Verizon Wireless Weathers Reliability Issues

Verizon Wireless stepped on a few too many toes last month when it announced a plan to charge customers for making certain types of payments. The company, a joint venture of Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NYSE: VOD), also had to do some damage control regarding a series of outages on its 4G wireless data network.

These were less than ideal situations going into the new year. However, they underscore the attention focused on Verizon Wireless and the wireless market. "It's an enviable position to be in when you have people that are demanding your services," said Robert Rosenberg, president of the telecom industry analysis firm Insight Research Corp.

On Jan. 15, Verizon Wireless had planned to start charging $2 for single payments made by customers online or over the telephone, but it backed off quickly in response to the backlash. Calling the charge a convenience fee and offering ways to avoid paying it apparently did not sit well with Verizon Wireless users.

In recent months, customers have railed against charges that companies such as Bank of America (NYSE: BAC) tried to introduce. Much as Bank of America withdrew its planned debit card fees, Verizon Wireless nixed its fee before it ever went into effect.

Several connection outages in December gave Verizon Wireless more headaches to contend with as the year ended. On Dec. 29, the company said it was coping with "growing pains" on its 4G LTE network. When necessary, it said, it shifted some customers to its 3G network to maintain their data service. But not everyone linked up smoothly. Verizon Wireless said its engineers were addressing the connectivity issues.

Consumer demand is driving the market for high-speed wireless data access. Verizon Wireless is working to widen its 4G network, which had been operating for one year as of December, across the country at a brisk pace.

In addition, 2011 was the company's first year offering the Apple Inc. (Nasdaq: AAPL) iPhone 4. Verizon Wireless has plenty of other smartphones on its roster, but the arrival of the iPhone boosted traffic on the network. Rosenberg said Verizon Wireless must weigh how it will invest in infrastructure to keep up with demand. "It's a very sophisticated planning process, and they're not new at it."

Verizon Wireless is far from alone in its desire to innovate. Rosenberg said the US wireless industry is still trying to catch up to the advanced mobile devices and 4G service more widely available overseas. "We're ramping up, but other countries are already there," including the mobile technology hotbeds of Singapore, Japan, and Korea. "We are not leading. We are following."