Open, Schmopen: Wireless Networks Are Still Closed

Despite the hype from top carriers, U.S. networks are nowhere near open—and they won't be until industry wakes up to the possibilities

By Jack Gold

Over the past year, there's been a lot of lip service in the mobile-phone industry about making our wireless networks "open." The idea, consumer and open network access advocates have argued, is that open networks would let consumers buy any mobile device from any source and run it on any network. This is especially important in the U.S., where handsets work on a particular network—CDMA from Verizon Wireless and Sprint Nextel (S) or GSM from AT&T (T). Under most circumstances, your device remains closely controlled by your carrier of choice.

But in recent months, carriers including Verizon Wireless and AT&T have announced their intention to make "openness" a part of their strategy going forward. It's a great idea in theory.

Yet the question remains whether we are achieving, or even moving toward, open wireless access. Are the carriers just creating a PR campaign, spinning their brand of openness for the benefit of consumers and regulators? Well, for right now at least, the claim of achieving openness is dubious at best.

The industry has a long way to go before it's anywhere near open. Carriers still heavily control their networks and don't appear to be willing to give up that control anytime soon. A device manufacturer can't just launch a new wireless product without carrier approval and extensive testing.

A Drag on Innovation

While carriers say this limits any risk of network problems from badly designed products, it also significantly limits the ability of wireless vendors to innovate and offer compelling new products and services. The test and approval cycle is long, and it has to be performed for each individual carrier—not just for each of the two major network types. Imagine if vendors of PC hardware and software had to test and get approval for each brand and model of PC! That would drastically curtail innovation in the computing market. But this is exactly the current situation in wireless. The end result for the mobile market is that the launch cycle for devices is long—possibly a year or more. And each device needs to remain in the market for a relatively long period as well to enable its makers to recover the added expenses. That in turn extends product life spans and upgrade/refresh cycles. This is not the way efficient competitive markets should work.

Another roadblock to openness is handsets and their operating systems. The major "open" phone OS is Android, backed by Google (GOOG). Nokia's (NOK) Symbian is due to become open in the next year or two. Both of these offer open-source platforms that allow lots of potential for customization and creativity. But in reality, such devices represent a very small share of the current market. The first Android-powered phone, HTC's G1, did not exactly set the world on fire.

Indeed, the recent trend in handset popularity has been away from openness. Case in point: the very popular iPhone from Apple (AAPL). The iPhone is a very proprietary environment, as are Research In Motion's (RIMM) BlackBerry Storm and the myriad Microsoft (MSFT) Windows Mobile-powered devices. In fact, many of the carriers require "modifications" to devices that will only work on their networks, making the device vendors produce custom devices for each carrier. So much for "openness."