Verizon Wireless and Qualcomm Inc are forming a joint venture to offer machine-to-machine wireless services to companies in sectors such as healthcare, manufacturing and utilities.
For example, a utility company could remotely monitor power usage at individual homes without visiting them. These kinds of services are seen as an important growth engine for wireless companies as they seek to expand beyond phone services.
The venture, which is expected to kick off services in 2010, would use chip maker Qualcomm's wireless technology and software, and a device certification process that Verizon Wireless has already established to allow network support for mobile devices it does not sell itself.
Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, and Qualcomm did not provide financial details on the 50:50 venture, which will be lead by Qualcomm executive Steve Pazol.
Verizon Wireless has already been offering connectivity for machine-to-machine services for companies such as utilities.
It sees the collaboration with Qualcomm as a way to expand this business by making it easier for customers outside the mobile industry to develop wireless applications, such as e-book downloads or remote electric or water meters.
The opportunity here for Verizon Wireless is to explode its open development business, Tony Lewis, the head of Verizon Wireless open development unit, which certifies third party products for use on its network, said in a phone interview.
Pazol said during a Webcast about the agreement that he aims to announce a name for the venture in coming weeks.
He said that after kicking off services in the United States first, the venture would look to provide services on a global basis by look for agreements with overseas operators.
There are other operators outside the U.S. who are interested, Pazol said without naming overseas operators.
While the companies would not reveal any financial details, Lewis said machine to machine wireless connections would have to be priced differently to today's cellphone service plans.
The economics are different. The model does need to change, he said during the Webcast. In order for us to exploit this marketplace we are going to have to look at things differently.
Qualcomm shares were down 29 cents or 0.62 percent at $46.19 on Nasdaq. Verizon shares were up 16 cents at $31.16 on New York Stock Exchange.
(Reporting by Sinead Carew; Editing by Derek Caney)