Verizon Wireless: Not All 4G Is the Same

Includes: S, T, TMUS, VZ
by: Yankee Group

By Chris NicollI

Verizon Wireless (NYSE:VZ) announced that Dec. 5 is “just the beginning” for its entry into the world of 4G, clearly putting a shot across the bow of the other 4G players. Calling it the "Real Deal," Verizon Wireless used the press conference to hammer home three messages:

  • Commitment to superior network performance
  • Sunday is just the beginning
  • Not all 4G is the same

None of these are any surprise, or represent a break with any Verizon Wireless positioning in the past. Verizon Wireless trades on its network performance, so this is actually a nod that 4G will not be any different - that the operator will not sacrifice quality in order to get the network built quickly. In fact, it is telling that the operator is launching first with data dongles, which appeal to a specific sub-set of users, rather than launching with a mix of smartphones, which appeal to a much broader base of users and represent a much greater initial risk to the network. Metro PCS, on the other hand, launched with a lower-end smartphone rather than data dongles in an effort to mitigate network traffic loads. Verizon Wireless is not usually first, but they are usually prudent.

The airport roll-out plan, supplementing the 38 major city roll-outs, also is a smart introduction to the 4G network for Verizon Wireless users. At the airports PC dongles will drive heavy data loads, but likely will offer relatively constrained-session length at the various airports as travelers get a quick Internet hit before catching their flights. This PC dongle experience will provide Verizon Wireless with some valuable early feedback on network performance, prior to the smartphone launch in 2011, which could rapidly expand to hundreds of thousands of users. Very smart. It IS about network quality for Verizon Wireless.

We know that networks take years to roll out, and we fully expect Verizon Wireless will capitalize on its late 2010 launch with an aggressive marketing campaign in early 2011 highlighting its expected LTE smartphone and perhaps tablet device family announcements. And stating that not all 4G is the same is an introduction to Verizon Wireless’ late-to-market messaging campaign we should expect to see next year. Verizon Wireless comes to market after Clear/Sprint (NYSE:S), T-Mobile and MetroPCS (PCS), but it is already positioning itself as the leader. Cheeky, perhaps, but it will force the other operators to respond. AT&T (NYSE:T), are you listening?

Verizon Wireless' LTE performance expectations remain the same since the Boston demonstration earlier in 2010 - 5-12MB download, 2-5MB uplink on a "fully loaded network." Latency was presented as being half of what is on a 3G network, presenting an experience similar to a wireline network. We will see more of this positioning in the future. I’m sure we will also see a lot of comparison tests coming our way between the various 4G network options as soon as is feasible.

Pricing lacks any real innovation as well, at least at this time. Currently, data dongles are available only with a two-year contract, but it was unclear if there were any non-contract services/options available. Pricing starts at a $90 dongle price with a $50 rebate, with the two-year contract. Service plans are slightly more generous than the 3G plans: $50 for 5GB and $80 for 10GB with a $10 per GB over charge. Users are notified via messaging when they reach 50, 75, 90 and 100% of their limit, and can check current level via the My Verizon site.

Stay tuned. With T-Mobile launching its 42MB service soon, the speed and coverage wars are heating up. AT&T should provide some additional momentum, sometime in 2011. All good news for the consumer.