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Verizon: Not yet time for fancy wireless

The company scraps plans to build a next-generation data-only cellular network for complex tasks such as video conferencing--a potential blow to Qualcomm and its EV-DO technology.

Verizon Wireless has scrapped plans to build a next-generation data-only cellular network for complex tasks such as video conferencing--a potentially damaging blow to Qualcomm and its EV-DO technology, which Verizon was expecting to use.

Verizon CEO Denny Strigl told analysts this week that the company has instead decided to focus on its just-completed Express Network, a voice and data setup that allows for simpler data tasks, and has started to produce revenue of about $3 per user.

"You will not see VZ jumping into (EV-DO)," Strigl said. "We've run a couple of trials. It's a terrific product...but I'm not going to leap into this head over heels."

Verizon, along with every other major U.S. wireless carrier, is looking for new revenue sources, now that rates for cell phone calls have hit rock bottom. Most U.S. carriers have built wireless networks that can handle relatively easy data functions such as wireless messaging, photo swapping and game downloads. But Verizon and a handful of other carriers have also begun testing a newer generation of data-centric equipment fast enough to offer more complex and potentially lucrative wireless services.

The network Verizon was testing is only for data traffic, not voice calls, and Strigl noted that dedicating hard-to-get and expensive spectrum--the lifeblood of any wireless carrier--solely to a data service is not "something sustainable long term."

"There is a tangible data value today," Strigl said. But "for consumers, that value isn't the highfalutin things you read and hear about, it's actually (text messaging) and downloadable applications."

Qualcomm owns many of the patents to the technology that Verizon had been eyeing--which bears the name CDMA20001X EV-DO, or EV-DO for short.

In the United States, Conshohocken, Pa.-based wireless carrier Ubiquitel, a Sprint PCS affiliate, and Monet Mobile Networks, a regional carrier, have begun a commercial EV-DO service. Sprint PCS has indicated that it is also exploring an EV-DO offering.

And Korean carriers SK Telecom and KT Freetel have also launched commercial EV-DO networks.

But one analyst said Verizon's decision indicates that U.S. carriers are realizing the public isn't yet ready for the faster EV-DO networks and their gee-whiz applications--especially given the anemic use of current wireless Web offerings to date.

"The industry as a whole is trying to wake up to the reality that what people want to do with their cell phones doesn't require the bandwidth people once thought was needed," said Joe Laszlo, a Jupiter Research wireless analyst.

A Qualcomm representative had no immediate comment on Verizon's decision.