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Verizon Wireless to Launch Global Cell Phone Next Month

By Peter J. Howe, The Boston Globe Knight Ridder/Tribune Business News


Mar. 8 - After years of development, Verizon Wireless plans next month to roll out its first cellphone that will also work on European and international wireless networks.

The move will give Verizon a new way to compete with other carriers, including T-Mobile and Cingular, that offer roaming abroad but are consistently rated as having less reliable US coverage than Verizon, the largest US carrier with 38.5 million subscribers. Analysts expect the phones will cost $300 or more, but Verizon has not disclosed any prices.

Besides addressing service demands from globe-trotting US executives for single-phone wireless coverage around the world, analysts said the plan may also be aimed at shoring up the frayed ties between Verizon Communications Inc. and European wireless giant Vodafone Group PLC, which owns a minority stake in Verizon Wireless in a 55 percent-45 percent partnership with Verizon.

Vodafone last month offered nearly $40 billion to buy AT&T Wireless Services Inc. before it was edged out by Cingular, losing a chance to get full control of its own US operations. Some industry executives said that while Verizon Wireless has been a good investment, Vodafone, which has interests in systems serving 125 million wireless subscribers globally, may be frustrated that Verizon has not better integrated itself with Vodafone -- a complaint Verizon can mollify by selling phones that get subscribers on Vodafone networks abroad.

Denny Strigl, chief executive of Verizon Wireless, told Reuters last week that "you will see the evidence of a major project that we've been working on for a couple years very shortly, which is our global phone." The unit, which Verizon has been talking about for years, would have extra components so it works on Verizon's US network as well as the GSM, or Global System for Mobile, networks that dominate in Europe and other foreign locations.

Verizon Wireless declined to give more details. Vodafone spokeswoman Jeanine Young said, "This is something that Verizon has been working on for quite some time, and it is theirs to talk about."

"Obviously, we'd be delighted to have a handset like that," Young said, but she described it as the sole initiative of Verizon, not something Vodafone has pushed for.

According to the US Commerce Department's Office of Travel & Tourism Industries, in 2002 23.4 million Americans traveled abroad, about 1.6 million of whom came from New England. About 7.5 million people traveled for business, spending an average of 13.9 nights abroad, and the average business traveler made five trips outside the United States. Western Europe accounted for 46 percent of all business trips abroad.

Overall, those numbers suggest that the number of US business people who travel often enough and long enough to want global-coverage wireless phones may be no more than 1 or 2 percent of the 155.9 million US wireless subscribers.

"The numbers are relatively modest, but they are some of your best business customers," said Mark Lowenstein, managing director of Mobile Ecosystem, a Wellesley wireless consulting firm.

Agreed Yankee Group wireless analyst Roger Entner: "The target market for this phone is not the mass market. It's the key decision-makers in multinational corporations, a small but very, very powerful number of people."

Eric Kraus, vice president of corporate communications for Boston-based Gillette Co., which operates in 200 countries and has factories in 14, said he and many other Gillette executives use a second phone when traveling. "The phone that I have abroad does have coverage in the US, but the signal strength isn't as good," said Kraus, who declined to say which carriers he uses. Kraus said many business travelers might like one-phone convenience, but carrying "a second phone may work very well. It really comes down to a matter of personal preference."

T-Mobile USA, a Deutsche Telekom unit that has always offered solely GSM service, has made its international roaming coverage in over 125 countries a key marketing pitch, although it tends to get more young, cost-conscious subscribers than business users. Adding international roaming -- as well as access to advanced European handsets -- has been a key driver for AT&T Wireless and Cingular, which are both most of the way through adding GSM service.

Nextel Communications Inc. also offers a $200 phone that works on GSM networks abroad but not on Nextel's US network. The advantage for Nextel subscribers is they can use their Nextel number abroad by transferring a stamp-sized card from their regular Nextel phone into the international phone when traveling.

The Verizon Wireless commitment to a global phone plan may reflect Strigl's desire to mend fences with Vodafone, given speculation that Vodafone's bid for AT&T Wireless reflected dissatisfaction with Verizon Communications Inc. Keeping Vodafone happy is important for Verizon Communications because Vodafone this year can exercise an option to force Verizon Communications to buy out Vodafone's interest in Verizon Wireless for $20 billion or more, which would have huge balance-sheet effects on Verizon Communications, currently carrying $39.4 billion in long-term debt.

Entner said the global phone offer "is meant to show the commitment of Verizon Wireless to being a global partner of Vodafone," quipping that "instead of saying it with flowers, Denny's saying it with a phone."

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