Verizon Wireless: Trouble with honesty & fairness

In the market for mobile phones, a time span of 7 years represents a different era altogether. At least 4 generations of hardware feature phones have come and gone. Seven years ago, there was no iPhone and no Android. Palm was king of PDAs, a class that was still separate from phones and browsers. Feature phones offered Symbian at best. (Who remembers Windows CE?).

Way back in 2004, Verizon crippled Bluetooth in the Motorola v710, the first mobile phone to support short range wireless technology. The carrier supported Bluetooth for connecting a headset and for voice dialing, but they blocked Bluetooth from transferring photos and music between a phone and the user’s own PC. More alarmingly, they displayed a Bluetooth logo on the outside of custom Verizon packaging, even though the logo licensing stipulated that all logical and resident Bluetooth “profiles” are supported.

(Disclosure: I was a plaintiff in a class action that resulted in free phones for users affected by the deception. I am not a ‘Verizon basher’. I have been a faithful client since early cell phones and I recently defended Verizon’s right to charge for off-device tethering.)

Can you hear me now?

Why would Verizon cripple a popular feature that helps to differentiate and sell equipment? That’s an easy one. It forced users to transfer photos and music over the carrier network rather than exchange files directly with a PC. The carrier sells more minutes or costly data plans.

With the same motive, Verizon restricted feature phone apps to their Get it Now store, limiting music, games and ringtones to their own pipeline. Heck–Why not? It’s their ball park! Users can take their business to other carriers. Right? Well perhaps—but mobile service is built upon licensed spectrum, a regulated and limited commodity. Although carriers are not a monopoly in the strict sense (there are three or four carriers in populated regions), they are licensed stewards of an effective market duopoly.

Perhaps the longest lived vestige of Verizon’s stodgy funk (and the most depressing) was their insistence on stripping pre-smart phones of the manufacturer’s user GUI and foisting users to navigate a bland set of carrier-centric screens and commands. Often, I would sit next to someone on an international flight who had the same model Motorola, Samsung or Nokia phone. And guess what? His carrier didn’t interfere with fascinating user features. Why did Verizon force their own screens on unsuspecting Americans? It meant that I could not set my phone to vibrate first and then ring with increasing volume over the next few seconds. What a great feature on my Moto i810! But it was stripped from subsequent models, because it wasn’t spec’d by the boys in Verizon’s “retrofit and bastardize” lab.

With the exception of the class action on the Bluetooth features, no legislation was needed to get Verizon to unlock phone features. Eventually a free market mechanism forced them to rethink their ivory tower greed. With AT&Ts market success selling iPhones, Verizon eventually capitulated so that they could become the Android market leader. The new strategy worked for both consumers and for Verizon. Even before they began selling iPhones in 2011, Verizon reasserted their position as the carrier of choice and fully justified their cost premium through excellent coverage and quality service.

Hey, Verizon! Can you hear us now?!

But now, the company that I have learned to hate, love, and then curse, is at it again! They are about to introduce the Samsung Galaxy Nexus. It is only the 2nd Google branded Android (you can’t get closer to a pure Android experience!). But wait! News Flash: They are going to cripple a native Android feature. Just as with the Bluetooth debacle, Verizon claims that it is for the protection and safety of their own users. (Stop me, Mommy! I’m about to access a 3rd party service!).

Why doesn’t Verizon get it? Why can’t they see value in being the #1 carrier and base profit strategy on exceptional build out and service? Sure, I support their right to offer apps, music, ringtones, photo sharing, navigation, child tracking, mobile television, and even home control. These are great niches that can boost revenue. But remember that you are first and foremost a carrier. Just because you plan to enter one of these markets is no reason to cut off your own users from content and service options.

Think of this issue as your subscribers see it: Cutting off users from the Android wallet, because you plan to offer a payment mechanism of your own is no different than a phone service blocking calls to Bank of America because they are tied in with Citibank. If that metaphor doesn’t cut it, how about a simple truth? It’s been 22 years since Judge Harold Greene deregulated the telecommunications monopoly. Your company is both legacy and chief beneficiary of that landmark decision. But success is transient to those who use market penetration to restrict choice. And this time, it won’t require anti-monopoly legislation. The market will push back hard and share recovery will be slow.

I’m taking my phone and going home!

Android is open. Get it? You have flourished recently, because you chose to embrace an open system that builds on its own popularity. You have contributed to its swift ascent, and likewise, Google and your users who like Android have contributed to your success. Why spit on your users now? What did we do to deserve this?

C’mon Verizon. Stop seizing your ball and threatening to close the ball park. We love you. Get it right for once and stop dicking with us. Our patience is wearing thin!

Samsung opens Bada: Is another phone OS good thing?

Got Bada? Don’t bother! This just in from Engadget (short version) via the Wall Street Journal (full story).

With Google’s recent acquisition of Motorola Mobility, Samsung has become the leading independent manufacturer of Android phones. In fact, they are in a pissing contest with Apple and they have a real shot at winning! And why not? The largest consumer electronics company is embedding the leading mobile OS without any license fee. They are not only making money phone-over-fist, they are presenting a viable threat to Apple for the brass ring.

But wait! Sammy is not happy.They want to expand their own mobile OS into a market juggernaut. Taking a page from Google, they have just announced plans to open the OS, inviting outside developers to extend and expand. But why? Does the market want another mobile OS? Samsung is a sterling manufacturer. The best. Given enough resources and drive, I have no doubt that they could catch up with Android functions and apps (navigation, media, markets, tools, hot spot feature, etc). But for what purpose? Are they planning to become a Google and replicate the underlying ad-driven business model? Do we want that from an electronics vendor?

I love competition, whether it be in the hardware or OS (mobile platform in this case). But in the past year, we were witnessing a tentative market maturity that foreshadowed the end of fragmentation. With the death of Palm and Symbian, the acquiescence of Blackberry, and the futile “last-gasp” rumination of Windows Mobile, it appeared that we were finally headed for a showdown – or more likely a market duopoly: Google Android -vs- Apple iOS. This congealing of the market will allow for much greater overall sales and it heralds the day when handset manufacturers can show their stripes and reward both users and shareholders. Think of Dell, HP and even Gateway in the heady heyday of the mid 90s. Once that market was firing on all cylinders – and with developers focused on just Windows and Apple, it floated all boats. Last second upstarts were squashed – and rightly so. Imagine the loss of productivity and profits if the market had experienced arrested condensation as it did with HD-DVD and BluRay.

Do you recall DrDOS and HPs desktop OS? Imagine, if a bit later in the desktop OS wars (some point after market maturation), there emerged a 16-bit CP/M or some new desktop OS by HP and Acer. Would it serve any purpose? Perhaps—but only if it brought transformative technology and a credible opportunity for rapid adoption. More likely, it would have simply retarded productivity and gains for everyone.

Please, Sammy, let it be so. I realize that you are a great company and that Korea’s Yin-yang is still rising. But now is not the time to become a Netflix and shoot yourself in the foot. Strengthen your ties with Google. The Motorola acquisition needn’t be a threat. Make piles of cash on great AMOLED Android phones and shelve your plans for an independent hurrah! At least think about it. This play will cause Samsung to lose precious ground.

So sayeth Ellery

Ellery Davies is chief editor of awwildduck.com
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