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It's official: Verizon Wireless has won licenses for nationwide coverage in the C-Block in the 700MHz spectrum auction conducted by the Federal Communications Commission.

This means that Verizon, not Google, will control the spectrum that is required by the FCC to adhere to special open-access rules.

Google had lobbied the FCC last summer to include several rules in the 700MHz spectrum auction that mandated open access. The FCC adopted only one of Google's proposed rules, which requires the winner to allow any device or application to connect to a network that uses this spectrum.

Google made good on its promise to bid in this sliver of spectrum in the auction. But as I predicted months ago, the company wasn't really serious about winning the auction. Instead, it looks like it just wanted to push the price of the auction above the $4.6 billion threshold to ensure that the open-access rule would go into effect.

Google apparently did not win any licenses in the auction, FCC Chairman Kevin Martin said at a press conference in Washington, D.C., Wednesday, according to The Wall Street Journal.

It's not surprising that Verizon won the C-Block licensees. Analysts had been predicting that for weeks.

Now it looks like the company will include this spectrum in its new open-device initiative. In November, the company announced that it would allow subscribers to bring their own phone or other wireless device to its network.

On Tuesday, Verizon released specifications and certification testing information for devices that it will allow on this open network.

Of course, the very fact that the company still requires device makers to certify their products for use on its network means that it isn't completely "open." But the new certification process is streamlined and will allow device makers to get through certification in weeks rather than in months.

Verizon also won other 700MHz spectrum licenses. It was the largest winner of licenses in the A-Block, which are midsize licenses. And it won 77 licenses in the B-Block, the smallest regional licenses that were being auctioned.

Satellite TV provider EchoStar Communications also won enough spectrum licenses to give the company nearly nationwide wireless coverage. EchoStar and DirecTV Group had dropped out of the Advanced Wireless Service auction in 2006. AT&T also won a large number of the smallest licenses that were auctioned.

The auction, which sold spectrum being freed from the transition to digital TV in 2009, closed on Tuesday, raising a record $19.6 billion.

Verizon made a big splash in 2007 by talking up its plans to open its network to third-party developers. "Any application, any device" was the mantra.

Several months later, however, more questions than answers remain as to just how open Verizon plans to be, and what it's going to charge for the privilege of openness, as BusinessWeek has highlighted.

Among the biggest concerns: Verizon did not divulge any details of the pricing plans customers would be offered to use such devices. Nor did it publish any specifications to help software developers create applications for the network. In fact, the company distributed materials to attendees online, stressing that the company "will not approve, test, or service third-party applications that customers load onto their Open Development Devices."

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NEW YORK--Verizon Wireless unveiled specifications for its new open wireless program Wednesday as part of a strategy that could change the future of the wireless market. But the road ahead will likely be a long and slow one.

Traditionally, cell phone operators have tightly controlled the entire cell phone experience--from the network to the handsets to the applications running on those devices. But now Verizon, and others like AT&T, are looking for ways to open up their networks.

Verizon first announced plans for an open development network in November with the hope that it would make it easier and less expensive for third-party developers to bring new devices and applications to its network. Ultimately, Verizon hopes its open network will help spur innovation and provide a testing ground for new devices, applications, and services.

"The U.S. market has been conditioned to have the carrier control the wireless network end to end," Lowell McAdam, Verizon Wireless' CEO and president, said in an interview at Verizon's Open Handset Development Conference here. "We'll have to see how willing people are to give up the subsidy and pay $200 or $300 for a device. We think it will take a long time before the old model dies."

Analysts agree that Verizon's new initiative has big long-term implications, but in the short term will have little impact on the market.

"When talking about the future of wireless this is a big deal," said Avi Greengart, research director for mobile devices at Current Analysis. "It enables connected devices that futurists have been talking about forever. All devices will have network connectivity. But in the short term, people will still buy a subsidized phone if they have the choice."

Verizon's move to create a more open network comes at a time when everyone from application developers to handset makers to customers to government officials are insisting on more openness. Apple's iPhone, which generated more buzz than any other consumer electronics device in recent memory, has proven that some segments of the market don't care about having their phone subsidized. But Apple's exclusive contract with AT&T has also spawned debate over whether the device should be locked to a specific carrier's network.

On the application front, Internet search giant Google announced plans to develop an open operating system it calls Android to help handset developers and carriers bring new applications to the market more quickly.

But there has also been pressure from regulators and lawmakers, who are considering regulation and laws that would require service providers such as Verizon to be more open. In the Federal Communications Commission's 700MHz spectrum auction, which ended Tuesday, the government required operators winning licenses on one particular block of spectrum to make their network open to any device.

Google, which had pushed for the rule, was a bidder on this part of the spectrum, but it's widely believed Verizon Wireless was the ultimate winner of that spectrum. Winners of the auction aren't expected to be announced for a few weeks.

Verizon's McAdam conceded that the company's open-network program was motivated in part by some of these developments.

"We are always resistant to government trying to put themselves in the middle of the market," he said. "That is always a recipe for disaster."

But McAdam said a bigger motivation for creating the open-network program was Verizon's customers, who are demanding cooler phones and more applications.

"We saw what was happening with the iPhone and what Google is doing and we listened to what customers wanted," he said. "We saw this moment in time coming, and we thought if we open this up, it will be great for our customers and great for our shareholders."

One of the biggest criticisms of Verizon has always been its lack of cool or cutting-edge phones. Traditionally, Verizon has been known as the most stringent carrier about the devices and applications it allows on its network. It also has one of the more rigorous testing processes for device and application developers. A more open network could allow Verizon to offer customers many more handset and application options than it can offer today.

Testing requirements loosened
As part of the open development program, Verizon has released specifications and best practices for new devices and applications that can be used on its network. The new specifications only allow customers to bring any CDMA (code division multiple access) or EV-DO (evolution data optimized) phone to its network if it's been precertified by Verizon. But the testing requirements are much less, the company said. And the time it takes to get through the process is greatly reduced. For example, the testing period for the open network is expected to take roughly four weeks, compared with the three to four months that it takes to fully test a device on Verizon's traditional network.

Tony Melone, Verizon Wireless' chief technology officer, said the testing process isn't meant to be a profit center for the company. Developers can use Verizon's testing sites or they can contract with a third-party developer. The goal is to make sure the devices meet basic specifications, which are based on adhering to the CDMA and EV-DO wireless standards, the technologies that are used on Verizon's network. In addition to these basic requirements, Verizon will also test to ensure that new devices meet E911 specifications such as GPS location proximity.

"We don't want to be a barrier to entry," McAdam said. "But as all of you can appreciate, with 65 million customers and billions of dollars of investment in our network, we need to protect our customers and our assets."

Customers will be able to activate these "open" devices by calling or going online. They will also be able to download applications directly from developers instead of going through a Verizon store.

The new devices won't have contracts or early-termination fees. And subscribers will be able to choose from Verizon's existing rate plans. The company also said it will open the network to wholesalers, allowing device makers to become Mobile Virtual Network Operators.

A chance to experiment
McAdam said he sees the open development network as a testing ground for the company to experiment with new services and business models. For example, he said the company is already considering a subscription model that would allow a single user to use multiple devices on the network while paying for a single subscription.

"I could easily see people connecting three, four, and five devices to the wireless network and they aren't going to want to pay a $50 subscription on each one of those," he said. "We aren't ready to launch any new service plan. But we do have the ability to move to this when the timing is right."

This new pricing model could work well with Verizon's new fourth-generation network that uses a technology called Long-Term Evolution, or LTE. The company will be testing the new network later this year and will extend the open-network concept to it as well. It is likely this future network that will truly benefit from openness.

But in the short term, some Chinese handset manufacturers may find it easier and cheaper to get their handsets to market. The open network could also help Nokia get some of its high-end N series devices into the U.S. market. And it could potentially provide a window of opportunity for companies developing handsets and applications based on Google's Android platform.

Verizon Wireless on March 19 plans to release the first version of specifications that developers will use to build new devices and applications to run over its open network service.

The company said Monday that it will release Version 1.0 of the specifications at its Open Development Device Conference scheduled for March 19 and March 20 in New York. The specifications will be used by application developers and handset makers so that they can create new applications and devices that will run on Verizon's "Any Device, Any App" network service. Verizon announced in November that it would open up its network to allow devices and applications not specifically approved by Verizon Wireless to run on its network.

"Version 1.0 will provide the road map for wireless device visionaries and tinkerers, as well as existing device makers, to create consumer products not offered directly by the company, which can run on the nation's most reliable network," Anthony A. Lewis, vice president of the Open Development initiative at Verizon Wireless, said in a statement.

This was a huge change for Verizon Wireless, which has operated one of the most closed wireless services in the country. The company has been notorious for being the most stringent about qualifying devices and applications for its service and disabling certain features on some handsets. But in November, Verizon shifted gears and announced that it would offer a service that allowed devices and applications not specifically approved by the company to be used on its network.

The idea of open wireless networks has been gaining momentum over the past year. This summer the Federal Communications Commission included an open access provision in rules for certain licenses in the 700MHz spectrum auction, which began in January.

Verizon's move to open its network followed Google's announcement that it was developing an open software platform for mobile phones. The search company also announced it was spearheading a consortium to build an ecosystem of component suppliers, device makers, and carriers that will use the new Android software. The first prototype handsets using Android were shown at the GSMA Mobile World Congress in Barcelona earlier this month.

Apple is also supposedly about to release a software development kit for its iPhone that is expected to open up that device to a slew of new applications that have not been developed by Apple.

But even though Verizon appears to be embracing the network openness, the proof will be in how it actually implements the service. If it prices the service much higher than its traditional cell phone services, it could discourage consumers from even trying it. Then, Verizon's consumers would still be locked into its handsets and applications.

The reserve price on a valuable sliver of spectrum was reached in the Federal Communications Commission's 700MHz auction on Thursday, triggering rules that would make the spectrum accessible to any device or software application.

After the 17th round in the auction, a bidder for eight licenses in the "C" block of the 700MHz spectrum auction surpassed the minimum reserve price of $4.64 billion, which had been set by the FCC before the auction began. The current bid is now at $4.71 billion. The minimum bid for round 21 is $5.18 billion, according to the FCC's Web site.

Because the bidders in the auction are anonymous, it's difficult to know who is bidding on it. But many analysts believe that Google and Verizon Wireless are the two most likely bidders in the auction. Google CEO Eric Schmidt had said publicly the company was willing to put up at least the minimum reserve price for the spectrum.

Some experts have speculated that Google may want the spectrum to build its own wireless network to compete with traditional players such as AT&T and Verizon. Others think that Google wants to build a wireless network that it can lease to other operators. But I'm more inclined to believe that Google may not really want the spectrum at all.

There's a good chance the company bid on the spectrum to make sure it reached the $4.6 billion threshold to trigger the open access requirements. And now that those requirements have been met, the company may bow out of the race.

But there is also a chance that Google has the winning bid. And if it does, the company may end up with the spectrum anyway.

Regardless of whether Google stays in the auction or not, now that the minimum has been reached, the company that eventually wins the spectrum license will have to make their network open to any devices and applications, which is exactly what Google wanted from the beginning.

Today, U.S. wireless operators have tight control over which devices can be used on their networks and which applications can be used on those handsets. Google and other companies, such as Skype, have complained that this is too restrictive.

Verizon, which has traditionally been the most strict operator in the U.S. about what it lets on its network, recently said it would allow non-certified devices on its network.

Skype, which makes software that allows people to make free and low-cost phone calls over the Internet, issued a statement praising the FCC for putting in the open access. Currently, most U.S. operators do not allow Skype to be used on handsets that operate on their networks.

"The FCC got it right in putting this spectrum to work for consumers' best interests," Christopher Libertelli, senior director of government and regulatory affairs for Skype, said in a statement. "We look forward to the day when this spectrum is made available to the broader market, so that Skype users can have their conversations whenever and wherever they would like."

Now that the open access rule has been triggered, it will be interesting to see what happens next in the auction. Earlier in the week, there was speculation that the "C" block might not reach the reserve price. After intense early bidding, the price seemed to languish. Even though there is no way to tell who is bidding, if the bidding slows again or if someone drops out, it might be an indication that Google was simply trying to pump up the price.

The "C" block is one of five blocks of spectrum in the 700MHz frequency that is being auctioned off. The spectrum is being turned back into the government auction by broadcast television operators who will switch their broadcasts to digital from analog in February 2009. The spectrum is considered valuable because it can travel long distances and penetrate obstacles like walls.

Traditional wireless companies like AT&T are bidding on spectrum. The auction has also attracted several wireless newcomers such as Google, TV satellite provider EchoStar Communications, cable operator Cablevision Systems, and wireless chipmaker Qualcomm.

The auction could last for weeks or possibly months, depending on how long the bidding goes on. The auction was expected to generate at least $10 billion. As of Thursday morning, the total bids came to $12.79 billion for all five spectrum blocks.