Verizon Launches 1X In Low-Key Rollout

BEDMINSTER, N.J.— Verizon became the first carrier to launch commercial CDMA 1X service in the United States, and like other networks' GPRS launches, it's as conservative as they come.

Service, for example, was launched in markets reaching only 20 percent of the population in the carrier's footprint, or 53 million people in the Northeast from Norfolk, Va., to Portland, Maine, in the San Francisco Bay and Silicon Valley areas of Northern California, and in Salt Lake City.

In addition, the carrier has held back distribution through indirect channels, offers only one 1X phone and one PC Card-size 1X radiomodem, and plans a conservative advertising schedule in targeted print publications that reach business consumers who are heavy data users.

On top of that, like current GPRS networks, Verizon's 1X Express Network was launched with no data applications other than faster WAP browsing and ability to use a 1X phone as a wireless modem for connected laptops and PDAs. For now, average Verizon throughput is 40-60kbps.

"There are very few to no services that take advantage of it, but that's not surprising," said Cahners In-Stat analyst Ken Hyers. "You have to build the road before you can put cars on it."

Verizon won't say when it will offer new types of data services, such as wireless gaming, videoconferencing, or downloadable or streaming video programming.

The most important gain for Verizon right now, Hyers continued, is 1X's ability to increase voice capacity. "You'll have to wait for Sprint for a flashy rollout" of wireless packet-data services, he added.

Sprint has promised a nationwide launch sometime in mid-year throughout its network and in the networks of most of its carrier affiliates to deliver data at average throughputs of 70-80kbps. (See TWICE, Jan. 21, page 1.) At launch, Sprint said it will support the downloading of still images and games and possibly the downloading of video clips. Multiplayer games are also possible at launch.

At launch, analysts say, Sprint will also offer a phone with built-in digital still camera to snap digital pictures and send them wirelessly to any e-mail address. Sprint will follow up with third-quarter sales of Samsung's NEXiO, which integrates a 1X phone with a handheld PC based on Microsoft's PocketPC 2002 OS, analysts say.

Although its launch was limited, Verizon says it has aggressive expansion plans. By the end of 2002, "the majority of the nearly 222 million covered POPs should be able to use the Express Network every day," said CTO Dick Lynch. The carrier also expects to expand its 1X handset selection "by mid year, probably by the end of the first quarter, with several new products," a spokeswoman added. Like the current model, they will be WAP-browsing phones that also double as wireless modems, she said. That round of introductions will not include phones with integrated video cameras or phones with built-in PDA or Handheld PC operating systems, she noted.

To expand the service's utility, Verizon announced an alliance with Accenture, enabling both to market Accenture's mobile enterprise applications to businesses.

Verizon is also "working aggressively" to open up handset distribution beyond its direct-sales channels, which include its Web site, direct sales force, and company-owned stores. RadioShack will be among the carrier's indirect partners selling 1X. "We will be a major retailer... when the carrier is ready," said a RadioShack spokeswoman. "We're still looking at the product and how we'll participate."

In-Stat's Hyers said Verizon is limiting its handset distribution because of tight 1X handset supplies and a desire to "manage how the service is sold while they roll it out."

Underscoring tight suppliers, Verizon launched with only one handset, the Kyocera 2235 at $79, and one radiomodem, Sierra Wireless' $299 AirCard 555, a Type II PC Card. The handset also doubles as a modem when connected to a laptop or PDA via an optional $79 Mobile Office connection kit.

The phone features microbrowser, two-way SMS, predictive text input, four-way navigation key, five-line bitmap display, four games, and alarm clock, calculator, tip calculator, countdown timer and stopwatch.

The AirCard features 2.5mm headset jack, enabling users to place voice calls through a hands-free headset.

Unlike its GPRS competitors, Verizon bills for data use by the minute, not by the packet. Data service is available only to Verizon subscribers with digital voice plans costing at least $35/month. For an additional $30/month, subscribers will be able to use their plan's airtime minutes for voice or data.

Even though IX is a packet-based technology, Verizon is pricing data service like circuit-switched voice technology because per-minute pricing is familiar to consumers, Hyers said. Unlike the GPRS carriers, he added, Verizon's billing systems aren't set up to offer per-packet pricing throughout its footprint.

That will soon change, however. By the end of the first quarter to mid-year, Verizon will offer a per-packet plan for enterprises requiring large data buckets, the spokeswoman said. At that time, Verizon will also offer a per-minute-based data-only plan for users of PC Card radiomodems.

Data charges begin after the user selects the Express Network option from the phone or PC's menu and hits the send or connect button. The charges stop when the end or disconnect button is pressed. The data charges will automatically time out if data isn't sent for five minutes.

People who want to keep their existing 2G phones will be able to charge AirCard usage against their current plan's per-minute fees even though the AirCard will have a separate phone number.