Verizon Wireless to Spend $6 billion on Network Upgrade

Verizon Wireless Inc. plans to boost its wireless data network through a new three-year contract with Alcatel-Lucent SA that is expected to be worth US$6 billion.

In addition to increasing the coverage and capacity of Verizon Wireless' existing CDMA2000 (Code Division Multiple Access) EV-DO (Evolution-Data Optimized) Revision A broadband data network, Alcatel-Lucent will also supply technology to enable VOIP (voice over Internet Protocol) and video telephony services. The EV-DO Revision A network offers users a 300K bps (bits per second) to 400K bps upload data rate and 450K bps to 800K bps download speed.

The network update, part of Verizon Wireless' transition to an all-IP network, will also support other new multimedia services that combine voice, data and video, Verizon Wireless said. Many mobile operators are in the midst of moving to IP networks, which can efficiently handle data traffic and allow for new types of services.

Enabling such services is the best way for operators like Verizon to grow, said one industry analyst. "Growth in wireless is not just about voice but about all the other things we can do with wireless phones like watch television, movies, take pictures, send messages, manage calendars and so on," wrote Jeff Kagan, an independent industry analyst, in an e-mailed comment.

Some existing Alcatel-Lucent switches and routers used by Verizon will be upgraded and Verizon will also use other products from the vendor including digital microwave radios, optical cross-connects and bandwidth management devices. Alcatel-Lucent will also provide network support services as part of the contract.

The deal was likely very well-received at Alcatel-Lucent. "This is the first big deal from the newly merged Alcatel-Lucent and it is very good news for the company," Kagan said. Alcatel SA and Lucent Technologies Inc. completed their merger late last year. Revenue and profits were down for the fourth quarter, the first quarter that the combined company reported earnings for. The vendor blamed the poor results in part on customer uncertainty while the companies work on integration.