Verizon Wireless Inc. announced on Wednesday that it has signed a multi-year deal with Nortel Networks Corp., which will allow the wireless communication provider to upgrade its equipment and allow for a new third generation (3G) voice and data network.
With the billion dollar deal, Verizon wireless – owned by parent company Verizon Communications and Vodafone Group PLC – plans to deploy and upgrade certain wireless infrastructure equipment including code division multiple access 2000 (CDMA2000) 1X radio base stations, switching, and Passport Internet Protocol (IP) platforms, according to the companies.
The US$1 billion agreement will span just over three years, according to Bruce Gustafson, director of market relations for wireless at Nortel, and is essentially a framework that says that Nortel will provide extensions to Verizon Wireless’ existing infrastructure.
This deal will give Verizon additional network capacity allowing it to provide services including Web browsing, streaming audio and virtual private networking.
Nortel Network’s solutions will also support Verizon Wireless’ attack of the hot spot market by offering Wi-Fi or 802.11b service.
Warren Chaisatien, senior telecom analyst with IDC Canada Ltd. in Toronto, said that although Verizon is currently concentrating on upgrading and expanding its coverage for 2.5G technology, the deal shows Verizon Wireless’ commitment to rolling out 3G technology in the near future, which, according to Verizon Wireless, is part of the company’s plan.
This deal shows a natural evolution of the wireless industry, said Chaisatien adding that when comparing the wireless penetration in North America to that in comparable economies like some European countries or leading countries in the Asia-Pacific region, Canada and the U.S. have a lot of growth potential.
“In those regions, at least two thirds, 60 to 70 per cent, and in many cases 80 to 90 per cent of the population already use a cell phone. Here in North America…less than half of the Canadian population use a cell phone, so, that shows a tremendous opportunity for growth,” Chaisatien said.
Chaisatien added that this deal is good news for Nortel, “in an industry that has been battered for so many years.”
“Not too long ago Nortel restructured itself and put a lot of emphasis on wireless as a growth business segment, so obviously they are stepping in the right direction.”
He added that in the overall telecom market, wireless and IP-based services will drive growth going forward.
Verizon is targeting American markets including those in San Diego, Los Angeles, Las Vegas, Detroit, Atlanta and Cleveland as well as new markets such as Myrtle Beach, S.C. Nortel Networks had already provided wireless equipment for its CDMA2000 1X to Verizon Wireless earlier this year in Georgia and Alabama.