Verizon, Vodafone Head for LTE

Duo is working towards adopting a common 4G platform, with Long-Term Evolution the front runner

September 20, 2007

5 Min Read
Verizon, Vodafone Head for LTE

Vodafone Group plc (NYSE: VOD) and Verizon Wireless are working towards adopting the same 4G technology, with Long-Term Evolution (LTE) the most likely platform to be chosen.

Vodafone CEO Arun Sarin and Verizon Communications Inc. (NYSE: VZ) CEO Ivan Seidenberg both told a Goldman Sachs & Co. investor conference Wednesday that they are planning to use the same technology in the next major evolution of their wireless networks, and that the two companies are involved in LTE development work.

News of the CEOs' speeches, reported by Thomson Reuters and confirmed by Vodafone's press relations team, is significant for a number of reasons.

Common approach for partners
Vodafone owns a 45 percent stake in Verizon Wireless (the rest is owned by Verizon Communications), yet the two mobile giants currently use different network technology.

Vodafone is a GSM operator that has built out its 3G network using HSPA (High Speed Packet Access) technology. Verizon Wireless, meanwhile, is a CDMA operator that has build out its 3G network using CDMA EV-DO (Evolution Data Optimized) Revision A technology. (See Vodafone Soups Up HSDPA, Verizon Does EV-DO in MN, and Verizon's Rev A Gets Carded.)

HSPA and EV-DO are not compatible technologies, which means Vodafone and Verizon Wireless subscribers can't roam onto each others' networks, and the two operators can't enjoy economies of scale from joint procurements.

Adopting the same network technology would allow the two operators to work more closely together, potentially cut costs, and enable their subscribers to roam onto each other's networks. Verizon Wireless currently has more than 62 million subscribers, while Vodafone has more than 200 million customers around the world.

LTE has been developed to provide a migration path to HSPA, but it could also be used by EV-DO operators.

Reuters reports Sarin as saying: "It makes complete sense for us to go from HSDPA to LTE and it makes sense for Verizon to go from EV-DO to LTE." Sarin added that it would be another three or four years before LTE could be deployed.

That's because the technology, which is set to enable wireless data access speeds of up to 100 Mbit/s or even more, is still in the 3rd Generation Partnership Project (3GPP) standards development process, with a first version due to be published before the end of 2007.

All the major mobile infrastructure vendors are already developing LTE platforms, though, and Japanese mobile operator NTT DoCoMo Inc. (NYSE: DCM) says it's testing LTE in its labs. (See DoCoMo Tests 'Super 3G' and Ericsson Demos LTE.)

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Verizon Wireless is a trend setter
The suggestion that Verizon Wireless will choose LTE as its 4G platform is also significant because of the U.S. mobile operator's role in the industry as a technology leader and trend setter, says Gabriel Brown, chief analyst at Unstrung Insider, in his upcoming report, "700 MHz Technology Options: Reshaping the U.S. Wireless Market," to be published next week.

"The technology Verizon Wireless, a CDMA carrier, chooses for its next-generation radio access network will have global impact, as the carrier looks to maintain its reputation for technical leadership," writes Brown.

Choosing LTE would be significant because Verizon Wireless has other 4G options, most notably a technology called Ultra Mobile Broadband (UMB), which is being developed by the CDMA sector's standards group, 3rd Generation Partnership Project 2 (3GPP2) , and a new version of mobile WiMax based on the IEEE 802.16m specification (See Faster WiMax on the Way.)

Brown notes that Verizon Wireless has "not yet committed publicly to the 3GPP2 upgrade to UMB" and has hinted previously that it might adopt an alternative technology platform for 4G.

"This sets up the intriguing possibility that Verizon Wireless could pioneer LTE technology, making it a world leader in what will likely become the dominant global standard for OFDMA-based cellular access," adds Brown. OFDMA (Orthogonal Frequency Division Multiplexing Access) is the radio technology that underpins virtually all 4G networking technology.

The analyst believes that the carrier's adoption of LTE will become even more likely if it manages to secure the 2x11 MHz C Block of spectrum it's hoping for in the upcoming 700 MHz auctions. If Verizon Wireless lands that spectrum, Brown believes it could start deploying LTE infrastructure "from 2010/2011 onwards… comfortably within the FCC's rollout deadlines attached to the 700 MHz licenses." (See 700 MHz: The Fix Is In and FCC Revises 700MHz Rules.)

Essentially, if Verizon Wireless throws its weight behind LTE, then UMB is far less likely to become a technology platform of much significance in the 4G world.

Vendor impact
The adoption of LTE by Verizon Wireless would have an impact on the R&D activities of the operator's two incumbent CDMA infrastructure suppliers, Alcatel-Lucent (NYSE: ALU) and Nortel Networks Ltd. , according to Brown. (See Nortel's $2B CDMA Bump and AlcaLu Wins $6B Verizon Deal.)

"Verizon's current vendors, Alcatel-Lucent and Nortel, are already working on upgrade paths from CDMA EV-DO to LTE," notes the analyst in his report.

Nortel, in particular, has been very vocal about its 4G plans and aspirations. (See Zafirovski: We'll Get 4G Right and Nortel CEO: 3G Can't Cut It.)

But a positive decision on LTE by Verizon Wireless would also open up the two incumbents to more competition from some of the wireless infrastructure world's other big hitters, notes Brown. "It would also offer LTE-focused vendors such as Ericsson AB (Nasdaq: ERIC), Nokia Networks , and Motorola Inc. (NYSE: MOT), a new opportunity. It’s this competition and diversity in the supplier base that makes LTE so attractive, relative to the nimbler, yet smaller, ecosystem associated with UMB."

UMB's main supporter is Qualcomm Inc. (Nasdaq: QCOM). CDMA stalwarts like Alcatel-Lucent, Nortel, and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) are also involved in developing the technology, but they now need to see some operator commitment to deploying it. (See Huawei Claims 60M CDMA Users and Nortel Calls UMB.)

WiMax developments
Vodafone and Verizon Wireless aren't only working together on LTE developments. Reuters reports Verizon's Seidenberg as saying the two operators are also jointly evaluating the potential of WiMax. The Intel Corp. (Nasdaq: INTC)-backed next-generation version of mobile WiMax (802.16m) could yet emerge as a serious contender for 4G. (See Vodafone Signs on for WiMax .)

WiMax is already being deployed in the U.S. by Verizon Wireless rival Sprint Corp. (NYSE: S). (See Sprint & Samsung in NYC WiMax Push.)

— Ray Le Maistre, International News Editor, Light Reading

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