Verizon moves forward on rural carrier LTE deals

More than a "couple dozen" rural wireless carriers have expressed interest in Verizon Wireless' (NYSE:VZ) 700 MHz LTE spectrum licensing proposal.  And the company is in the process or formulating different business models for the deals, according to a company spokesman.

The carrier's business development team is working on two different types of deals, Verizon spokesman Jeffrey Nelson told FierceWireless. In one scenario, Verizon will build the network, and in the other the rural carriers will build the network. However, both deals include LTE data roaming. Within the next week or two, Nelson said, Verizon will launch a website explaining the potential benefits of the two types of deals to rural carriers and allow them to explore which model works best.

Nelson added that Verizon is not "interested in mandating to anybody how they build [the network]." Verizon has picked Alcatel-Lucent (NASDAQ: ALU) and Ericsson (NASDAQ: ERIC) as its primary LTE infrastructure vendors but rural carriers will not be required to use those vendors. However, Nelson said there may be some benefits from economies of scale to selecting the same vendors.

How the deals will be structured is something that is being debated, and Verizon will have to work out the details on a bilateral basis with the carriers as well as with the FCC, Nelson said. "We're looking at how to structure these things in a couple of different ways," he said. "It seems unlikely that we would be licensing our spectrum over to someone else. We might be sharing it somehow or allowing them on. We're looking at how, technically, to share this resource."

Nelson added that Verizon Wireless CEO Lowell McAdam believes these roaming deals are important for the carrier's brand, and are not intended to generate substantial revenue. The proposal was first mentioned by McAdam in an interview last week with the Wall Street Journal. At the Reuters Global Technology Summit earlier this week, McAdam said he expected to finalize the deals within the next 30 days, and that the deals could extend coverage to between 6 million and 10 million people by the middle of 2011, depending on how quickly the rural carriers act.

Steve Berry, president of the Rural Cellular Association, said that Verizon has a standing invitation to brief the RCA board on its proposals.  "It's heartening that this is part of the discussion now. It wasn't part of the discussion four weeks ago," he told FierceWireless. "It's also interesting that Lowell McAdam has acknowledged that they don't have a plan to build out 4G in rural America without the cooperation of the rural carriers."

Berry added that it's unclear whether Verizon's proposals will benefit the rural carriers because the details are still uncertain.  

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