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Verizon Catches Data Wave

Light Reading
LR Mobile News Analysis
Light Reading
9/29/2003

Verizon Wireless has announced the commercial launch of a third-generation (3G) wireless data network but is being extra cautious in deploying the service, launching it in just two cities to test the water before a national rollout (see Verizon Offers BroadbandAccess).

The new service, dubbed Broadband Access, is available in San Diego and Washington and offers remote workers wireless data at speeds up to 2 Mbit/s, or about 16 times faster than its existing CDMA2000 1X network, Verizon claims.

”We have an embedded base of enterprise customers in these markets that we can get immediate feedback from,” says Andrea Linsky, spokeswoman for Verizon Wireless. Computer consulting firm, Computer Sciences Corp. (CSC) (NYSE: CSC) is using the service, as are university students and real estate agents in those regions.

To get the service, which costs $79.99 a month for unlimited access, a customer must purchase a Verizon Wireless PC 5220 card for his or her laptop. These cards are manufactured by Qualcomm Inc. (Nasdaq: QCOM) and resold by Verizon. Qualcomm will manufacture additional access devices, including cards, modems, and handheld mobile devices for the carrier, should the service take off.

CDMA2000 1xEV-DO (1X evolution-data optimized) 3G technology (the next generation of CDMA2000 1X) is already in use in other parts of the world, where carriers including SK Telecom (Nasdaq: SKM) and Telecom Italia Mobile SpA (Milan: TIM) are seeing plenty of demand for wireless data services (see Wireless Data Rakes in Revenues).

"SK Telecom has a million users using this technology already, which is very promising,” says Verizon’s Linsky. It supports VPN connections as an extension of a corporate LAN, which allows users to work from any location with the same speed, security, authentication, and data protection as if they were working from their offices, she says.

On the OSS front, Verizon is pitting two of its suppliers, Nortel Networks Corp. (NYSE/Toronto: NT) and Lucent Technologies Inc. (NYSE: LU), against each other in somewhat of a bakeoff as part of the commercial launch. Nortel is supplying the software to upgrade Verizon’s CDMA metro cell base stations, radio network controllers (RNCs), and element management system for San Diego, while Lucent is supplying exactly the same software, but for the Washington area.

Verizon declined to tell Boardwatch how much it cost to upgrade its network to offer this service but says it will monitor the service for three to six months before deciding whether to extend it to other cities.

Analysts say that should Verizon Wireless expand in California, where more than 20 percent of its 34.5 million customers live, it would take an additional nine to 12 months and as much as $200 million to upgrade the more than 1,000 cell phone towers in just the L.A area, in order to handle the higher speeds.

AT&T Wireless Services Inc. (NYSE: AWE) and Cingular Wireless expect to launch similar services by the end of this year.

— Jo Maitland, Senior Editor, Boardwatch

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