Liu+J.+Strategy+Report

Liu J.

TO: Proximity Mobile Team FROM: Jesse Liu DATE: February 23, 2010 SUBJECT: Verizon Wireless Strategy Analysis

Below you will find is my strategy report on Verizon Wireless. Although Verizon is known as the biggest and best mobile wireless service provider, many analysts think competitions from other providers jeopardizes Verizon’s position. Verizon’s answer to their competition is to launch the next generation network LTE as quickly as possible.

Verizon Communications Inc. is a US telecommunication provider which possesses and controls land line, cellular wireless, television, and data services. Its cellular wireless distribution, know as Verizon Wireless, is a leading cellular phone telecommunication network and represents the largest subscriber base with 91.2 million customers as of the end of fiscal year 2009. Verizon Wireless employs a diverse staff personnel of about 83,000 with more than 2,000 stores and kiosks nationwide. The company have generated approximately $62.1 billion in annual revenue for fiscal year 2009. This represents an increase of $12.8 billion over the fiscal year 2008. After buying Alltel, a Southern based wireless telecommunication provider, with $28.1 billion in January 2009, Verizon Wireless became the largest wireless service provider in the US. (Verizon Communication, n.d.)
 * Profile**

The primary force (or forces) driving competition in the mobile marketplace are: >
 * Competitive Landscape**
 * **Competition among providers tied to handsets** - In the traditional mobile market, consumers would choose a carrier first, and then select a phone from the subsidized phone selection by that carrier (i.e. iPhone to AT&T). Often time, consumers cannot take the favorite mobile phone to another carrier, and are forced to tie to them with a time contract. And sometimes, consumers realize that carrier may not be able to handle the severe usage. But since the introduction of Google’s Nexus One phone, Google has changed the tradition around, where consumers select the phone first, then the carrier with the best coverage in the area.
 * **Constraints on consumer's ability to switch providers –** The subsidized phones most users purchase in the US do not have the ability to switch between networks (i.e. from CDMA to GSM), as well as in foreign countries. In Europe, mobile phones operate on the GSM standard. In the US there are only AT&T and T-mobile. Many GSM consumers can purchase an unlocked phone to switch between GSM carriers. However, Verizon Wireless has a CDMA spectrum, which will not run on a GSM network, and there aren’t many CDMA/GSM hybrid phones introduced in the market neither, other than the Blackberry’s world phones.

Verizon’s CDMA network have a very strong coverage in the US, with more towers than their competitors, but many consumers still find themselves staying with other GSM carriers, despite the lower quality of cellular service. Because they could find an unlocked version their favorite phone which has the ability to switch between GSM networks. Since GSM is a global network spectrum, in order for Verizon Wireless to attract more customers, especially international businessmen/women, they will have to integrate into a GSM-like spectrum. With the introduction of the Long Term Evolution (LTE) - an exponentially faster 4G GSM technology, Verizon has already invested the implementation. They will be the first in the US and the world to launch LTE in 2010. During a Long Term Evolution developers conference held on May 13, 2009, CEO Lowell McAdam clarified the schedule Verizon Wireless has envisioned for rolling out its [|fourth-generation] [|LTE] network running at 700 MHz. McAdam said the network will launch in 20 to 30 markets during the second half of 2010. (Verizon Communication, n.d.)
 * Verizon Wireless’s Strategy**

Advantage of Verizon Wireless LTE:
 * **Higher Data Rates**: LTE will have the ability and support between 5-12 Mbps download and 2-5 Mbps upload, per user. That is nearly comparable to a fiber-optic service.
 * **Coverage**: With the LTE 700 MHz spectrum, it provides better in-building penetration and coverage over the current 3G technologies.
 * **Simplified Worldwide Roaming**: Provide greater opportunities for seamless international roaming and for global device economies of scale as well. (Verizon LTE, n.d.)

Even though Verizon may be sitting at a somewhat unusual position deploying LTE technology, which is a technology that developed from a GSM family. For Verizon, the new handsets will likely be released with CDMA/LTE dual mode, as Verizon is a CDMA network for the time being. Verizon has also announced they would be joining the GSM Association hoping to smooth out their LTE integrations. (Seal, 2010)

Verizon is a huge and strong network carrier in the US, with the demand of the GSM mobile phones increases, Verizon must develop a new technique to cater its customers need. Since consumers who buy into multimedia smartphones these day use data heavily, and none of the carrier is fully able to handle this type of usage. It’s a rumor that AT&T’s network have not been able to satisfy the heavy data usage from the iPhone users. The Nexus One will be released to Verizon very soon, and since it’s a web-centric phone, heavy data usage will be expected. In order to confidently handle the heavy data usage and better satisfy the consumers, Verizon’s answer is to launch the new network spectrum LTE as quickly as they can. This strategy will be a crucial implication to Gen-Y, as Verizon is going after the GSM footprint. However, the biggest concern for Verizon is will their budget allow them to complete the goal?
 * Gen-Y implications**

Kenny, Pauline. Cell Phones In Europe. Slow Travel. Retrieved March 1, 2010 from []
 * References**

Seal, Tara. (2010, February 17). //Verizon Wireless: Ready for LTE Deployment//. XChangeMag. Retrieved February 23, 2010 from []

Verizon About Us. VerizonWireless. Retrieved February 22, 2010 from []

Verizon Communication. Wikinvest. Retrieved February 22, 2010 from []

Verizon Communications. Wikipedia. Retrieved February 22, 2010 from []

Verizon LTE. Verizon LTE. Retrieved February 28, 2010 from []