Big wireless carriers get set to free the phone

It is a scenario rarely seen in today's technology market: Cellphone customers wander into any store, pick any device from a shelf, and connect it to any wireless network - one as open as the Internet.

But spurred by growing demand and a federal airwaves auction that closed last week, the major wireless carriers are stepping away from a model in which each cellphone is controlled by a single company that sells customers a device locked to their network, demands a lengthy contract, and limits the phone's features.

"We call it a 180-degree about-face to open access, and it really is a fundamental shift in business models - if we can get there," said Linda Barrabee, senior analyst at Yankee Group, a technol ogy research firm, and author of a recent report, "Open Access is the New Black."

Just a year ago, open cellphones were largely the province of hackers or frequent international travelers. But the newest website educating people about how to connect outside devices to a network is no hacker forum: It is run by AT&T, the nation's largest wireless carrier. Verizon Wireless, the number two provider, held a two-day conference this month to tell independent developers how they could get their devices certified to work on its network. And Google, the Internet giant that lobbied for open access and last year unveiled an open mobile platform called Android, this week detailed a proposal to use portions of the airwaves between television channels for open Internet access.

Suddenly, open access is fashionable.

The pivotal moment occurred in the run-up to this year's federal auction of valuable broadcast spectrum, which can also be used to carry telephone calls and data. Because of federal requirements that TV channels broadcast digital signals by February 2009, some airwaves now being used for TV will be available for other uses. As the auction of what is often called the last beachfront property in the wireless world approached, politicians, consumer advocates, and Google launched a discussion about the future of telecommunications in the United States.

The Federal Communications Commission attached rules to a slice of the spectrum, requiring that the winner of that portion leave the network open to outside devices and applications.

Meanwhile, more capable phones and networks meant people began to expect the devices to function more like computers, and public awareness of restrictive carrier policies increased.

When the high-profile iPhone was launched exclusively on the AT&T network last summer, it increased public awareness that devices were locked, meaning they were only compatible with one carrier. People who paid full price for an iPhone could not use it through another carrier, even if the carrier - T-Mobile, for instance - used compatible technology.

When the iPhone was unlocked last summer to allow use with other carriers, what would have seemed to be an insider-geeky event drew widespread attention and national news stories.

Last fall, Sprint agreed to provide codes to unlock its phones as part of a class-action settlement. And all four major carriers have said that when a customer ends a contract early, termination fees will be prorated.

Driven by a combination of regulation and public awareness, the zeitgeist for "open" was born. Earlier this month, Apple began allowing outside software developers to create their own programs, such as games.

Not long ago, carriers bristled at the notion that the nation's wireless system stifled innovation. Verizon Wireless fought the FCC's decision to attach open access requirements to the spectrum.

"Imposing any such requirements in the competitive wireless market would reduce the revenue the government will receive from the spectrum auction and limit the introduction of new and innovative wireless services," the company said in a statement in July, as the rules were being debated.

But Verizon Wireless eventually accepted the rules, and earlier this month it won the coveted block of spectrum subject to the open-access conditions. Also, AT&T and other companies won other portions of the spectrum, and the auction raised $19.1 billion. At its conference for developers last week in New York, Verizon emphasized that new partnerships were essential for innovation.

"We believe that as the two great megatrends of mobility and the Internet come together, the next wave of growth will come from a whole new generation of devices, applications, and services," said Ivan Seidenberg, chief executive of Verizon Communications Inc., which owns 55 percent of Verizon Wireless. "No single company - whether you're a carrier, a manufacturer, a software company, or anybody else - will be able to envision all these uses or meet all the needs on their own."

Not to be outdone, AT&T launched a website the day before the conference, emphasizing its open network.

"This is not new business for us," said Mark Collins, vice president of Consumer Data Products for AT&T. The company uses GSM, the predominant wireless technology and "the most open standard on the planet," he said.

Still, Collins said AT&T phones would be sold locked -and unlocked only upon customer request. T-Mobile has a similar policy. Sprint and Verizon Wireless use different technology. Sprint and T-Mobile also moved to embrace openness as members of the "Open Handset Alliance." To some extent, the technology for open systems has been available all along, but wireless carriers have created a different model in the United States than in Europe or Asia, where consumers can easily swap a phone between providers.

But by the end of this year, Verizon will allow approved devices that aren't offered by the company to connect to its network. People can already buy phones and add T-Mobile or AT&T service. Also, Sprint is beginning to roll out its Xohm mobile broadband WiMAX service, touted as part of its "open Internet vision."

Ultimately, loosening the relationship between the wireless provider and devices could spur innovation - devices that phone companies may never have developed. Sprint, for instance, powers the wireless connection for the Amazon Kindle, an e-book reader.

Openness comes at a pivotal point for the industry. Companies are struggling to prevent what happened online, when people moved away from proprietary "walled gardens" like AOL and Prodigy and onto the wider Web.

As the cellphone market becomes saturated, providers will have to find ways to grow other than selling people their first phone, and as data services become more common, "their whole business model is called into question," said Paul DeBeasi, senior analyst with the Burton Group. "If instead of paying for minutes people pay for Skype - that's what happened to the old AT&T. People stopped paying for long distance; it became a commodity."

But even as companies try various approaches to openness, their definition of "open" remains unclear. Are they paying lip service to a popular idea - or will they open a new frontier in phones and computing?

According to Barrabee, it will be years before the mobile ecosystem really changes and technological hurdles are overcome so people can really walk into stores and buy any device and pick any network.

And consumers may continue to prefer the current US model, where it is clear whom to call for customer support and people are used to cheap phones and long contracts.

"The concept of open access is a bit intoxicating, but we really need to see the details and action - need to see an ecosystem emerge and then see distribution channels for these devices and services, before we see the impact," said Barrabee. "And then it is really a question - how much does anybody want?"

Carolyn Y. Johnson can be reached at cjohnson@globe.com.