At Last, Consumers Have Options

On Tuesday, Verizon Wireless announced its intent to open its networks for use by all devices and applications beginning in 2008. This unprecedented move by Verizon is an improvement for consumers. While Verizon still offers exclusive devices, customers with devices purchased elsewhere can now join Verizon without having to buy a new phone. This saves customers a significant amount of cost and hassle, and we hope that other companies will follow suit.

This represents a change from the so-called “walled garden” approach that Verizon and competing companies within the United States had previously employed, which forced customers to use software and devices approved by the company. That approach typically couples exclusive devices with mandatory contracts with the service providers. In the old system, the devices worked only with that provider. An example is Apple’s iPhone: If a customer wishes to purchase an iPhone, he or she must use AT&T as a service provider. If another company has a more desireable contract or better service, tough.

Currently, some consumers choose one particular phone, Internet, or cable company based on prices of contracts or the wireless options available. Others choose their provider based on whether that provider is paired with the device they favor. With consumer loyalties guaranteed through specific devices, providers have little incentive to constantly improve their plans. Similarly, companies with excellent service or connectivity have little reason to improve their devices. With the option to choose both device and service separately, companies will be forced to improve their contracts and connectivity rather than simply coasting on the bells and whistles that their devices can offer, and vice-versa.

Verizon’s decision also gives the consumer a wider variety of options. Multimedia and technology companies have increasingly shunned such an approach, instead restricting consumer access to the things they have already purchased. (Perhaps the most relevant example for college students is iTunes, which will only allow downloaded songs to be played on three separate computers.)

Verizon’s new policy is a welcome step away from this type of salesmanship. It acknowledges the demand for this type of service and benefits those who would otherwise feel coerced into making an unwanted and unnecessary purchase. Hopefully, Verizon’s decision will pressure other companies to improve their own products.