Without divulging financial details, Nortel Networks Ltd. bagged what is likely a hefty contract to supply Verizon Wireless with CDMA2000 1x EV-DO Revision A network technology beginning in the third quarter.
Albert Lin, telecom analyst at American Technology Research, estimated that Verizon’s total Rev. A spending will be about $3 billion or $4 billion spread out over 3 years, peaking at around one-and-a-half years.
Verizon Wireless said it expects Rev. A technology to help meet customer demand for more high-bandwidth, real-time wireless services such as Voice over Internet Protocol, video telephony and advanced multimedia services. However, the carrier has not specified when it plans to launch Rev. A services. Conversely, Sprint Nextel Corp. has announced that it plans to offer commercial Rev. A services by the end of next year, but the carrier has not yet named an equipment supplier.
“These new services provide a very powerful end-user experience that increases customer loyalty,” said Nortel’s Doug Wolff, vice president and general manager of CDMA.
Verizon Wireless is testing Nortel’s Rev. A technology applications, including push to talk, fixed-mobile convergence, VoIP and messaging services. “Successful trials of EV-DO Rev. A have demonstrated the technology’s potential for taking the Verizon Wireless broadband experience to new heights,” said Ed Salas, vice president of network planning, Verizon Wireless.
Salas’ comments were more cautious in March; at that time, after Sprint Nextel unveiled its plans to upgrade to Rev. A, Salas told RCR Wireless News that “the Rev. A stuff is all very interesting, but we know that this is technology that’s still in the oven, right? It’s not baked. We’re not going to provide a specific timeline for [when Verizon Wireless will announce the rollout of] a technology that’s not ready. The advantages to being first in the marketplace, for a lot of products and services, don’t matter. When it goes to your core asset, your true differentiator, which is the network, what matters is experience in the marketplace. Strategically, we have every intention of evolving to Rev. A.”
Nortel said its Rev. A technology will allow Verizon Wireless to provide peak data rates of up to 3.1 megabits per second on the downlink and up to 1.8 Mbps on the uplink. Lin suggested that Verizon Wireless is stepping up its Rev. A buildout to keep pace with Cingular Wireless L.L.C.’s HSDPA rollouts, which are expected to cover top markets by the end of the year.
In addition, Nortel noted that it has been a key supplier to Verizon Wireless’ nationwide network for more than a decade.
Indeed, Lin said Nortel has held on to a 15- to 20-percent account share of Verizon Wireless’ infrastructure contracts, while Lucent Technologies Inc. holds the lion’s share.
In late June, Lucent announced it had secured a Rev. A contract with Verizon Wireless, though Lucent did not elaborate on the financial terms of the agreement or specific markets set for Rev. A upgrades.
Interestingly, Lin noted that although Lucent is Verizon Wireless’ dominant supplier, the carrier uses Nortel equipment exclusively in the San Diego market, known to be a test-bed for Qualcomm Inc.’s CDMA-based technology.
Lin also indicated that the infrastructure market-share split between Lucent and Nortel with Verizon Wireless is not likely to change dramatically any time soon, but he also left the door open for change, questioning the carrier’s relationship with Lucent once the infrastructure vendor is acquired by Alcatel Inc.
“Verizon has not liked working with Alcatel because they supply its competitor, AT&T [Inc.] with infrastructure equipment,” said Lin. “There is not an established history of a working relationship with Alcatel, which could lead to Nortel upgrading their account share with Verizon after the merger.”
Lin also described the Mike Zafirovski-factor, saying, “Mike Z has a very good relationship with Verizon from his days at Motorola, around 2002 and 2003, when he began improving Motorola’s vendor status with Verizon. He was instrumental in convincing Verizon to offer Motorola’s V100 series of handsets, which ended up working out well for both companies. And when he became president of Motorola, Zafirovski secured Verizon’s optical equipment business.”
Overall, Lin deemed Nortel’s Rev. A contract with Verizon Wireless as a positive and said the struggling equipment vendor is holding its own.
Danny Locklear, director of CDMA product marketing at Nortel, was more upbeat, saying, “We’re very excited about this contract because it establishes that we continue to be a key partner of Verizon Wireless.”
