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The largest U.S. mobile service provider Verizon Communications Inc. ( VZ - Analyst Report ) launched an in-home wireless broadband service –– HomeFusion Broadband –– based on Long Term Evolution (LTE) technology.
Verizon introduced this service in rural and remote homes, which do not have access to DSL or cables. The service will be available initially in Birmingham, Alabama, Dallas and Nashville, Tennessee later this month.
The company will charge $59.99 per month for 10 gigabytes (GB) of data and an initial fee of $199.99 for installing the antenna device either on an outside wall or at the roof. Home Fusion provides download speed of 5 to 12 megabits per second and 2 to 5 megabits for upload.
Verizon is further seeking the deployment of 4G services to rural areas using tower and backhaul assets and its 700 MHz spectrum. We believe Verizon’s expansion into rural areas will drive subscriber growth and improve the churn rate, leading to higher growth and profitability. In addition, Verizon is ahead of its largest rivals AT&T Inc. ( T - Analyst Report ) and Sprint Nextel Corp. ( S - Analyst Report ) in providing home broadband services.
Verizon continues to lead the wireless industry with the expansion of both its 3G and 4G mobile broadband networks. As of January 23, 2012, Verizon deployed 4G LTE services in 195 markets, covering more than 200 million people.The company expects to expand its 4G network to its entire nationwide 3G footprint by mid-2013, compared with the previous forecast of year-end 2013.
Verizon is poised to grow its revenue and earnings this year based on the introduction of new smartphones, tablets and data devices in the Wireless segment as well as continued strong FiOS fiber-optic network and strategic services in the Wireline business.
However, wireless home broadband service is not a new growth revenue stream in the telecom space. Clearwire Corp. ( CLWR - Snapshot Report ) already provides similar rural offerings but with limited coverage.
We are maintaining our long-term Neutral recommendation on the stock. Currently, the stock retains the Zacks #3 Rank (Hold) for the short term (1–3 months).
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