US wireless kingpin Verizon (VZ) has reported that the field testing of its 4G Long-Term Evolution (LTE) wireless broadband network in Boston and Seattle have demonstrated encouraging throughput levels. These two cities are expected to be the initial markets where 4G LTE services will be commercially available in 2010.

Trails in these two test sites have shown the potential of achieving peak downlink speeds of 40 to 50 megabits per second (Mbps) and peak uplink speeds of 20 to 25 Mbps, significantly faster than the current 3G deployments. This represents a major milestone in Verizon’s first phase of 4G trial process, providing the roadmap for future test launches.

While Verizon continues to extend the nationwide coverage of its 3G wireless services, the carrier is also investing heavily on 4G, representing a key future growth driver. The company spent $9.4 billion for purchasing the 700 megahertz (MHz) spectrum from the Federal Communications Commission (FCC) auction in 2008, providing the platform for 4G network deployments.

Verizon is using the 700 MHz frequency band for 4G data transfer to successfully test applications such as Web browsing, voice transmission, video streaming and file upload and download. The company continues to expect achieving average network speeds of 5 to 12 Mbps on the downlink and 2 to 5 Mbps on the uplink in practical settings.

Verizon is leveraging the network infrastructure provided by its technology partners Ericsson (ERIC) and Alcatel-Lucent (ALU), network equipment vendors Starent Networks (STAR) and Nokia Siemens and trial device providers LG and Samsung.

Leading carriers across the globe have adopted LTE as the base technology standard for their 4G network upgrade initiatives due to its fast data transfer capability and ability to handle bandwidth-intensive applications. LTE is faster than the other leading 4G standards including WiMax. Swedish telecom operator TeliaSonera (TLSN) became the first carrier in the world to launch 4G LTE services (in Stockholm and Oslo) in late 2009.

Verizon is progressing well in leapfrogging its archrival AT&T (T) in 4G roll-out initiatives. The company expects to commercially launch its 4G LTE services in 2010 across 25 to 30 markets (covering 100 million people) with plans in place to provide nationwide coverage by 2013. This will make Verizon the first operator to offer commercial LTE services in the US as AT&T lags with its 4G LTE service launch planned in 2011.

We expect this technological lead to strengthen Verizon’s existing network footprint and drive wireless data revenues with increased margins as a result of new features enabled by the lightning-fast 4G services. ARPU (average revenue per user) is also expected to expand as higher pricing for wireless data service contributes increasingly to overall sales.

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