Verizon taking different direction for next wireless network

Verizon Wireless, the No. 2 U.S. mobile service, said Thursday that it planned to build a next-generation high-speed wireless network based on Long Term Evolution, or LTE, technology and to start trials next year.

The move could eventually bring revenue to network equipment makers suffering from slower spending by carriers. But it is also seen as a blow to a rival technology developed by Qualcomm Inc. and to WiMax, an emerging wireless standard that Intel Corp. supports.

The decision means that customers of Verizon Wireless, a venture of Verizon Communications Inc. and Vodafone Group, will be able to roam more easily on the networks of both parents, which now use incompatible network technologies. Britain’s Vodafone, which owns 45% of Verizon Wireless, also plans to build a network based on LTE.

UBS analyst John Hodulik said the decision to use a common platform could mean that a merger of Verizon and Vodafone at some point “is not unthinkable.” Verizon has long said it wanted to buy Vodafone’s Verizon Wireless stake.

If Verizon uses existing wireless airwaves, it could pay $1 billion to $2 billion to build the LTE network, Hodulik said in a note to clients.

Verizon Wireless said it could be 2010 or later before its LTE technology was ready for commercial services. Vodafone’s chief has said it could be 2015 before Vodafone and Verizon Wireless networks are fully compatible.

LTE is seen as an upgrade of GSM, the most widely used mobile technology. As a result, it might be a cheaper option than the follow-up to San Diego-based Qualcomm’s CDMA standard that Verizon now uses.

“Using CDMA has certainly put them in a position where they’re different to most of the world,” said David Sanderson, head of global media practice for Bain & Co., noting that equipment produced in higher volumes is often cheaper.

Analysts said they were unsure any carriers would use Ultra Mobile Broadband, Qualcomm’s next-generation rival to LTE.

“Ultimately, Qualcomm is going to see a much lower base of people using its technology,” Charter Equity Research analyst Ed Snyder said.