Lucent Ready to Snag Verizon Deal

Some Lucent bulls like Lehman Brothers analyst Steve Levy were quick to point out that the Nortel pact simply maintained the status quo. The deal covers the six-city Verizon network turf Nortel had previously outfitted, and adds Myrtle Beach, S.C., to the mix.

Analysts and industry observers estimate that because Lucent's gear makes up nearly all of the remaining network, its contract should be two or three times the size of Nortel's.

As for timing, Lehman's Levy points out that Lucent's current contract expires in December. He expects an announcement in the "not-too-distant future."

Egg Salad

But skeptics worry that too much of Lucent's prospects are riding on the rather unpredictable behavior of the wireless telcos. Last month, for example, troubles collecting payments from one overseas customer -- thought to be India's Reliance -- created a sales shortfall for Lucent, further undermining Wall Street's faith in its fitful recovery.

Even the sure-bet Verizon contract carries some caveats. Observers question whether Verizon is ready to start the next phase of network upgrades. Verizon finished the first stage of its so-called third-generation, or 3G, upgrades earlier this summer.

The next stage involves data-only gear, which will enable fast wireless Net connections. But in order to carry data traffic, Verizon must allocate separate channels, a luxury the telco may not be able to afford given the increased amount of phone traffic the network has been carrying as new subscribers pile on by the millions.

If consumers don't flock to Verizon's new data services, set for trials this fall in Washington, D.C., and San Diego, it could slow the telco's network expansion plans.

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