Nortel Networks Ltd. has teamed with Hitachi Ltd. (NYSE: HIT; Paris: PHA) to supply core network equipment for KDDI Corp. 's Long-Term Evolution (LTE) 4G mobile broadband network in Japan.

The news shows that Nortel's LTE business is still alive while the company searches for ways to offload the 4G development program to "mitigate the risks" associated with those investments, a strategy that CEO Mike Zafirovski revealed in September along with plans to sell the Metro Ethernet Networks division. (See Nortel 4G Plans Up in the Air, Nortel to Sell Carrier Ethernet, Optical Biz, Good News for Nortel!, and No News on Nortel 4G .)

Hitachi, an existing core network supplier to KDDI, will provide an Evolved Packet Core (EPC) network that will use Nortel's ATCA-based Access Gateway as a Mobility Management Entity (MME) -- a key element in LTE core networks. (See 4G Drives All-IP Mobile Networks and All-IP Architectures Square Off.)

This is the first joint development between Hitachi and Nortel, apart from some earlier interoperability testing. And the collaboration is limited to the Japanese market and to KDDI in particular, according to a Nortel spokeswoman.

But the co-development with Hitachi looks like just the sort of partnership Nortel is seeking to "de-risk" the 4G business, as Zafirovski said in September. For strategic options for Nortel's LTE program, Zafirovski pointed to what Nortel has done with its UMTS and WiMax businesses as possible scenarios. Nortel sold its 3G UMTS division to Alcatel in late 2006 and struck an OEM partnership with Alvarion Technologies Ltd. (Nasdaq: ALVR) for WiMax in June this year. (See Alcatel Snags Nortel 3G Unit and Nortel Flunks WiMax.)

"Nortel is looking to establish LTE partnerships that can expand our market reach, enhance our LTE solution offer, and/or improve R&D efficiency," said Doug Wolff, Nortel's vice president and general manager LTE, in an emailed response to Unstrung.

From CDMA to LTE
KDDI is following a well-worn 4G migration path from CDMA2000 to LTE, like Verizon Wireless and other CDMA operators. Nortel's involvement in Verizon's LTE trial may have played a role in KDDI's decision to add the Canadian vendor's technology to its core network. (See Verizon Goes LTE, KDDI Goes LTE, and Canadians Leap to LTE.)

"Nortel has demonstrated clear technology leadership in early LTE trials with industry-firsts in high-speed mobility handover and in LTE interworking with CDMA which is the base of our current network," said Masahiro Inoue, associate senior vice president, KDDI, in a press statement.

A KDDI spokesman tells Unstrung that the operator will order equipment from Hitachi by March 2009 and select LTE base station vendors by the end of next year. The plan is to have the LTE core and radio access network "developed" by the end of 2010, but that "doesn’t mean we'll be starting the service in 2010," says the spokesman. "We haven't decided when we'll start the service."

KDDI's LTE timeline is somewhat less aggressive than the plans of its rival, NTT DoCoMo Inc. (NYSE: DCM), which expects to launch commercial LTE services in 2010.

DoCoMo has also already made its LTE vendor selections. The operator chose Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) and Nokia Networks to supply LTE core network equipment, and tapped Ericsson AB (Nasdaq: ERIC), NEC Corp. (Tokyo: 6701), and Nokia Siemens (in partnership with Panasonic Mobile Communications Co. Ltd. ) to supply LTE base stations. (See DoCoMo Takes LTE to 250 Mbit/s, DoCoMo Does LTE With NSN, DoCoMo Picks Ericsson LTE, and DoCoMo Adds NEC for LTE.)

Spectrum holds back Japan's LTE
But Japanese operators do not yet have the spectrum they need to deploy LTE.

The KDDI spokesman explains that the operator cannot use its existing 3G spectrum in the 2 GHz frequency band for LTE because there is not enough of it. There is spectrum available for LTE at 1.5 GHz, but KDDI, along with DoCoMo and Softbank, is waiting for the Japanese regulator to decide who can use how much of this spectrum, according to the spokesman.

Another LTE spectrum option in the country will be in the 800 MHz band, which will be made available by 2010 as cable operators switch from analog to digital TV transmission.

— Michelle Donegan, European Editor, Unstrung