Hype-y New Year

Tech and telecom companies talked a big game in 2007. Will they live up to the hype in 2008?

NEW YORK (Fortune) -- First thing's first: Let's give props to a pair of tech giants for shaking up the telecom industry in 2007. Computer maker Apple rocked the wireless world with its instantly iconic iPhone. And Internet search company Google, which is planning to bid on wireless spectrum, is developing a wireless operating standard, Android, that aims to make the mobile data experience more Internet-like.

Soon every phone maker was producing an "iPhone killer," and after Google (GOOG, Fortune 500) announced Android, U.S. carriers rushed to show their openness: Verizon's (VZ, Fortune 500) wireless unit said it would make its network open to any device that meets minimum technical standards - and customers can use any application they wish on these devices. AT&T (T, Fortune 500) then reminded the world that its network has always been open to any and all devices that operate on its GSM standard.

But for all the talk of openness, little has changed in the U.S. mobile user's experience. Yes, AT&T devices are open to other GSM phones, but it cannot guarantee all the features and functions of, say, a phone originally sold by T-Mobile.

The iPhone has helped some consumers recognize the benefit of a mobile device with a full HTML browser that readily lets users get mobile content from the Web instead of relying on a menu of choices offered by the mobile operator. In reality, though, high-end users (like those willing to spend big bucks for an iPhone) always have had access to mobile browsers in so-called smart phones, such as the Blackberry 8800.

Will the new year bring true openness and new experiences for U.S. consumers? Sort of, says Rich Nespola, chairman and CEO of tech consultancy The Management Network Group (TMNG). "My prediction for 2008 is that the open networks initiative will become a reality, but at the end of the day, the major network operators continue to dominate."

Nespola and others think AT&T, Verizon and Sprint Nextel (S, Fortune 500) will open up considerably, but still find ways to maintain control of the customer relationship - and that's not necessarily a bad thing for some consumers. While early adopters and folks with IT departments at their beck and call might be happy to rely on the carriers for access only, the teenager, stay-at-home mom or dad, or small-business owner might prefer to rely on the carrier for customer service support and handset replacement services.

"I think the idea of forcing people into walled gardens is going to break down next year," says Bill Howe, CEO of Azaire Networks, a telecom gear maker. He's referring to the "decks" of pre-approved content the carriers feature on their devices. But if content opens up, and consumers can access any games, videos or other applications they want, Howe thinks the carriers can still exercise control over the experience - and make money.

"The whole magic is making it dead simple in a mobile form factor, and I think that's something the operators can do," says Howe. "They have the billing relationship with the customer, they can make it so I just press a button and [content I want to purchase] gets on your phone bill right away."

Carriers aren't the only ones pondering the impacts of an open new world. Handset makers, energized by iPhone mania, now have to rethink what an open world means for their devices - and their business models. No. 1 handset maker Nokia (NOK) already is reinventing itself as a more service-oriented company complete with a digital music store, a la Apple's (AAPL, Fortune 500) iTunes.

Many analysts think openness will be good for device makers in 08, because consumers will start to upgrade to new phones that allow them to more easily access all the great new applications that openness is promising to unleash. And if networks and devices become more open, some consumers will choose to buy multiple phones (as some do in Asia) - all they need to do is transfer a little 'SIM" card from one phone to the other to maintain their phone numbers, contact lists, etc.

However, just as carriers don't want to become "dumb pipes," cell phone makers don't want to become makers of dumb terminals, and it isn't hard to imagine a longer-term scenario in which the phone itself is just a touch screen with a broadband mobile connection, and all the cool stuff resides in applications that consumers download to the device. (Like, say, a plain vanilla laptop.)

Bottom line, all this talk of openness has been a much-needed jolt in the arm. It has the telecom industry thinking about itself in exciting new ways, and it certainly will lead to some new experiences for consumers. But the telecom industry is a business dominated by giant companies and international bodies that set rules and technology standards. In other words, big change for the mass market is coming, but not in '08.