Verizon's McAdam: AT&T, Sprint and T-Mobile all 'playing catch up'

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Verizon Wireless (NYSE:VZ) is so far ahead of its competitors in terms of its LTE network coverage and quality that it will be a significant period of time before the other Tier 1 carriers are on the same level, according to Verizon Communications CEO Lowell McAdam. "I think at this point the various carriers with their network initiatives are playing catch up," he said.

Verizon Communications CEO Lowell McAdam

McAdam

McAdam, speaking at the UBS Global Media and Communications Conference, said the carrier's recent growth in postpaid subscribers is "sustainable because of the robustness of the platform. I've built up networks my whole career and you don't make up the lead we've got in a couple of quarters."

"Even if someone catches up from a coverage perspective you've got to catch up from a user experience perspective," he said. "In the meantime we're going to try and figure out what 5G and 6G look like."

Verizon's LTE network now covers 250 million people, or around 80 percent of the U.S. population, and the carrier has a goal of expanding that to at least 260 million POPs by the end of 2012. Verizon has said it plans to complete its LTE buildout by mid-2013.

Others carriers are indeed making progress, but Verizon maintains the clear LTE coverage lead. Competitor AT&T Mobility (NYSE:T) recently expanded its LTE network to hit its goal of covering 150 million POPs with LTE by year-end; the company plans to cover 250 million people by the end of 2013 and 300 million by the end of 2014. Sprint Nextel (NYSE:S) is building out LTE as part of its Network Vision network modernization plans and plans to have close to 120 million POPs covered by the end of 2012, expanding to 250 million by the end of 2013. T-Mobile USA has not yet launched LTE but plans to cover 200 million POPs with LTE by the end of 2013.

McAdam said Softbank's proposed $20.1 billion purchase of 70 percent of Sprint would be a good thing and would lead to more competition in the industry. He also praised T-Mobile's planned merger with MetroPCS (NASDAQ:PCS). "I do expect, and I'm glad, there will be new competitive forces in the marketplace," he said. "To me it's better to have four healthy competitors in the market overall."

McAdam touched in a wide range of topics during his appearance at the investor conference, including Verizon's Share Everything shared data plans, the idea of toll-free data plans, and Verizon's joint venture with a group of cable companies.

The Verizon chief said the carrier is activating more shared data plans than expected (new smartphone customers are required to sign up for the plans). He also said that during the Thanksgiving weekend Verizon enjoyed an uptick in the number of tablets that customers added to their Share Everything accounts. He said within a "couple of years" he expects to see very few customers buying standalone data plans for single devices.

On the concept of toll-free data plans, McAdam noted that the idea has been batted around for a while. Such plans allow application providers to pick up the cost of subscribers' data usage on specific services. "I don't think we've seen any meaningful application move in a big way, but I think it's possible," he said, adding he expects some form of toll-free data plans to emerge before the end of 2013. 

McAdam also said Verizon has been working on network architecture and applications with its cable partners, especially Comcast, as part of their joint venture. Verizon purchased $3.9 billion worth of AWS spectrum from Comcast, Time Warner Cable, Bright House Networks and Cox Communications this year. The companies also agreed to resell each other's services, subject to restrictions imposed by the FCC and Department of Justice, and created a technology joint venture.

McAdam said that next year Verizon and the cable companies would start to roll out applications and services as part of the joint venture, especially for video transmission. "It's still a little nebulous, but I think it will come," he said.

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