Why Did Verizon Wireless Open Its Network Now?

Why did Verizon Wireless announce it'll open up its network now? There are several reasons, from trying to influence approval of the XM-Sirius merger to trying to lower prices in an upcoming wireless auction.

Why did Verizon Wireless announce it’s opening up its network now? There could be several reasons, ranging from Verizon’s interests in an upcoming wireless auction to XM-Sirius merger.

Richard Doherty, director of consultancy Envisioneering Group believes Verizon Wireless has given the Federal Communications Commission’s Chairman Kevin Martin — a long proponent of open access — this treat in order to influence the commission on a number of important deals, such as the XM-Sirius satellite radio merger that’s pending approval.

Then, there's the upcoming wireless auction. Until today, the auction was expected to fetch more than $15 billion. Verizon Wireless, long expected to participate, would have had to borrow money to buy a chunk of these expensive airwaves in a bidding against potential newcomers like Google. The newcomers have been threatening to use the airwaves to build networks open to all sorts of phones and software; this openness was going to be their main marketing advantage in competition with the incumbents like Verizon.

Now, that advantage is -- poof! -- gone. Some of the wireless newcomers might have lost some of their marketing edge -- and financial backers in a single day. Thus, bidding at the auction might not go as high, Doherty says.

Verizon Wireless has achieved all that with just one press release and a news conference. What remains to be seen, though, is just how much Verizon Wireless will really open its network by.

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