NEW YORK-Where wireless data is concerned, Dennis F. Strigl, president and chief executive officer of Verizon Wireless, has assumed the enthusiasm of a recent convert.
“I was not bullish on data five years ago … but we are finally seeing some real numbers in data,” he said June 20 at the Donaldson, Lufkin and Jenrette Securities Corp. Wireless and Satellite Conference.
“We have more (Code Division Multiple Access) than (Cellular Digital Packet Data) customers … more than six figures this year and more than seven figures next year … Very early results show [average revenue per unit] of $8-$10 more per month.”
CDPD, however, is likely to remain a very good market for Verizon’s vertical applications, targeted at users involved in fields like law enforcement and public safety, he added. Overall, data could account for 10 percent to 15 percent of the company’s revenues by the end of 2004.
“The challenge will be to decipher what customers want. Data has to be solution driven, not technology driven, as the industry has done in the past,” Strigl said.
Later this year, Verizon’s regional prepaid offering will be expanded into a nationwide, digital offering with a one-rate plan comparable to that in its postpaid business. Also this year, the company plans to offer “coast-to-coast two-way messaging … for applications like personal banking,” Strigl said.
“In a few weeks, we will launch a Verizon-branded wireless portal, which is now in beta testing. We’re not replicating what is done on the desktop (computer). We are not making the Internet wireless,” he said.
Verizon has worked with Procter & Gamble in Cincinnati on a trial of this service, which also will allow mobile workers access to real-time information behind the firewalls protecting the corporate intranet.
Americans are tough customers to satisfy, accustomed as they are to high-quality wireline Internet access with full color graphics. Wireless attempts to replicate these capabilities might give domestic consumers the same sense they would have if color television suddenly reverted to black-and-white TV, he said.
As a result, Strigl said Verizon is creating a wireless product that will permit “continual monitoring and alerts, based on customization done on a [personal computer] or a wireless phone. If you update one, the other automatically is updated. And you can use your own e-mail address.”
Furthermore, customers who have short message service will be able to take advantage of this offering, even if their phones are not Internet-enabled, he added.
“We own the space on the handset, which can be very valuable real estate for us. The art will be to make the most of this without being obtrusive to customers. And we also will get transaction fees,” Strigl said.
By fall, Verizon also plans to make instant messaging available to wireless phones.
Today, the carrier offers digital cellular on 75 percent of its network, and the goal is to increase that coverage to 90 percent by mid-2002.
The company also plans to invest immediately in coverage improvements in its PrimeCo Personal Communications L.P. properties and upgrades of analog networks in the GTE Corp. footprint.
This year’s capital expenditure estimates are approximately $3 billion. As it integrates its acquisitions, Verizon expects to realize substantial savings through consolidation of information technology, billing and customer-care centers. By year-end, it hopes to raise substantial equity through an initial public offering.
Meanwhile, the carrier is in the process of updating its CDMA data capabilities, which now deliver text at 14.4 kilobits per second, “faster than the eye can read,” Strigl said. Verizon soon will begin trials in central New Jersey of 1XRTT data at 144 Kpbs and plans commercial launch throughout its network by the middle of next year.
“CDMA allows easy transition from [Interim Standard] 95A to 1XRTT and offers significant advantages over the data-only [Enhanced Data Rates for Global Evolution] product,” Strigl said.
In 2002, Verizon plans to transition its data to 1EV, opting for “the Qualcomm solution because it plugs into the hardware and is not a base station solution like EDGE,” Strigl said. Between 2003 and 2005, the carrier plans the upgrade to 3XRTT third-generation wireless.
“As we move to 1XRTT and to 3G, we will be through with our CDMA buildout and might use some of the money (budgeted) for CDMA on 3G. But keep in mind, I also thought CDMA would lower our [capital expenditures] several years ago,” Strigl said.
For now, Verizon has a strong position with respect to adequate spectrum for its needs, even as it unveils new data services, according to the chief executive.
“Long term, significant demand for data and broadband will require more spectrum. While we have traditionally been aggressive bidders, we also have been prudent bidders,” Strigl said.
“Frankly, in evaluating the business case for the 700 MHz auction, this spectrum is heavily encumbered. Without rule changes, those encumbrances could weigh heavily in bidding decisions and the overall value of these properties. It is in the best interests of the industry, consumers and the government to revise these rules, even if it means delaying the auctions.”
