Verizon Pushes-to-Talk, Finally

Verizon jumps on Nextel's tail, with push-to-talk service expected this week

August 13, 2003

2 Min Read
Verizon Pushes-to-Talk, Finally

Verizon Wireless will launch its long-awaited push-to-talk (PTT) service tomorrow, Boardwatch (Unstrung's sister site for the telecom services industry) has confirmed, almost ten years after Nextel Communications Inc. (Nasdaq: NXTL) established the market (see Verizon Pushes to Talk).

PTT services, which allow regular cell phones to work like walkie-talkies, are used by the services industry and are common among plumbers, builders, and courier companies.

”I always say that Nextel built my house,” says Iain Gillott, wireless analyst and founder of iGillott Research Inc. “The handyman couldn’t pick up a brick without talking to his boss on the Nextel.”

The carrier claims more than 150 million Direct Connect PTT calls are made daily on its networks. Nearly 50 billion such calls were made in 2001. It has 12 million subscribers with an average revenue per subscriber of $70, or roughly $10 more per subscriber than Verizon Communications Inc. (NYSE: VZ) or Sprint Corp. (NYSE: FON) pulls in, analysts say.

Needless to say, Verizon, Sprint PCS (NYSE: PCS), AT&T Wireless Services Inc. (NYSE: AWE), and others are eager to cash in on the extra revenue (see Walking, Not Running, to PTT).

”In a nutshell, Verizon’s service means serious competition for Nextel,” Gillot says. He points out that the picture only gets worse for Nextel as more carriers encroach on its market and the Federal Communications Commission (FCC) mandates wireless number portability. “Number portability presents a big problem for Nextel, as customers will be able to carry their Nextel number over to Verizon if they want." (See In-Stat: WLNP May Boost Churn.)

Right now, Verizon will launch the service on Motorola Inc. (NYSE: MOT) handsets, as does Nextel, but has plans to make it available across other handsets in time. “Nextel users have been very limited in their choice of handset options, which Verizon will change,” says another wireless analyst, who requested anonymity.

Verizon is expected to use Motorola’s softswitch technology, which the equipment vendor picked up via its acquisition of Winphoria, to set up and tear down calls on the new PTT network (see Motorola Eats Winphoria).

In order to make a PTT call, the user selects a name and pushes a button on his or her handset. Voice is packetized in the handset and routed via base stations and the operator's IP backbone to the recipient, using the Winphoria switch to set up the VOIP connection, handle billing, and so on.

The fact that Verizon is charging ahead and launching its PTT service implies that it's satisfied that past concerns over VOIP solutions -- namely, long call-setup times and excessive network delays -- have been dealt with satisfactorily. Nextel's PTT service isn't VOIP based.

Verizon itself declines to comment on these issues until the official launch.

— Jo Maitland, Senior Editor, Boardwatch

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