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Increased VoIP Availability Raises Concerns for Voice Profitability on Verizon’s Open Network

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[by Blake Robinson] GigaOM’s Daniel Berninger offered this morning a bit of analysis on Verizon’s (NYSE: VZ) much-touted Open Network announcement. In brief, for those not following this continually developing story, Verizon last week promised an open network customer option delivering “any apps, any device,” to be available in 2008.

Citing numbers from VZ’s latest quarterly report, it shows exponential growth across the board in data revenue while voice profits fell 5 percent. Berninger questions the wisdom behind a decision that will inevitably augment mobile VoIP availability for an already declining voice business. This inevitability that leads one to question whether the new Open Network data rates will be gouged to compensate for the absence of traditional voice revenues.

Berninger summarizes: “We can suspend our disbelief until the pricing details arrive in January, but the unintended consequences of the announcement likely represent the best hope for progress. Verizon’s vision of the future may not have changed much. It just gets easier to read the writing on the wall when your back is up against it.”

So the questions remain, has Verizon accurately judged its market even with its back to the writing on the wall? Or does it have eyes in the backs of its hydra heads? Could it have jumped the gun in promising to offer the network that consumers have lusted over since the creation of the cell phone?

Unfortunately, those answers wait for us early in the new year.

Dec 4, 2007 12:03 PM ET

Posted In: Companies, Verizon

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