Will open access drive a retail revolution?

 

Will open access drive a retail revolution? 

Open access to networks and devices is beginning to look like it could become a competitive differentiator among U.S. operators. Last week Verizon Wireless announced that it will support all devices (that meet minimal technical requirements) and all applications beginning in late 2008. That news was quickly followed by AT&T Mobility CEO Ralph de la Vega claiming to USA Today that AT&T is already an open network.  

Of course, de la Vega's claim was disputed by many--including some AT&T Mobility resellers who wrote to us saying that de la Vega's comments are contradictory to letters they have received from AT&T telling them that uncertified handsets are prohibited on carrier's network.

Nevertheless, the furor over these recent news items has made me wonder what ramifications open access will have on the wireless retail channel. I suspect that Verizon's announcement, coupled with the growing availability of unlocked GSM phones, will cause major changes in retail and distribution.

Currently wireless carriers are the main marketers of devices. Consumers primarily purchase their phones through operator retail stores or at one of the operator-approved agent stores or retail partners. As open access becomes the norm, I expect handset makers and independent retailers will start aggressively selling unlocked devices to the consumer.

In fact, open access could be a huge win for wireless retail stores. Instead of just offering consumers devices sanctioned by the operator, retailers could significantly increase their phone portfolio and use their vast handset selection as a competitive advantage. Retailers that can score the latest unlocked handsets with high-tech innovations from Korea or Japan could experience some big sales.

Operators argue that unlocked handsets will cost more because they won't be subsidized and therefore most consumers will remain loyal to the carrier-sanctioned wireless devices. But not all consumers are price-sensitive when it comes to their wireless phone--the iPhone debut earlier this year challenged that theory. Of course, not every handset carries the iPhone clout but with the opportunity to sell directly to the consumer, I suspect handset makers will strive harder to increase their "cool" quotient with U.S. mobile phone buyers. -Sue

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