How Successful Has Verizon Wireless' EV-DO Offering Been?
By Mike Masnick, Sat Apr 16 01:00:00 GMT 2005

A week ago, the stories suggested Verizon Wireless was cleaning up with its EV-DO offering. Today, Wall Street analysts are complaining that sales are weak. Can they both be right?

Verizon Wireless has been way out in front of the other mobile operators in the US in terms of offering real 3G service with its EV-DO "Broadband Access" service. While it's still not nationwide, the company has rolled out the service from city to city at a fairly rapid pace, trying to stay ahead of Sprint -- who is expected to launch a competing EV-DO service shortly. The reviews of Broadband Access from those who have tried the service have been mostly positive (in more than a few cases, to the point of "glowing") suggesting that the service really does fill a need.

With that in mind, it wasn't all that surprising to find out last week that Verizon Wireless was very happy with the acceptance, claiming it was more successful than the company expected -- to the point that it planned to more aggressively roll out the service. Of course, this could just be marketing-speak. The aggressive expansion is just as likely to be an attempt to have service in as many locations as possible by the time Sprint joins the party.

In fact, over on Wall Street, the doubters are speaking up today, noting that every indication is that the service is catching on slower than expected -- even to the point of being described as "anemic." Apparently, Verizon Wireless sellers have plenty of inventory on hand, and are having trouble finding buyers for either the EV-DO handsets (which have only been out a few months) or the datacards.

Of course, the real answer is that both sides could be correct. From the very beginning of Verizon Wireless's rollout, the company has been somewhat cautious about it. Recognizing that it had the playing field mostly to itself, the company focused on datacards first, which let the company stress test the network without overwhelming it initially. By slowly adding in EV-DO handsets, it increases the capacity tests, without problems normally associated with the launch of new mobile technologies. This can be seen in the general tone of most of the reviews of the service. It may be giving the company too much credit, but it has been able to launch the service without the technical glitches that seem to accompany so many 3G networks these days. It could absolutely be true that the sales and service have exceeded Verizon Wireless's expectations.

However, that doesn't mean the sales may would be all that impressive to the folks on Wall Street. The service is still limited in locations. There aren't that many EV-DO handsets and none are all that impressive. Most importantly, the prices are definitely high -- especially with the value to the subscriber not clearly laid out by the company.

The real question is what will Verizon Wireless do now? Sprint will soon be competing directly. Alltel is launching EV-DO in a few locations. Earthlink and SK Telecom will have an EV-DO MVNO before too long and Cingular is working furiously to leapfrog UMTS and offer HSDPA by the end of next year -- which should be even faster than EV-DO. With that in mind, coverage is going to improve, prices are going to drop, applications and services are going to increase and the number and type of available handsets will multiply. The competition will show whether or not the company can really make 3G work. It may be off to a slow start, but that also means it has a lot more successful experience with a 3G network than most of the competitors rushing into the market. Verizon Wireless might be right where it wants to be -- even if that's not where Wall Street thinks it should be.