USA - Verizon contracts for LTE

Verizon awards 4G contracts worth billions

Ericsson and Alcatel-Lucent yesterday emerged as big winners at the Mobile World Congress in Barcelona, when Verizon Wireless, the leading US mobile operator, awarded them multi-billion dollar contracts for fourth-generation wireless infrastructure.

The contracts are the first significant deals relating to 4G networks based on wireless broadband technology called Long Term Evolution.

LTE is expected to fuel the growth of the mobile internet because it should markedly increase download speeds on handsets.

In a big blow, Canada’s Nortel and Motorola of the US both failed to secure any of Verizon’s initial LTE contracts.

The LTE deals could be worth as much as $3bn-$5bn during the next five years.

Sweden’s Ericsson expressed delight at its contract with Verizon as the US mobile operator is a new customer for the world’s largest maker of wireless network infrastructure.

Carl-Henric Svanberg, chief executive of Ericsson, said: “It is very inspiring for us as we see ourselves as leaders in the development of LTE.”

For Alcatel-Lucent, the Verizon deals are a relief since the US mobile operator is one of the Paris-based company’s largest customers and its loss would have represented a serious setback.

Alcatel-Lucent is struggling to make a success of the 2006 merger between its French and US predecessor companies.

Ben Verwaayen, chief executive of Alcatel-Lucent, said the Verizon contracts were “wonderful news for us”, particularly given the equipment maker’s decision in December to focus on LTE rather than WiMax, an alternative 4G wireless technology.

“This is a clear validation of the company’s recently announced strategy and the importance of LTE to that strategy,” said Mr Verwaayen. “It is a clear basis of future growth.”

Richard Windsor, a technology specialist at Nomura Securities, claimed Nortel’s failure to secure LTE contracts with Verizon was a “massive blow”. Nortel filed for bankruptcy protection last month.

Ericsson and Alcatel-Lucent will build the wireless infrastructure enabling Verizon to be the first US mobile operator to deploy 4G mobile services based on LTE.

The contracts involve the roll-out of LTE infrastructure in two US cities late this year, and a further 25-30 cities in 2010.

Nokia Siemens Networks, the equipment maker controlled by Finland’s Nokia, won a contract with Verizon for other network infrastructure, but the value is small compared with the deals secured by Ericsson and Alcatel-Lucent.

Dick Lynch, chief technology officer at Verizon Communications, the majority shareholder in Verizon Wireless, said the company was planning a nationwide roll-out of its LTE network by 2015.

Vodafone of the UK owns 45 per cent of Verizon Wireless.