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Carriers look toward open mobile future

About 30 percent of the devices using T-Mobile USAโ€™s network in New York City werenโ€™t sold by T-Mobile, the head of that carrier said Wednesday.

Thatโ€™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 โ€œdeck,โ€ designed for each handsetโ€™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 Googleโ€™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 carrierโ€™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 carrierโ€™s network. With mobile speeds that rival home broadband, thereโ€™s too much potential in applications and services for Verizon to contain, he said.

โ€œWe couldnโ€™t handle all that innovation, and make all those bets, and train all those people, and take all that overhead into the business,โ€ McAdam said. โ€œNow the developers will place those bets, and consumers will decide.โ€

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 thatโ€™s like the PC business may not be for everyone.

โ€œWhen an application crashes on your Dell laptop, you donโ€™t call your cable provider,โ€ 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 subscribersโ€™ privacy and security โ€œwith religion,โ€ T-Mobileโ€™s Dotson said. But he believes the playing field has shifted. โ€œThe notion of the walled garden is one that, for us, sits in the past,โ€ 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 Dotsonโ€™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.

โ€œWhat the industry tried to do, particularly from a brand point of view, is to make sure that the experience was a good one,โ€ Hesse said. โ€œIn a 2G world โ€ฆ that was largely necessary. I think itโ€™s less necessary in the 3G and 4G world.โ€ 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 โ€œtilesโ€ 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.

โ€œWe say, from a customerโ€™s point of view, โ€˜Knock yourselves out. The entire Internet is yours. You will not get an error message that you cannot access that site, or you shouldnโ€™t,’โ€ Hesse said.

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