Verizon offers consumer 3G

Verizon Wireless made the first big splash in a year that promises to be paramount for growth of the wireless data market. It will launch the first national consumer 3G service in February, building off the CDMA 1X EV-DO infrastructure the company has established in 32 markets.

The service, which includes video streaming, online gaming and other capabilities, will be called Vcast. Not one for understatement, Verizon Wireless CEO Denny Strigl simply called the launch of Vcast the most significant announcement for his company for 2005, and possibly the most significant industry announcement of the very new year.

“This is a defining moment for the wireless industry,” Strigl said at the International Consumer Electronics Show in Las Vegas earlier this month. “The promise of 3G is finally in the consumer's hands.”

Verizon Wireless looks to be first out of the gate with a full-scale combination of 3G business and consumer services, something the other national carriers can't yet claim. AT&T Wireless launched UMTS services in six markets before it was acquired by Cingular Wireless, while Sprint expects to make waves with its nationwide rollout of EV-DO later this year. Meanwhile, Cingular expects to launch additional UMTS networks augmented by high-speed downlink packet access (HSDPA) by the end of the year. However, Verizon Wireless gets to coast for several months unchallenged — at least on the capacity front.

What Verizon does with that early market advantage, however, is up in the air. Michael Grossi, an analyst at market research firm Adventis, said that while Verizon Wireless has a definite first-mover advantage, it also has a significant consumer education hurdle in front of it. Not only will Verizon have to make its case that faster wireless data is better, it will have to up-sell its customer base on what likely will be expensive handsets.

“It's going to come down to how effective their marketing is,” Grossi said. “Most folks out there don't just quite get, just yet, what exactly this 3G thing is.”

Sprint, for its part, doesn't think Verizon will make much of a dent in the market popularity of its PCS Vision plan. Jeff Hallock, vice president of consumer product marketing at Sprint, said that the services Verizon Wireless is touting over VCast are the same services Sprint already offers through PCS Vision: video streaming, gaming and advanced messaging capabilities. And while Verizon Wireless might be introducing some advanced features like 3-D gaming, Hallock said Sprint is planning its own launch of 3-D gaming in the near future over its current CDMA 1X network.

“What Verizon has launched isn't a new set of services — we've had those services all along,” Hallock said. “We're not waiting for our EV-DO network to deploy these rich multimedia features.”

Verizon launched its EV-DO service for corporate enterprises and business in late 2003 starting with two trial markets in San Diego and Washington. Last year it began a rapid network expansion and today is in 32 metropolitan areas with plans for doubling its footprint by the end of the year. Verizon's initial launch was solely a business play utilizing laptop cards. Consumer services were held back by the lack of EV-DO handsets, but with VCast's launch in February, LG, Samsung and UTStarcom have all committed to advanced multimedia handsets.

While the EV-DO handsets are backward compatible to 1X networks, that compatibility won't work the other way. Verizon Wireless will have to initiate a significant handset replacement campaign to get the service into customers' hands — a campaign likely to be laced with subsidies and incentives. While they did not announce how much the handsets will be, Verizon Wireless officials said they planned to make them very competitively priced.