The real reason for Verizon’s new open network

There has been much speculation for the reasoning behind Verizon’s open wireless network announcement. Perhaps even a monopoly or a cartel can’t force it’s business model on consumers when they don’t want it. The consumer will always eventually find a work around to use the service the way they want to regardless of how the provider tries to steer them.

I think Om Malik has found most of the truth is Verizon’s own numbers as posted on his blog:

The wireless unit of Verizon (VZ) reported year-over-year subscriber growth of 12 percent, but a mere 5 percent rise in voice revenues. Data revenue saved the day, surging 63 percent and lifting the company to 15 percent revenue growth overall. Data revenue per user increased 43 percent, while voice revenue per user declined 5 percent — pushing data to 20 percent of revenues from 14 percent.

The same report revealed a 10 percent decline in residential access lines. The voice business of Verizon Wireless, in other words, seems to have entered the same cycle of contraction suffered by Verizon’s wireline business in recent years. Joining the open access bandwagon promises to keep data revenues growing strongly, but CEO Lowell McAdam faces some mighty difficult choices as the 80:20 ratio of voice to data revenues reverses. The legacy pricing model incorporates price discrimination that will prove awkward to preserve.

I’ve long held the belief that voice communication is something can you do with the network rather than the reverse, and that the traditional cellular market has peaked. I like finding proof I’m right.