Alcatel-Lucent and NEC are forming a joint venture to develop Long Term Evolution (LTE) products

February 12, 2008

3 Min Read
AlcaLu, NEC Team for 4G

BARCELONA -- Mobile World Congress -- Alcatel-Lucent (NYSE: ALU) and NEC Corp. (Tokyo: 6701) are to form a joint venture (JV) to develop Long Term Evolution (LTE) products and may collaborate on a broader range of technologies, the two companies announced here today in Barcelona. (See ALU, NEC Form LTE JV.)

Essentially, the two companies believe they can get LTE infrastructure -- one of the options for 4G alongside WiMax and CDMA Revision C -- to market more quickly if they work together, and they are scoping out further collaboration possibilities in CDMA, optical, IP routing, and IP Multimedia Subsystem (IMS).

The fruits of the joint venture -- about which the new partners are not releasing any financial details -- should be ready for trials this year and ready for commercial deployment in 2009, the duo said at a press conference today. “This is the right time to do this. It’s early in the LTE process,” said AlcaLu CEO Pat Russo, who co-chaired the press conference with NEC’s president, Kaoru Yano.

Both firms have already made headway in the LTE market: NEC is one of the vendors involved in NTT DoCoMo Inc. (NYSE: DCM)’s 4G trials, while Alcatel-Lucent is involved in LTE trials at Verizon Wireless . (See DoCoMo Tests 'Super 3G',Verizon Goes LTE, DoCoMo Picks Ericsson LTE, and NSN Touts Tier 1 4G Trials.)

The move makes sense for both companies, says Heavy Reading senior analyst Patrick Donegan. “NEC doesn’t have the clout to be a global player on its own, and this gives Alcatel-Lucent a substantial opening into Japan, and potentially other Asia/Pacific markets, that they otherwise probably wouldn’t have had,” says Donegan.

While the companies had plenty to say in their official presentation about the JV, it’s what they said during the question-and-answer session that helped to put some flesh on the bones of the announcement.

  • AlcaLu CEO Pat Russo said this wasn’t the first step towards a spinoff of the vendor’s wireless business, which is currently dragging down the company’s financials. (See AlcaLu Reports Q4 Loss of €2.6B.)

  • Even though the duo will be targeting the LTE platform at WCDMA and CDMA operators, Russo also said this wasn’t the beginning of the end for the vendor’s CDMA infrastructure business. “Some of our CDMA customers are choosing different evolution paths. Some are migrating to WCDMA and some are going to trial LTE, but we will support all of our CDMA customers on whichever migration path they choose,” said the CEO. “CDMA is an important, large part of our business, and we will continue to invest in it."

  • The relationship is initially focused on the FDD (frequency division duplex) flavor of LTE. AlcaLu’s Carrier Business Group head, Michel Rahier, said that a TDD (time division duplex) agreement, which would be relevant for the massive Chinese market (as an upgrade path from TD-SCDMA) might follow later.

  • This new relationship does not affect NEC’s current 3G relationship with Nokia Networks , said Yano. (See Nokia Siemens Reveals Product Picks.)

  • The pair expect that, in time, the JV will deploy the resources of more than 1,000 people jointly, though the initial number of staff involved will be much lower.

    As expected, LTE has been one of the major talking points at this year’s Mobile World Congress. (See Ericsson's Need for Speed, NSN Does LTE, AlcaLu, LG Team Up, Nortel Demos LTE, Qualcomm Targets LTE, Agilent Adds LTE Tester, and MWC Preview: LTE in the Limelight .)

    — Ray Le Maistre, International News Editor, Light Reading

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