and Sprint) that for Christmas (shh, this is a surprise), I'm getting my wife and iPhone and happily paying Sprint's termination fee on her current phone.

  • The iPhone is an amazing little toy, and Apple will reap the benefits of introducing the first-of-its-kind device for quite some time.

  • Rob

    Some great commentary:

  • Rob

    News? Yes. Huge news? I'm skeptical. Verizon needs to "approve" all devices first and don't you think they are just a head of doing this before government (Big Brother) forces them to?

    The U.S. is still tremendously behind the rest of the world in wireless. Perhaps this is a small step in the right direction.

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