Verizon is expanding download business

BUSINESS DIGEST

August 01, 2006|By BLOOMBERG NEWS

NEW YORK -- Verizon Wireless, the No. 2 U.S. mobile-phone services company, dropped a user fee for its music service yesterday as it began selling a new music-capable handset.

Customers with Verizon Wireless' new Chocolate phone or other handsets capable of downloading music and video can use the company's online store free, paying only for downloads, John Harrobin, vice president of digital media, said yesterday in an e-mailed video. Users previously had paid a $15 monthly access fee.

The Chocolate phone, made by LG Electronics Inc., is Verizon Wireless' first handset designed to look and operate like a digital music player, using a dedicated button on the side to access tunes. It has a scroll wheel, similar to Apple Computer Inc.'s iPod players, to search music files and a removable memory card that holds as many as 1,000 songs.

"It's a whole new phase of mobile music," Harrobin said in a conference call with reporters.

Verizon Wireless' online music store offers 1.3 million songs for sale, compared with 3 million from Apple's iTunes site. The songs cost $1.99 each if bought through a mobile phone. The company is dropping the $15 monthly fee to get more people to search for and buy music from the site, Harrobin said.

"The majority of sales are singles and it really makes sense to lower the entry price," he said.

At 3.8 inches, the bar-shaped Chocolate phone is slightly longer than a credit card. It is about 2 inches wide and less than three-quarters of an inch thick. The panel with the wheel screen slides up to reveal a phone keypad.

Verizon Wireless has an exclusive agreement with LG to sell the phone in the United States, Harrobin said.

The wireless company is selling the Chocolate on its Web site for about $150 after a $50 rebate and with a two-year service contract. Without a new contract or discounts, the phone sells for about $360. The phones will be sold in 2,100 Verizon Wireless stores starting next Monday.

The 2 gigabyte song-storing memory card from SanDisk Corp. is sold separately. So is a cord that lets a user put his or her own CDs and music libraries onto the phone from a computer.

With add-on software, the phone can be held up to a speaker to recognize a song being played, and then buy the song from Verizon Wireless' store. That application can be downloaded for a fee, Harrobin said.

The Chocolate phone also comes with a camera and the capability to play 3-D games, Verizon Wireless said. It also can get geographic directions from Verizon Wireless' VZ Navigator online site.

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