L.A. Launch of Verizon Wireless Service Pushed Back
By MICHAEL THURESSON
Anxious to set up shop in L.A. with its next generation wireless network, Verizon Wireless has run into glitches that have pushed back its rollout.
Initially expected to introduce a new wireless standard capable of transmitting data at speeds comparable to landline Internet connections like DSL or cable, the launch was pushed back first to early October and again by another few weeks. Verizon is testing the service in San Diego and Washington, D.C.
The delay has slowed its introduction to the L.A. market at a time when Verizon Communications Inc. is relying more heavily on wireless as its landline business lags. The wireless business is a joint venture of Verizon Communications and British telecom carrier Vodafone Group Plc.
The parent, citing the lack of demand for local phone service, recently reduce its earnings forecast and said it would cut back on capital spending.
Analysts see Verizon’s investment in the high-speed wireless system, known as EV-DO, as a natural upgrade to its network but said the delay suggests the technology is not quite ready for a launch in L.A., where the greater population density will make installing the necessary infrastructure more difficult.
Cellular networks require the placement of base stations throughout the city, and larger cities require more stations. The stations, which receive signals from cell phones, use copper or fiber landlines to move the data across the Internet.
But Verizon has little landline coverage in California, forcing its wireless carrier to invest heavily in new or leased lines if it wants to offer its new high-speed service in Los Angeles.
The additional coverage, or “backhaul,” will have to be installed to support the higher-speed traffic flowing through the new network.
“The coverage issue will be huge,” said Michael King, a wireless industry analyst at Gartner Dataquest. “Getting bandwidth to cell stations is a huge issue.”
In Los Angeles, the plan is for Verizon Wireless to use the limited local coverage of its parent, supported by landlines leased from SBC Communications Inc. As a result, company officials said, spending cuts by the parent company are not expected to affect the feasibility of rolling out EV-DO in L.A.
“That doesn’t have any impact on the infrastructure that would provide our backhaul capacity. I don’t see a positive or negative impact,” said Daniel Jaurigue, executive director of network for Verizon Wireless in Southern California.
Extending reach, revenues
The carrier climbed over AT & T; Wireless to become the market-share leader in Los Angeles in 2001, according to a report from J.D. Power & Associates.
But Verizon’s average L.A. customer spends $12 less per month on cell phone bills than the local average nationwide. Getting customers to buy the new EV-DO Internet service, which will cost $79 per month and require the purchase of a $150 card, is a way to increase that number.
Verizon expects to triple its subscribers using the Internet service on its current network, said Marni Walden, president of Verizon Wireless in Southern California. She declined to provide current subscriber numbers.
The centerpiece of the new network, which does not upgrade voice service, will be a card that slips into a laptop and connects it to the Internet over the wireless network. Verizon and other carriers have been offering wireless Internet access over existing networks for about a year, but EV-DO will make the download speeds up to five times faster than those systems.
Walden declined to discuss the investment required for the upgrade, but previous investments by the company could provide some idea. Last month, Verizon announced a $250 million investment in its Southern California network and a $1 billion purchase order for network equipment from Nortel Networks Corp.
In 2001, Verizon Wireless paid $513 million to the Federal Communications Commission for radio licenses in Los Angeles as part of a nationwide auction that raised more than $16 billion, according to the FCC.
Sprint PCS, the wireless unit of Sprint Corp., uses an earlier version of the same wireless Internet technology and has decided to wait until 2006 before it moves ahead with its next generation network. The carrier wants to use a different technology, one that improves voice service as well, called EV-DV, and plans to commercialize the network nationally rather than using Verizon’s city-by-city approach.
“We want an effective solution that supports voice and data in an integrated fashion. Unless you do it nationwide, you are only confusing customer as to what they will get,” said Mike Karageorge, area vice president for California at Sprint PCS’ Irvine office.
Speed Merchants Qualcomm’s wireless technologies dominate market.
– 1X Current wireless communications standard used by Sprint PCS and Verizon Wireless last year. Faster than dial-up, slower than cable or DSL.
-1xEV-DO Standard Verizon Wireless plans to roll out in 2003-04. Data-only upgrade has no effect on voice communications.
-1xEV-DV Standard to be employed by Sprint PCS starting in 2006. Both a voice and data service upgrade.
Source: CDMA Development Group