About 30 percent of the devices using T-Mobile USA's network in New York City weren't sold by T-Mobile, the head of that carrier said Wednesday.
That's one sign that the traditional closed world of U.S. mobile operators is changing. T-Mobile Vice-Chairman, President and CEO Robert Dotson and executives of Verizon Wireless and Sprint Nextel sounded resigned to the end of that world in a keynote session at the CTIA Wireless I.T. & Entertainment conference in San Francisco.
What excites their enthusiasm is the lucrative data use that the growing choices of devices and networks will inspire among users.
Mobile operators in this country traditionally have sold most phones under their own brands and offered a carefully selected set of content and data services through a branded interface, or "deck," designed for each handset's screen. Now Verizon has pledged to open its network to lightly certified third-party devices, Sprint plans to launch a WiMax network for third-party devices this month, and Google's upcoming Android open-source software platform is generating interest at several carriers.
In the 2G (second-generation) and 3G cellular worlds, Verizon Wireless has made large investments in handsets, services and customer support that all carry the carrier's own brand, said president and CEO Lowell McAdam. In March, Verizon kicked off its open-network initiative by distributing a set of specifications for non-Verizon devices that can use the carrier's network. With mobile speeds that rival home broadband, there's too much potential in applications and services for Verizon to contain, he said.
"We couldn't handle all that innovation, and make all those bets, and train all those people, and take all that overhead into the business," McAdam said. "Now the developers will place those bets, and consumers will decide."
Devices developed under those specifications are already on the market, McAdam said, citing a 3G data card designed for the insurance industry and a US$69 handset offered by prepaid service provider AirVoice Wireless. Eight hundred companies have now downloaded the specifications, he said.
But the executives warned that the open future has its own pitfalls, emphasizing that some controls are still needed and a mobile world that's like the PC business may not be for everyone.
"When an application crashes on your Dell laptop, you don't call your cable provider," McAdam said. And without the carrier subsidies that consumers have grown used to, consumers will have to get used to paying more for handsets, he added. McAdam sees about 20 percent of customers adopting the open model rapidly and others following if the user experience proves good.
Carriers still need to guard subscribers' privacy and security "with religion," T-Mobile's Dotson said. But he believes the playing field has shifted. "The notion of the walled garden is one that, for us, sits in the past," Dotson said. As a GSM (Global System for Mobile Communications) carrier, T-Mobile already allows outside devices on its network. Especially in urban areas like New York, customers are taking advantage of that, he said.
T-Mobile, along with Sprint, belongs to the Google-affiliated organization Open Handset Alliance. Some industry observers expect Dotson's company to be the first out with an Android phone later this year. A key benefit of an open industry will be getting new handsets and services out to consumers more quickly, Dotson said.
Mobile data speeds that can handle standard Web pages have helped to change the game, said Sprint Nextel CEO Dan Hesse.
"What the industry tried to do, particularly from a brand point of view, is to make sure that the experience was a good one," Hesse said. "In a 2G world ... that was largely necessary. I think it's less necessary in the 3G and 4G world." Sprint now allows full HTML browsing on all its 3G devices, he said. It does put some transcoding in the browsers to display pages as well as possible.
On Wednesday, Sprint introduced one more ease-of-use feature, called One Click, on its LG Lotus, Samsung and Samsung Highnote handsets. It lets users set up several "tiles" on the home screen that can take them directly to Web sites of their choice, as well as to voicemail, text messaging and other phone features, Hesse said.
"We say, from a customer's point of view, 'Knock yourselves out. The entire Internet is yours. You will not get an error message that you cannot access that site, or you shouldn't,'" Hesse said.