As Android approaches, carriers embrace change

Mobile operators, long the arbiters of content and services on cell phones in the U.S., are now giving up some ground to other players as the industry is rocked by the success of the iPhone and the emergence of new players on the tiny screen.

AT&T and Apple's business model for the iPhone achieved what carriers had been trying to do for years: Get consumers excited about mobile data. It lets subscribers tap into the riches of the Web with a full browser (though without Flash), and customize their phones with applications developed and sold by someone other than the mobile operator. The most widely copied blockbuster of recent mobile history owes most of its success to what Apple built, not to the carriers that give it service.

On Tuesday, the next big disruption will hit: A phone for T-Mobile USA's network based on Google's Android operating system. Google designed the platform, soon to be open-sourced, so developers could create and market their own applications royalty-free and have them work on all Android phones. Following Google's lead, an open-source version of Symbian, the software in about 60 percent of the world's phones, is due out next year. Phones are already on the market using an open, Linux-based operating system backed by the The LiMo Foundation, an industry consortium. And some handset makers are beginning to eye software and services, too.

An AT&T executive said earlier this month at the CTIA Wireless I.T. & Entertainment show that it's too late for carriers to take the lead role in developing new applications.

"We missed that boat," said Roger Smith, director of next-generation services.

The head of rival Verizon Wireless, which launched an initiative this year to allow third-party devices and applications on its network, seemed relieved to hand over some control.

"We couldn't handle all that innovation, and make all those bets, and train all those people, and take all that overhead into the business," President and CEO Lowell McAdam said. "Now the developers will place those bets, and consumers will decide."

Mobile networks can be "open" in two ways, both of which U.S. operators are starting to embrace. One is allowing devices not sold or branded by the carrier onto the network without stringent controls, rather than strenuously reviewing a product, customizing its interface, and timing its release to the carrier's business cycle. Verizon is already allowing some specialized devices in an open-network plan that it's operating alongside its regular business, and Sprint Nextel will use a similar approach with its WiMax fourth-generation network that's due this month.

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