NEW YORK — Moving quickly to fulfill the bold promise of its new national brand, Verizon Wireless today announced it plans to purchase an estimated US$500 million in wireless and optical equipment from Nortel Networks* [NYSE/TSE: NT]. This agreement is expected to provide significant savings to Verizon Wireless' network infrastructure costs.
The proposed two-year agreement will enable Verizon Wireless to increase capacity and coverage in key markets and offer high-capacity, cost-effective and reliable wireless services to its customers nationwide. The agreement also includes optical transport and asynchronous transfer mode (ATM) switches for major metropolitan markets, and additional equipment for expansion of an existing microwave backbone network.
Last week, Verizon Wireless announced one of the wireless industry's largest planned capital investments. By the end of 2000, the company will invest more than $3 billion in its nationwide network to further expand its digital footprint and increase capacity for wireless voice and data services. This investment will involve the properties of GTE Wireless (based on the close of the Bell Atlantic and GTE Corporation merger).
"Continued investment in our CDMA network will enable Verizon Wireless to efficiently and cost-effectively expand its CDMA network to support today's subscriber growth and meet future growth forecasts," said Richard Lynch, executive vice president and chief technical officer of Verizon Wireless. "CDMA has proven itself as the best, most efficient digital service in the industry. Plus CDMA technology offers a clear and cost-effective path to 3G products and services, and Nortel Networks is a key partner in deploying these solutions nationwide."
"Our paramount objective is to drive down the cost of building and operating wireless networks," said Anil Khatod, president, Internet Business Solutions, Nortel Networks. "By combining packet, IP, wideband digital radio and optical backbone technologies, we're delivering a new era of network economics."
"We expect not only to drive down costs, but also to bridge the gap between wireless and wireline, bringing people and content together instantaneously with a new, high-performance Internet," Khatod said. "By showing the foresight to explore and evolve to this architecture - in particular, by pairing wireless and optical technologies - Verizon Wireless is staking claim to first-mover advantage in delivering lower costs and advanced new services to its customers."
Verizon Wireless and other operators plan to use new high-speed, highly reliable Wireless Internet services to capitalize on an anticipated explosion in demand for wireless data. The Yankee Group, a leading industry research firm, expects the U.S. wireless data market to grow from US$1.8 billion last year to US$13.2 billion by 2003, with as many as 25 million wireless data users nationwide by 2002.
Already preparing to conduct trials in Dallas of a packet-based, all-IP (Internet Protocol) wireless network architecture, the companies are also planning a second trial - to begin in August at a location to be determined - using third generation (3G) cdma2000* digital radio technology.
The first phase of cdma2000 technology - called 1XRTT - is designed to double voice capacity and support data transmission speeds up to 144 kilobits per second, or 10 times the speed commonly available today. cdma2000 is ultimately expected to offer speeds up to 384 kbps for mobile and two megabits per second for stationary applications.
Verizon Wireless is the largest wireless communications provider in the US with over 16 million wireless voice and data customers and nearly four million paging customers. The new, coast-to-coast wireless provider was formed by the combination of the US wireless businesses of Bell Atlantic Corp. and Vodafone AirTouch Plc. The new company includes the assets from Bell Atlantic Mobile, AirTouch Cellular, PrimeCo Personal Communications and AirTouch Paging. Verizon Wireless will be further strengthened by the addition of the US wireless assets of GTE Corp. when it completes its merger with Bell Atlantic. When the merger is complete, the new company will have a footprint covering nearly 90 percent of the US population, 49 of the top 50 and 96 of the top 100 US markets. Verizon Wireless, headquartered in New York City and Bedminster, NJ, is 30,000 employees strong. Visit the company at www.verizonwireless.com.
Nortel Networks is a global leader in telephony, data, eBusiness, and wireless solutions for the Internet. The Company had 1999 U.S. GAAP revenues of US$21.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet through Unified Networks* that promise a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.
Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; unanticipated impact of Year 2000 issues; and the impact of consolidations in the telecommunications industry. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
*Nortel Networks, the Nortel Networks logo, the Globemark, Unified Networks and How the world shares ideas are trademarks of Nortel Networks.