Verizon and telco revolutions
As most ZDNet readers already know, Verizon has announced that it will allow any device onto its network that meets certain network compatibility standards. Such compatibility standards will not include tests relating to stability, user-interface or security, and won't even require that the connecting device be, strictly-speaking, a phone. Gaming devices (as an example) that use the Verizon Network as little more than a data pipe seem possible.
Verizon will still choose handsets that will be promoted by the company through its stores, and these will be given the "full service" testing treatment, thus offering the stability, user-interface and security guarantees that won't exist for non-standard hardware. Such phones will continue to be subsidized by the company for use on the network, and will likely continue to require "lock-in" agreements that carry cancellation fees if subscriptions are ended before the expiration date.
Until the final details for the program are released, I can't be sure that Verizon won't try to require mandatory subscription periods for non-standard hardware as "charge" for playing outside the Verizon-controlled sandbox. As a Verizon customer myself, I remember well how Verizon used to require that I extend my subscription plan by one year if I merely wanted to increase the number of voice minutes included with my plan (now rescinded, likely because Verizon's competitors made such hay of the policy in advertisements). Verizon also tried to sue the FCC over open device requirements backed by FCC Chairman Kevin Martin, though, again, they later decided to drop the suit.
Perhaps Verizon has truly turned a corner, and has decided that encouraging use of its spectacular high-speed data network is a better move than bullying customers into sticking with the company while forcing them to use their network in only Verizon-approved ways. Remember, Verizon was rumored to be Apple's first choice for the iPhone, mostly on the strength of its high-speed data service.
Imagine where the Internet would be today if the closed mobile communications model had been used to control what device could hook into IP networks.
An open model (which can include even the compatibilty testing required by Verizon, provided the rules aren't too draconian and costs are relatively low) allows third parties to find ways to use network capacity that it is Verizon's job to provide. Most owners of late-generation mobile phones don't use the advanced data features that their devices make possible. If third parties find ways to convince more consumers to use that network capacity, that can't but help Verizon, even if they don't generate ALL revenue from network-consuming services. Spreading the wealth, in other words, increases the size of the mobile revenue pie, and Verizon seems to believe that its portion will grow along with it even if they drop as a total percentage of the whole.
I'm looking forward to new phones that act more like VoIP terminals even as they offer the wider range of services that befit a true IP-oriented networking device. I'm also looking forward to lower hardware costs. As noted, Verizon subsidizes the price of their phones in exchange for fixed-length subscription contracts. Though that may lower the barrier to entry for many users of mobile phones, it also serves to hide the real cost of a mobile device. Though I admit that cell phone miniaturization carries costs, it still is annoying when I can find a complete desktop PC, with 17" flat-panel monitor, keyboard and mouse, for about the same price as I find some medium-range cell phones.
If third parties can offer devices direct to customers, they have more incentive to discover new ways to lower costs. The same economic forces that served to lower PC prices can now act to lower mobile phone prices.