Verizon touts new music and networking services

The long-awaited V Cast Music service, reported by CNET News.com in December, offers the ability to download full-length digital songs and transfer them between handsets and personal computers running Windows XP.

Verizon will charge $1.99 a song for wireless downloads, but will offer a discounted rate of 99 cents for songs downloaded onto PCs and transferred to mobile phones via a USB (universal serial bus) cable.

The service will offer consumers at least 500,000 songs when it becomes available on Jan. 16. The company hopes to offer a total of 1 million songs from all major music labels later in the year.

V Cast Music-enabled phones include the LG VX8100 and the Samsung a950.

Seidenberg said during his keynote speech at CES that the V Cast Music service is just one of many new services the company is delivering as a result of its ambitious efforts to improve its wireless and wireline broadband networks.

In the past two years, Verizon has upgraded its wireless network to third-generation technology called EV-DO, which not only allows laptop users to connect to the Internet on the go at high speeds, but enables other services like online gaming, mobile video and now mobile music downloads.

Verizon's EV-DO network is available to 150 million Americans in 180 major markets, allowing consumers to download files and send e-mail at 400 kilobits per second to 700kbps, Seidenberg said.

Verizon also has been building a new fiber-to-the-home network called Fios, which provides consumers with up to 30 megabits per second worth of bandwidth. The company is using the network to deliver TV service to consumers.

Fios TV was launched in Keller, Texas, in 2005, and has since entered new markets in Florida and Virginia. On Thursday, Verizon announced it has expanded into seven more communities in Texas. It plans more Fios TV deployments in New York, California and Massachusetts later this month.

"No network company has done more over the last two years to create a mass market for broadband and wireless in this country than Verizon," Seidenberg said. "And no one else can deliver a better combination of coverage, speed, quality and security to the digital customer."

But at least one analyst worries that some of Verizon's ambitious efforts may cost too much. In a research note published Wednesday, Lehman Brothers analyst Blake Bath said Fios, which provides high-speed Internet access over fiber-optic cables to more than 3 million consumers in 16 states, cost the company about $1 billion in free cash flow in 2005. That figure could double in 2006 as Verizon plans to provide access to another 3 million homes and businesses, Bath said. Pressure from the financial community could force Verizon to scale back efforts, he added.

"The market is very skeptical of Fios spending," Bath said in his note. "We believe that if Verizon shares continue to lag its peers and the broader market, it may substantially scale back its fiber build before the end of 2006, due to poor economics and the technical and regulatory delays associated with rolling out video."

But Seidenberg didn't indicate that Verizon is thinking of pulling back. On the contrary, he said the company plans to aggressively press forward.

"We'll continue to roll out networks that will push toward the high-tech vision of 100 megabits to the home and 3 megabits to the handset," he said. "We will expand Fios Internet and Fios TV...As content migrates from physical media to online distribution, we will carry more and more information, entertainment, music, television and games--indeed, anything that can be expressed as a bit or a byte--over our fast, secure, all-digital IP networks."