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Verizon Wireless CTO spurns network outsourcing, posits on EVDO shutdown

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BOSTON - Verizon Wireless' chief technology officer said he does not believe in network outsourcing, comments that imply the carrier's intention to retain direct control of its CDMA network and LTE rollout.

The remarks are notable in light of a recent Wall Street Journal report that Sprint Nextel is in advanced negotiations to outsource its network to infrastructure giant Ericsson. Neither Ericsson nor Sprint has commented on the issue.

"I am not a believer in outsourcing," said Tony Melone, Verizon Wireless' senior vice president and chief technology officer, during a question-and-answer session at Ericsson's Capital Markets Day event here. Ericsson is one of the suppliers for Verizon Wireless' LTE buildout.

Melone said Verizon Wireless has long worked to promote the quality and reliability of its network--he trumpeted that the carrier has spent $50 billion on its wireless network since 2000. Thus, Melone said, outsourcing its network operations wouldn't jive with the reliable-network image the carrier has spent billions pushing onto consumers.

Despite Verizon's apparent distain for outsourcing, the trend is growing. Indeed, research firm Gartner recently wrote that "carriers will need to experiment with different ways to transform the businesses and operating cultures in order to prosper," and cited Vodafone's outsourcing of its network operations to Ericsson as an example.

'Pricing is inhibiting'

During his presentation to investors, analysts and press, Melone also briefly stepped outside his role as a network and technology guru to address Verizon Wireless' marketing and service pricing. When questioned about the carrier's pricing plans for its forthcoming LTE service, Melone said, "I think the current pricing schemes will change over time."

Indeed, Melone said current mobile broadband pricing "is inhibiting the market," and suggested mobile data fees may change even before Verizon launches its LTE service.

The comments are notable considering Verizon Wireless' current strategy: the carrier charges $60 per month for Internet access with download speeds of between 600 Kbps and 1.4 Mbps, and caps usage at around 5 GB per month. The pricing is significantly higher than what most wireline carriers charge for Internet access at higher speeds. Such pricing is largely in line with Verizon's competitors.

EVDO on the chopping block?

Finally, Melone also dropped some interesting remarks about Verizon Wireless' eventual transition from CDMA to LTE. He reiterated the carrier's already announced rollout plans--commercial LTE service by 2010 and expansion thereafter--and noted Verizon Wireless would operate its existing CDMA network in parallel with is LTE offering. Melone said Verizon Wireless would continue to rely on its CDMA 1x network for voice traffic during its LTE rollout, noting that the technology is well-designed for such communications. And though LTE can simultaneously support voice and data communications, Melone said the carrier wouldn't force customers to migrate their voice calls to LTE initially. He said Verizon Wireless would support its CDMA 1x network at least through 2018 to 2020.

However, the same may not be true for the carrier's CDMA EVDO 3G network. EVDO is primarily designed for data communications and not voice communications. Thus, Melone implied the carrier's EVDO network would become redundant with the launch of the higher-speed LTE technology.  "EVDO I believe will have a much shorter lifespan" than CDMA 1x, Melone said.

Melone did not provide a specific timeline for the shutdown of Verizon Wireless' CDMA EVDO network, and the carrier likely will continue to maintain it as long as a significant number of customers retain and use their EVDO-capable devices. Nonetheless, the move has precedence; AT&T Mobility recently completed the shutdown of its 2G TDMA network, and Verizon Wireless did the same with its own analog network.

Related stories:
Sprint in 'final negotiations' on Ericsson outsourcing
Verizon may complete LTE buildout by 2014
Verizon says LTE will be here next year
How long can mobile operators institute data usage caps?

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Comments (6) | Post a comment
More stories about Wireless Broadband   Verizon Wireless   Melone   LTE  

Comments

If a network operator can't operate its network what can it do?

I bet this guy will not be CTO after 2011. Remember his name because he is grossly underestimating the transitional process. Note the 2018 to 2020 dates referenced, he thinks 1x will be a better fall back that EvDO for speed. If they go LTE by 2014, AT&T HSPA+ network will still have a greater advantage on data speeds with 42Mb/s+. LTE first iterations top out at 21Mb/s and greater speeds in later releases. AT&T's HSPA+ network with match or excessed Verizon's LTE until the two merge in release 12 or 13 due out in 2014 or 2015. Unfortunate for Verizon, they will still be fully launching there entire footprint and AT&T will easily "migrate" into LTE because it is the natural pregression for a UMTS network.

Last word, remember the iPhone and where is that Verizon guy now.

Gee - you must be an AT&T employee - game on - we'll see...and sorry to hear how badly that iPhone subsidy is hurting your bottom line...

Historically, VZW has executed on their biz plan like no other carrier. They'll get it done.

I'm no fan of Verizon, but if history proves true they will be better equipped to execute any large scale network deployments.

ATT on the other hand hires monkeys to do a mans job. No other carrier brags so much about their network despite the fact that it's probably the worst from a quality perspective. You tell us your the biggest and baddest in the world but your domestic 3G network is a poor excuse for fast dial up.

ATT knows their network sucks. That's why they plan to force 3G phone users onto 2G networks if they aren't heavy data users. HSPS is supposed to be simultaneous voice and data. Apparently their network is sooooo bad it can't operate the way it's supposed to.

What a joke! The only ones who blindly defend them are their underpaid retail sales clerks who work in our local malls.

I think Verizon is doing the right thing. Advocates of outsourcing keep pointing to Bharti and others in India as models of success, however to me the ground reality is --

http://www.hindustantimes.com/news/specials/popup/15_09_09-frustration.htm
http://www.hindustantimes.com/Call-drops-wreck-India-s-mobile-revolution/H1-Article1-454022.aspx

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