Verizon's Uphill Data Push

Verizon Wireless says its fast data service is thriving, but some industry watchers say the vital signs are weak.

One thing seems clear: It can be hard to manage expectations when you are spending $1 billion in a year on a new Qualcomm(QCOM)-developed technology that promises speedy, office-like Internet access over wireless broadband connections.

Verizon Wireless, jointly owned by Verizon(VZ) and Vodafone (VOD), has expanded its evolution data only, or EV-DO, network to more than 30 cities.

The company offers the service to laptop users for $80 a month. Phone subscribers can add Verizon's V Cast service, which gives them handset access to tiny TV clips, music-on-demand and video games, for $15 monthly.

But the bold new offering has been slow to catch on with consumers, say some industry analysts. Store checks show a healthy supply of EV-DO phones and antenna cards for laptops, but sales of the new service have been anemic, says Roger Entner, wireless analyst with Ovum, a tech strategy shop in Boston.

Part of the problem is that EV-DO phones sell for about $200. "Typically you have to price handsets under $100 to move real volumes," says Entner. And early reviews from phone users haven't been very encouraging. Some find the service expensive and the content boring.

Also reinforcing the notion that EV-DO is stumbling out of the gate, RadioShack (RSH) warned last month that its first-quarter numbers would be weak, due largely to a wireless shortfall. The retail chain, which sells Verizon Wireless and Sprint (FON) service, said contributors to the disappointment included a failure to meet expectations for EV-DO video-phone sales.

Then there's the WiFi challenge. Laptop users have gravitated to cheap, fast WiFi Net access at home, in offices and at various public hot spots. Observers question whether these people will find the greater mobility of EV-DO compelling enough to switch to the much pricier service.