The decision by Verizon Wireless to start testing LTE (Long-Term Evolution)
mobile technology for rollout early in the next decade may lead to an even bigger
change down the road.

The emerging high-speed infrastructure, which is along the evolution path from
GSM (Global System for Mobile Communications), marks a shift by Verizon from
the CDMA (Code Division Multiple Access) technology it uses today. But it would
lead to a consistent system across Verizon's network and that of its part owner,
Vodafone Group, which operates GSM-based networks on four continents. Both companies
will test LTE at the same time, starting next year.

But next-generation infrastructure may be merely the first thing the two companies
agree on, said analyst Jack Gold of J. Gold Associates. He thinks it will renew
their quest for something that's never made sense until now: a buyout.

"It would make no sense for Vodafone to own both a GSM and a CDMA network,"
Gold said. "Now it's much more attractive for the two entities to become
one." It's not clear which of the co-owners would buy out the other, but
they might do so to keep up with what Gold sees as growing consolidation in
the global cellular industry. Gold expects to see just three to five major mobile
operators in the world within a few years.

Technology itself will help drive this trend, Gold believes. Because LTE and
the other technologies promoted as 4G are all based on IP (Internet Protocol),
roaming from one carrier to another will be more like going from one Internet
service provider to another rather than moving from one operator's "walled
garden" to another's, he said.

Globalization may well lead to fewer mobile operators in the world, but both
partners in the highly profitable Verizon Wireless know a good thing when they
see it, in IDC analyst Godfrey Chua's opinion. So neither company is likely
to sell its share of the venture, he said.

"Partners often are more willing to let go if things are not going well,"
Chua said.

The agreement on a network path would make such a deal more likely, said Tad
Neeley, a partner at the investment firm Gemini Partners who specializes in
wireless. Ultimately, Verizon would be willing to let go of its wireless arm
for the right price, he said.

Regardless of actual mergers, mobile users will benefit as Verizon and other
operators around the world converge on LTE, according to analyst Jason Kowal
of Analysys. The more carriers that use it, the more equipment vendors they'll
have to choose from and the lower costs will go. LTE would also attract more
developers and allow portability among more networks, he said. By contrast,
Verizon's use of CDMA so far has made it hard for subscribers to roam onto GSM
networks.

"For anyone who travels internationally, this is a huge issue," Kowal
said.

Not that any of this will happen overnight, the analysts warned. It isn't even
guaranteed that Verizon will use LTE, according to Gold.

"There's no LTE system up and running anywhere in the world. This is all
still on the drawing board," he said.

IDG News Service

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine