Verizon Wireless, MSN in Major Alliance

By Erin Joyce

Verizon Wireless and Microsoft Corp. have unveiled a
far-reaching alliance that will pipe new services and content, including instant messaging and new forms of
targeted content, from MSN to Verizon’s 30 million customers.

The deal represents a major long-term commitment by both companies, which could help spur greater adoption of wireless device usage as carriers race to build out more advanced data networks.

The co-branded services will debut Friday with the help of a splashy, multi-million dollar advertising campaign, described as one of the largest ever deployed by Verizon Wireless. The services are available to Verizon Wireless customers who have a digital Web-enabled wireless phone and will be featured on future “smart” phones yet to hit the market.

The alliance marks the first time that MSN Instant Messaging will be available to US-based Verizon customers with WAP-enabled digital phones. Already, WAP-enabled subscribers pay about $6.95 a month for services that include Web-based Hotmail and slices of news and content stripped down for a small screen. The new service will include the IM service and eventually ringtones and even more detailed news features that can be downloaded onto subscribers’ devices.

In addition to the consumer-targeted services, the two are joining forces to develop and market Windows-based Pocket PC applications to the corporate marketplace, built on the .NET Web services platform. The alliance also signals that no sector of the wireless market will go uncovered.

Beyond the enhanced wireless portal, the alliance will focus on the intersection of businesses and consumers who use the Windows Pocket PC operating system with their handheld devices. Plus, it will focus squarely on the enterprise market by offering customized wireless connection plans and applications for enterprise customers. Tops on that list would be Microsoft business desktop, which lets users port their Outlook e-mail, messaging and collaboration client to handheld devices.

In a statement, Steve Ballmer, CEO of Microsoft, called the agreement a “groundbreaking” arrangement, which “ushers in the next generation of wireless data services and devices for consumers and enterprise customers.”

Denny Strigl, president and CEO of Verizon Wireless, said he was confident that the alliance would be a catalyst for wireless data services growth. “We’re live on Friday. Customers who sign up for the VZW with MSN service will enjoy a robust mobile experience that truly meets their needs.”

Perhaps a more important aspect of the alliance is where it could lead the market as wireless data transmission speeds improve. The VZW WAP-enabled service is still running on a wireless network with data transmission speeds of about 14.4 kilobytes. But a Verizon spokesman said the express network that Verizon is building out will be able to eventually handle data delivery at an average rate of 40-60 kbps, up to 144 kbps.

The new service to be unveiled Friday includes a pitch for a monthly $40 voice plan that, in addition to unlimited calls on nights and weekends, tosses in the VZW portal and the jazzed-up MSN services such as IM and more detailed news alerts.

The monthly WAP service is still priced at $6.95 per month, but can be configured for incremental charges up to about $12.95 a month, depending on the type of additional alerts the subscriber chooses, either through SMS or one-way alerts such as stock prices or sports scores.

Verizon is clearly capitalizing on the growing use of SMS in the states, especially as carriers work to achieve interoperability on SMS networks. The company, a joint venture of Verizon Communications and Vodafone , has witnessed a doubling of SMS usage in the last month alone, a spokesman said.

Now, it is positioning to wring incremental fees from the millions of MSN users who have grown to rely on IM. MSN counts more than 270 million unique users worldwide per month. Bedminster, N.J.-based Verizon is the nation’s largest wireless carrier with more than 30 million customers.