Will Android Mutate Cellular Marketing?

By Joseph Palenchar -- TWICE, 11/19/2007

NEW YORK — Besides changing the types of third-party applications available to consumers, Android phones could also change the cellular industry's business model.

In Google's vision, consumers would be able to download Android applications from sources other than a carrier's over-the-air download store, breaking down the "walled-garden" strategy that many carriers have adopted.

Android's license-agreement terms don't prohibit carriers from controlling the sale of all downloadable Android applications or Web-based services, but a Google spokesman called it "unlikely" that Android-endorsing carriers would do so. Notably, neither Verizon Wireless nor AT&T Wireless, which account for more than half of the industry's U.S. subscribers, signed on as alliance members.

One member carrier, Sprint, already allows Java-phone users to download applications from download stores other than its own, the carrier said. Downloads for Windows Mobile and Palm phones are also available from third-party sites, analysts noted.

Two of Android's supporting carriers, T-Mobile and Sprint, have already moved toward an open-access business model, said Ross Rubin, industry analysis director for The NPD Group. T-Mobile, for example, operates Wi-Fi hot spots open to any Wi-Fi equipped device and any Internet application. Sprint's planned WiMAX network, called Xohm, is also an open-access network, Rubin said.

Open-access business models are also getting a push by the Federal Communications Commission, which is auctioning off 700MHz analog-TV spectrum in January. A portion of that spectrum is reserved for a network that must allow over-the-air downloads of applications and content from any third-party provider unless the downloads harm the network or are illegal. The network also has to be open to all compatible wireless devices.

On this network, Android would be at home, and Google has expressed an interest in bidding on the spectrum. That would create opportunities for an Google-branded Android phone.