Verizon's 3G plans upset Vodafone
By Dan Roberts in London and Richard Waters in New York - Mar 28 2001 00:00:00
news.ft.com
A dispute over mobile phone standards has caused a rift between US operator Verizon and Vodafone, the world's biggest mobile operator. The two are at odds over use of a US third generation technology that is incompatible with that in Europe.
Verizon Wireless, a joint venture controlled by Verizon but 45 per cent owned by Vodafone, announced plans to build a 3G network using CDMA2000 rather than the UMTS standard employed by Vodafone's other overseas networks. This could make it impossible for business travellers to use the same phone on both sides of the Atlantic. Vodafone fears it would undermine its global strategy.
It has persuaded its US partner to say a final choice has yet to be made. But the dispute remains unresolved and could cause a more serious conflict if Verizon persists in its apparent preference.
One insider said a lack of agreement could force Vodafone to sell its Verizon Wireless stake, although this was described as extremely unlikely. People outside the company have suggested Vodafone could react in the same way it did with Mannesmann - another foreign partner perceived disloyal - and launch a bid for control of the company.
In a statement last week, Verizon Wireless said it would launch this year a high-speed data service based on the CDMA2000 wireless standard and "also will deploy" the full CDMA2000 3G technology because it was compatible with its existing infrastructure.
On Tuesday Verizon Wireless said it might eventually opt for the UMTS standard (also known as wideband-CDMA), which Vodafone and other European carriers plan to adopt. A decision was unlikely for two or three years, it said, given the pace of technology change in the wireless industry. "Anyone that commits this far in advance is asking for trouble," it added.
Vodafone said: "International business customers are an important part of our business and we are confident that a technology will be chosen that will be in the best interests of both partners."
The problem could be solved if manufacturers produced a dual-mode handset, and it suggested a software solution was possible. However, this was disputed by UMTS specialist TTPCom, which said the two standards were too different.
Verizon's postponing a decision was seen by analysts as an attempt to appease Vodafone without abandoning its technology plans.
The US company is "making a pretty big investment [this year] and going down the road of CDMA2000", said Frank Marsalla, an analyst at ING Barings in New York. That made it highly unlikely it would switch course towards CDMA later.
© Copyright The Financial Times Limited 2001. |
