Verizon, Nortel in $1 billion network expansion deal

Verizon Wireless Inc. will expand and upgrade its 3G (third generation) cellular network over the next three and a half years with about $1 billion worth of equipment from Nortel Networks Corp., the companies said.

The contract covers expansion of the mobile operator’s CDMA2000 1x (Code Division Multiple Access) high-speed data networks in major markets including San Diego, Los Angeles, Detroit, Atlanta, and Cleveland. Nortel and Verizon also expect the work to include the rollout of CDMA2000 1x EV-DO (evolution-data only), the next generation of the technology, which is currently undergoing a trial on Nortel equipment in San Diego.

CDMA2000 1x is a packet-based cellular network for both voice and data. It can carry data at roughly dial-up speed, or about 60Kbps to 80Kbps, said Verizon Wireless spokeswoman Andrea Linskey. It is offered all over Verizon’s national coverage area except for recently acquired markets, she said. The equipment from Nortel, in Brampton, Ontario, will help the operator increase 1x capacity to serve more customers and extend its coverage to more locations, Linskey said. An EV-DO network can serve data applications at an average of about 600Kbps to 700Kbps, she said.

Nortel has been working on Verizon’s cellular network since 1996, Linskey said. In addition to Nortel, Verizon, in Bedminster, N.J., buys equipment from Lucent Technologies Inc. and Motorola Inc. Last year it signed a general purchase agreement with Lucent worth about $5 billion over five years. Using Lucent gear, the carrier is working toward an EV-DO rollout in the Washington, D.C., area later this year, she said.

Nortel welcomed the deal.

“We’re a ball player with one of the top teams in the league, and we’ve extended our contract for another three and a half years,” Nortel’s Gustafson said.

Under the contract, Nortel will supply Verizon with radio base stations, switching equipment and Nortel Passport IP (Internet Protocol) gateways that will sit between the wired and wireless networks, as well as other products, the companies said.

Also as part of the deal, Nortel will provide gateways and other infrastructure that lets customers roam between Verizon’s Wi-Fi wireless LANs and cellular network. This prevents Verizon having to install separate record-keeping, customer authentication and billing systems, Gustafson said. However, roaming still requires users to deliberately go off one type of network and on to the other. Technology that would allow seamless handoffs between Wi-Fi and cellular, with no discernible break in the call or application, exists but isn’t commercially viable yet, he added.