Lucent, Verizon Wireless drop $5 billion bomb

Verizon Wireless and Lucent Technologies last week announced their $5 billion, three-year contract to deploy the first phase of 1XRTT later this year. Although the timing caught some competitors off-guard, it created some much-needed optimism that U.S. carriers are proceeding with 3G plans.

Besides causing a stir and boosting CDMA's course specifically, the news helped Lucent's shares jump 20% from $9.99 to $11.97 at the close of the trading day last Monday. It also helped the financially troubled vendor make a little history.

“This represents the largest wireless contract Lucent has had to date and makes us the largest supplier to Verizon,” said Jim Brewington, president, wireless networks group for Lucent Technologies.

In fact, it is Lucent's largest contract, wireless or otherwise. Also on Monday, Nortel Networks announced Verizon Wireless has deployed its wireless network infrastructure equipment in Las Vegas and San Diego. Unlike Lucent, Nortel decided not to make a media splash with its news, said a Nortel spokesman, noting his surprise at the Lucent announcement.

During a press conference at CTIA Wireless 2001, Lucent and Verizon Wireless reaffirmed their long-standing relationship and their commitment to CDMA. In addition to trusting Lucent's ability to deliver and offer timely support, Verizon Wireless was attracted by the vendor's similar technology vision, said Richard Lynch, executive vice president and chief technology officer of Verizon Wireless.

“Five billion dollars is no small amount of money,” Lynch said. “There really are some meaningful reasons why we are signing with Lucent.”

The contract also signified that cdma2000 3G1XRTT has a smooth evolution path — involving little more than a software upgrade — that is viable, despite criticism emerging from proponents of competing standards (see story, page 14).

“Considering some of the talk that has surrounded CDMA, we needed to reaffirm that it is an effective solution,” said Brian Bolliger, director, global wireless marketing of Lucent.

Handsets and the PC card form factor will be available for the consumer market by the time Verizon Wireless's first phase of 3G launches, Lynch predicted.

The planned upgrade is expected to double the existing network's voice capacity and increase data transmission speeds almost 10 times.

Will that be cash, check or charge?

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