Verizon Aims to Move Swiftly to Full LTE Coverage and Compatible Phones

by Cynthia Wilson | March 15, 2012 12:04 pm

Verizon (NYSE:VZ[1]) is trying to up the ante in its bid to gain more broadband- and data-hungry customers.

The nation’s largest wireless operator said that it will double the number of markets where it offers 4G LTE coverage for its customers by year’s end, and that for the rest of 2012 most of the mobile devices added to its inventory will be compatible with LTE.

Verizon already has about 200 million subscribers who can access its 4G LTE network, which downloads movies, photos and music up to 10 times faster than 3G networks or 4G systems that have not yet upgraded to LTE.

With its expansion to more new markets, Verizon claims, its 4G LTE network will serve more than 260 million subscribers by the end of the year. David Small, Verizon Wireless’ chief technical officer, said Alaska would be the only state without 4G LTE service before 2013. By the end of that year, though, Verizon’s entire network is expected to be 4G LTE capable.

AT&T (NYSE:T[2]), by comparison, expects to offer 4G LTE coverage to 150 million Americans by the end of 2012 and also complete its network upgrade in 2013. Sprint (NYSE:S[3]) has a similar goal, including complete conversion to 4G LTE by the end of 2013, but its coverage will be available to a fewer customers this year. Deutsche Telekom’s (PINK:DTEGY[4]) USA T-Mobile, meanwhile, is not expected to offer any LTE coverage until next year.

The carriers are investing in LTE (long-term evolution, a high-speed wireless technology) to attract customers willing to spend more on subscriber plans that will allow their mobile devices to handle data-intensive tasks, such downloading movies, music, and photos, relatively quickly. A fully loaded LTE network would provide data rates of 5 to 12 megabits per second (Mbps) on the downlink and 2 to 5 Mbps on the uplink.

Aligning hardware with network capabilities

Many of Verizon’s customers who live in markets where 4G LTE connectivity is available are unable to take advantage of it, though, because they are still using 3G phones and tablets, particularly older versions of Apple’s (NASDAQ:AAPL[5]) iPhone and iPad. With the new, LTE-compatible iPad available in stores beginning March 16, Verizon is positioning itself to be the carrier of choice for the tablet and for any mobile-device user considering an equipment upgrade.

In addition, Verizon will be introducing only 4G-capable phones for the remainder of the year.

With so many U.S. customers choosing Apple’s iPhone, Verizon’s shift to LTE devices in its inventory further bolsters the notion that the next iPhone — usually referred to as the iPhone 5 — will, like the new iPad, most certainly be compatible with 4G LTE when it is released later this year. That also could give Verizon leverage should it raise data rates or introduce new pricing plans.

When 3G phones were introduced, subscribers who bought the phones typically purchased data plans that would allow them to use all of their phone’s features. The fees for those plans helped wireless operators offset the subsidies the carriers paid to phone makers so they could sell the phones at a discount and attract more customers.

Similar data plans likely will be sold with 4G devices, although Verizon may introduce rates that more accurately reflect the amount of data each subscriber uses. That could help keep the network from becoming overburdened and appease customers who don’t want to pay for data they’re unlikely to use.

Because they are being implemented relatively quickly, Verizon’s 4G LTE upgrades should give the New Jersey-based operator an advantage with prospective customers looking for faster Internet access for their iPad and other mobile devices now through the holiday season.

Endnotes:
  1. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  2. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  3. S: http://studio-5.financialcontent.com/investplace/quote?Symbol=S
  4. DTEGY: http://studio-5.financialcontent.com/investplace/quote?Symbol=DTEGY
  5. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL

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