Verizon Wireless increased the stakes in the wireless data market last week, announcing the expansion of its CDMA2000 1x EV-DO-based BroadbandAccess service to 11 new markets as well as limited coverage at 10 airports in eight additional markets. The expansion brings the carrier’s total EV-DO coverage to 24 markets and airport locations, surpassing the footprint of AT&T Wireless Services Inc.’s W-CDMA coverage, which recently expanded to six markets.
The new markets benefiting from Verizon Wireless’ high-speed wireless data service include Atlanta; Austin, Texas; Baltimore; Kansas City, Kan./Mo.; Los Angeles; Miami/Fort Lauderdale, Tampa and West Palm Beach, Fla.; Milwaukee; New York; and Philadelphia. They join previous deployments in Washington, D.C., San Diego and Las Vegas.
Verizon Wireless said the expansion increases its coverage to more than 34 million potential customers, and it plans to cover one-third of its network or around 75 million pops by the end of the year. Dick Lynch, Verizon Wireless’ executive vice president and chief technical officer, added that the carrier now offers a sizeable footprint in each of its launched markets and will continue to grow network coverage with additional EV-DO-enabled cell sites as early as this week.
The carrier also reiterated that it plans to roll out EV-DO coverage to two-thirds of its network by the end of next year as part of its $1 billion investment in the technology.
In addition to the major airports covered in each new market launch, Verizon Wireless added EV-DO coverage at airports in Dallas/Fort Worth and Houston; Jacksonville and Orlando, Fla.; Newark, N.J.; New Orleans; Phoenix; and Santa Ana, Calif. Verizon Wireless said the airport launches support the initial business focus for the service, which has already garnered several thousand customers in the three initial market launches.
“That’s where our customers are located, travel through and want to work,” said Cindy Patterson, vice president of enterprise data for Verizon Wireless.
The carrier added that while various Wi-Fi networks serve many of the airports, it did not feel the two technologies are competing for the same customers. “Wi-Fi is a great service for stationary locations but has a very long way to go before there are reliable hand-offs and mobile service,” Lynch explained.
Lynch also downplayed concerns that the wireless data service would eat into parent company Verizon Communications Inc.’s digital subscriber line deployments, noting the typical customer is not ready to pay a $40 premium for wireless broadband.
Analysts noted that households with more than one DSL user would see an even higher cost differential if they switched to Verizon Wireless’ EV-DO service.
“Naturally, buying more than one subscription for a household does not get much mileage economically,” said Albert Lin, wireless industry analyst at American Technology Research.
Verizon Wireless received some additional respect from analysts over the markets selected for the latest expansion, including areas in Texas and Florida that are not considered current strongholds for the Verizon brand name.
“It’s good to position the service in those markets where they don’t have a large presence,” said Ranjan Mishra, principal analyst at Adventis Corp., who added the carrier could have played it safe and launched services in markets where its parent company has a strong local wireline presence.
Mishra also noted that the expansion could prove a compelling competitive advantage to lure AWS’ business customers looking for a new service provider prior to its pending acquisition by Cingular Wireless L.L.C. “Verizon does a good job of promoting its superior network technology and this will only add ammunition to its arsenal,” Mishra said.
Verizon Wireless said it expects to begin targeting the consumer market some time next year once it has a larger footprint and more consumer friendly devices and rate plans in place. The carrier noted that it “won’t be too long before EV-DO [personal digital assistants] are available,” and that it is working with handset manufacturers on appealing handsets.
ATR’s Lin said he expects LG Electronics Inc. to provide the first EV-DO handset and there likely will only be a few available handsets by early next year.
In addition to the greater selection of devices, Denny Strigl, Verizon Wireless president and chief executive officer, said the carrier expected to offer different pricing options for its consumer launch. Today the carrier charges business users $80 per month for unlimited access using a PC card, which analysts have said is too high to spur broader adoption.
AWS charges users $80 per month for unlimited access to its W-CDMA network using a PC card, but only $25 per month for unlimited access.
Mishra was concerned about the spectral challenges Verizon could run into if the service proves more popular than expected but added that the time-to-market advantage the carrier is gaining on competitors was too large to pass up.
AWS is not expected to add to its W-CDMA deployments prior to its acquisition by Cingular. Sprint PCS said it plans to have EV-DO across most of its network by the end of next year, while Nextel Communications Inc. has only launched service in portions of North Carolina and T-Mobile USA Inc. has yet to commit to any 3G technology.
