Verizon Wireless chooses LTE for its 4G migration

Verizon Wireless, the second-largest wireless carrier in the U.S., yesterday announced plans to use Long Term Evolution (LTE) for its fourth-generation (4G) mobile broadband network.

Historically, Verizon Wireless has built networks using the CDMA technology migration path spearheaded by Qualcomm—a strategy that has generated some friction with 45% partner and global wireless carrier Vodafone, which has followed the GSM technology migration path. By opting to use LTE instead of Ultra Mobile Broadband (UMB)—Qualcomm’s preferred 4G technology for CDMA carriers—Verizon and Vodafone could develop a common network platform with global reach.

“We expect LTE to form a key part of Vodafone’s future technology strategy, and the prospect of moving towards a common platform with Verizon Wireless is an attractive long-term goal,” Steve Pusey, Vodafone’s global chief technology officer, said in prepared statement. “LTE will build on the capabilities of Vodafone’s 3G broadband High Speed Packet Access (HSPA) network technology, which is available across the entire Vodafone 3G footprint.”

With its LTE announcement, Verizon Wireless will be adopting a 4G technology that is expected to deliver greater economies of scale, as it is expected to be used throughout Europe and by AT&T, the largest U.S. wireless carrier with 67 million customers.

“With a host of new devices and applications, and a particular focus on embedded wireless in virtually every piece of electronics you buy in any store, we believe LTE is the best technology with global scale to deliver on the promise [of 4G],” Richard Lynch, Verizon Communication’s executive vice president and chief technology officer, said in a prepared statement.

Meanwhile, the Verizon Wireless decision means the potential economies of scale for UMB have decreased significantly, said Roger Entner, senior vice president of communications for IAG Research, said during an interview with MRT. As a result, Entner said he doubts UMB will be adopted by any U.S. carriers, because Sprint Nextel—the other nationwide U.S. carrier that has followed the CDMA path—does not have a large enough subscriber base to make UMB’s economies of scale work alone.

“Sprint Nextel will either go LTE or stick with WiMAX—my money would be on LTE,” Entner said.

The impact of Verizon Wireless, which boasts more than 63 million customers, using LTE will be particularly notable to Qualcomm, Entner said.

“When you lose one of the biggest cellular carriers, the psychological impact is at least as big as the actual impact,” he said. “Here, this stalwart ally of Qualcomm is not using [UMB], that’s a big signal.”

Entner said Qualcomm will need to focus its efforts on developing better LTE solutions and working on a fifth-generation (5G) technology. While UMB “is in serious trouble now,” Qualcomm still has enough intellectual property associated with LTE that it should maintain significant revenue streams during the 4G deployment period, he said.

“[With LTE] they’re not winning big; they’re winning small,” Entner said. “But they’re still winning.”