Verizon to Spend $1B on Wireless Upgrade
By Bruce Meyerson,
AP Business Writer
January 8, 2004

NEW YORK (AP)—Two months after AT&T Wireless launched the nation's fastest wireless Internet service, Verizon Wireless says it will spend $1 billion to reclaim the lead with an even speedier technology that just months ago the company insisted was not an urgent need.

The next-generation technology being used by Verizon, which can provide wireless downloads to a laptop between five and 10 times quicker than a dial-up connection over a wired telephone, will be rolled out nationally over the course of two years, with some cities getting the service by this summer.

In tandem with Thursday's wireless announcement, parent company Verizon Communications announced a $2 billion investment to accelerate the upgrade of its traditional wireline telephone network with Internet Protocol technology. The decision comes amid a scramble by top rivals to offer services using so-called Voice over IP, or VoIP, a cost-cutting technology that converts the sound of phone conversations into digital packets just like e-mail and computer data.

Verizon also announced plans to launch products this year that integrate a person's assorted communication devices, enabling customers to centrally manage phone calls, voice mails, calendars, address books and e-mails.

Verizon Wireless, which is also part owned by Britain's Vodafone PLC, introduced a speedier cellular data service during September in two test markets, Washington and San Diego, but asserted that a wider rollout was not planned or necessary anytime soon.

That strategy may have changed with November's national launch by AT&T Wireless of a mobile network that enables laptop connections up to twice as fast as the cellular-based Internet access currently offered across most of the country by Verizon, Sprint PCS and Cingular Wireless.

Sprint, which uses the same wireless standard as Verizon, stood firm Thursday in its decision not to upgrade with the EV-DO version of the technology that Verizon has now decided to deploy nationally.

Because the technology doesn't improve call capacity and quality, Sprint considers it to be an inefficient use of the spectrum when voice is still the primary and dominant driver of traffic on our wireless network, spokesman Charles Fleckenstein said. Based on our current projections regarding wireless data market growth, Sprint ... is instead focused on the next release of technology beyond EV-DO, which the company expects to deploy in 2006.

AT&T Wireless, which spent $300 million to introduce its EDGE service in the fall, is already testing a more advanced technology called UMTS. The company expects to offer UMTS, which can provide comparable speeds to the service Verizon plans to roll out, in four cities including Seattle and San Francisco by the end of 2004.

For now, there's no plan to accelerate that rollout in response to the announcement by Verizon Wireless, said Ritch Blasi, spokesman for AT&T Wireless.

The arms race in mobile data comes as cellular companies grapple with new federal rules that took effect in late November allowing customers to switch wireless services without losing their phone numbers.

The improved wireless data services are most appealing to valuable business users. Notably, the faster laptop connections offered by AT&T Wireless and Verizon Wireless are priced at $80 per month for unlimited usage on top of the monthly charge for cell phone service.

But in addition to improving laptop connections, cellular companies hope snappier data services will finally make Web surfing on a phone or handheld computer appealing, boosting sales of multimedia handsets and driving new revenues from data usage.

The current generation of cellular data technologies, rolled out to customers last year, disappointed many users in terms of speed, offering downloads that rarely surpassed a telephone dial-up connection.

As a result, many cell phone companies have embraced Wi-Fi technology to deliver faster wireless connections in at least some locations, such as cafes and airport terminals, that business customers frequent.

But they have also pressed ahead with plans to deploy speedier service over their cellular networks, which offer the advantage of covering far more territory than the 300-foot range of a Wi-Fi signal.

The EV-DO service Verizon plans to launch is billed with average download speeds between 300 and 500 kilobits of data per second, almost on par with the wired broadband connections provided by DSL and cable TV. During off-peak network usage, the technology could provide speeds twenty to forty times faster than dialup, which has a maximum capacity of 56 kbps.

By contrast, the 1xRTT technology that both Verizon and Sprint are now using nationally is capable of delivering speeds of up to 144 kbps. In practice, however, download speeds tend to average between 40 and 70 kbps, depending on the customer's location and the number of other subscribers using the network.

The laptop card required to access the EV-DO service, offered by Verizon at $150 after rebate, will also be compatible with the network in markets that have yet to be upgraded, so users will not need to carry two wireless cards.