VZW: Droid won’t strain 3G network
Verizon is counting on the new Android-powered smartphone being as successful as the iPhone, but unlike AT&T, VZW believes it can handle the enormous surge in network data traffic that will accompany it
Verizon Wireless (NYSE:VZ, NYSE:VOD) isn’t holding anything back in its launch of the new Motorola (NYSE:MOT) Droid, engaging in its biggest ever marketing campaign to sell the Android-powered smartphone. VZW is anticipating unprecedented device sales accompanied by a surge of new traffic from millions of new unlimited-data subscriptions, but Verizon officials today expressed confidence that its nationwide 3G network can handle the data tsunami heading its way.
“We’re encouraging it,” said Arvin Singh, VZW director of data sales for the Illinois-Wisconsin region. “We’re anticipating the Droid will be a blockbuster, but we’re not adding any new backhaul or new EV-DO carriers for the launch. We’re not anticipating the network will take a hit on this.”
Those are bold words considering the congestion problems AT&T (NYSE:T) had after each of its Apple (NASDAQ:AAPL) iPhone launches. The operator broke new records in each of its successive iPhone releases, throwing millions of new data-hungry smartphone users onto its high-speed packet access (HSPA) network in a matter of months each time. Those new iPhone users were largely responsible for AT&T growing its mobile data traffic by a factor of 50 in 12 quarters, leading to bottlenecks in its networks around the country and prompting AT&T to initiate a system-wide upgrade of its backhaul and 3G radio networks to meet the new demand.
But Singh said that it has long architected its EV-DO Revision A network to handle these kinds of capacities. In most markets, Verizon Wireless has EV-DO running on three sectors per cell site and in many congested areas, it has deployed multiple EV-DO carriers. CDMA downlink channels are only 1.25 MHz wide, compared to the 5 MHz used by AT&T’s HSPA network, but they support similar maximum capacities (3.1 Mb/s for Rev. A compared to 3.6 Mb/s for HSPA). AT&T’s 3G evolution path will widen that gap over the next two as it upgrades its base stations to 7.2 Mb/s HSPA, but for now VZW has an efficiency advantage, allowing it support much more capacity over the same spectrum.
While Verizon has a successful mobile data business rife with the typical assortment of smartphones and laptop cards, the Droid is a fundamentally different animal, representing VZW’s drive toward more open and nimble platforms, Singh said. The first phone to result from Verizon’s partnership with Google (NASDAQ:GOOG), the Droid is loaded with Google apps, many of which haven’t been available on VZW’s other devices. The Droid eschews the VZW-controlled Get It Now and V Cast content stores for Google’s Android market, an open distribution platform of thousands of paid and free apps available for Android devices around the world, including those on rival T-Mobile’s network.
Verizon could even be cannibalizing some of its own voice and application revenues, supporting Google Voice and VoIP apps that could impinge on its calling plans and access to video apps that compete against its V Cast content services. Applications like Google Maps Navigation, which provides turn-by-turn instructions, are free on the Android platform while on its other devices Verizon offers VZ Navigator, a paid for service. Instead of charging by the application, Verizon is providing a pipeline to reams of third-party data, all on the same data plan. The only differentiation VZW is making is between consumer and business users. The former get unlimited data for $30 a month while the later pay $50 but get access to enterprise push e-mail.
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