Verizon adds netbook, compromises on phone exclusives

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Verizon adds netbook, compromises on phone exclusives

By CAROLINE GABRIEL

Published: 13 May, 2009

READ MORE: Verizon | Netbook

Verizon Wireless, like arch-rival AT&T, is shaking up its device portfolio and including netbooks, though at the expense of its previously hyped-up Hub home media product. It is also making several moves to placate consumer rights campaigners and the FCC, selling some assets to AT&T as a result of its Alltel acquisition, and reducing the length of some LG and Samsung handset exclusives to help rural carriers.

The largest US cellco's first netbook will be the Hewlett-Packard 115NR, according to BoyGeniusReport, which will launch on the 3G network on May 17 at a price of $199 with a two-year data contract priced at $40-$60 a month (as yet unconfirmed by Verizon, but in line with current 3G laptop deals). This is less aggressive than AT&T's recent netbook moves - the second largest cellco now offers an Acer device for only $50 and a Dell for $150, both with two-year tie-ins, and Verizon is far away from the 'free' netbooks now being routinely offered in Europe.

The Hub will reportedly be moved from physical shelves (though still sold online) to make room for the new offering. This gadget was mainly designed to keep landline users loyal, or support fixed/mobile convergence in areas outside Verizon's fixed line catchment area - it provides an internet phone with touchscreen access to certain apps and to SMS and home media networks. Its demotion in the Verizon product portfolio suggests it has not been a big hit, though many operators round the world are bringing out somewhat similar home-based 'media tablet' hybrid products, like the Orange Tabbee or O2 Joggler.

Meanwhile, Verizon Wireless will sell cellular assets that it was forced to divest as a condition of buying Alltel, to AT&T for $2.35bn. AT&T gains "1.5m current subscribers in 79 service areas, primarily in rural areas across 18 states", boosting its overall base to 79.7m, still almost 7m behind Verizon's wireless base of 86.6m. The states covered are Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia and Wyoming.

AT&T will spend a further $400m on moving its new subscribers to its own W-CDMA/HSPA network from CDMA, which should take up to a year. It said integration costs for network conversion and customer migration will result in dilution to earnings per share of about $0.06 per share in the first year after closing, and that after that. Verizon Wireless is understood still to have some assets left to sell off.

Handset exclusives have been coming under fire as the US government debates open access, internet neutrality and the conditions that should apply to any networks built with the help of federal funds under the economic stimulus plan. In an apparent move to draw the sting of one claim - that exclusives disadvantage smaller, and particularly rural carriers, who cannot make the same high profile deals - Verizon has offered to allow LG and Samsung to sell their handsets to a group of rural operators represented by the Associated Carrier Group (ACG), just six months into an exclusive with the largest cellco. The offer does not, of course, extend to larger CDMA rivals such as Sprint Nextel, the US' third cellco, Leap or MetroPCS.

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