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ZTE Pumps Its LTE CredentialsZTE Pumps Its LTE Credentials

At CommunicAsia, ZTE claims LTE bragging rights with talk of impending field trials with major carriers in Spain and Hong Kong

June 18, 2009

4 Min Read
ZTE Pumps Its LTE Credentials

SINGAPORE -- CommunicAsia 2009 -- Mindful that some of its key mobile infrastructure rivals have been building reputations as the go-to companies for LTE (Long Term Evolution) network gear, Chinese vendor ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) has been pushing its next-generation wireless credentials here in Singapore with talk of two impending carrier field trials.

Vendors such as Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY), Huawei Technologies Co. Ltd. , and NEC Corp. (Tokyo: 6701) have all announced LTE engagements with carriers, including NTT DoCoMo Inc. (NYSE: DCM), Telia Company , and Verizon Wireless , which are looking to add LTE capabilities to their commercial operations within the next few years. (See DoCoMo Shells Out on LTE, Core Network Challenges LTE Vendors, CTIA 2009: Verizon's CDMA-to-LTE Helper, MWC 2009: Verizon Picks LTE Vendors, and TeliaSonera: We'll Do 4G in 2010.)

Now ZTE, which spelled out its LTE technology strategy at the CTIA and Mobile World Congress shows earlier this year, wants to be regarded as a member of the leading LTE pack. (See ZTE Touts LTE in Vegas and ZTE Goes to MWC.)

The vendor's vice president of international wireless marketing, Xu Ming, tells Light Reading Asia that ZTE will be involved in LTE field trials during the third quarter of this year with Telefónica SA (NYSE: TEF) in Spain and Hong Kong CSL Ltd. , which is part of Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)'s international operations.

While it would have been a shock if CSL had not been planning to put ZTE's LTE technology through its paces -- the vendor is already a key next-generation mobile infrastructure partner to the Hong Kong carrier (see MWC 2009: SDR Coup for ZTE) -- having Spanish giant Telefónica as a trial reference operator will be regarded as something of a coup for the vendor, which has not been as successful as its domestic rival Huawei in penetrating Western Europe's Tier 1 operators.

ZTE, though, is not alone in having its equipment tried out by Telefónica, as Ericsson has already been involved in LTE service trials at the Spanish incumbent. And it's unlikely that Nokia Networks won't be involved at some stage in Telefónica's LTE evaluations. (See Telefonica Tests LTE and Telefónica Expands 3G .)

The field trials in Spain and Hong Kong, which Xu says will involve FDD-LTE (Frequency Division Duplex LTE) access equipment and evolved packet core (EPC) technology, are clearly important for the vendor. "Wireless is the core business for ZTE," he notes. "Our main human resources are focused on this. And LTE is the main resource for [the migration towards] 4G, so we will invest much more in LTE."

Indeed, ZTE has already identified the R&D work it is doing on LTE and LTE-Advanced as its "most important strategic work." (See ZTE Secures $15B, Highlights R&D.)

The Chinese vendor is also engaged in TD-LTE (also known as TDD-LTE, or Time Division Duplex LTE) trials with China Mobile Communications Corp. , which needs this particular flavor of LTE to help it migrate from its TD-SCDMA 3G network to LTE. (See ZTE Passes TD-LTE Test.)

It's clearly not the only vendor to have identified an opportunity in the niche TD-LTE space, though. (See Nokia Siemens Targets TD-LTE, Moto Trials TD-LTE, and AlcaLu Tests TDD LTE.)

Core issues
Xu was also keen to share his views on the business prospects for vendors that are focused on the next-generation mobile network core. He told Light Reading Asia that, in ZTE's experience, packet core technology developments are very complicated and costly, require a great deal of R&D investment, and, once chosen by a carrier, then require a degree of customization that adds to the complex process of deployment and commercial operation.

That means a lot of investment, "but the core does not deliver much revenue -- that comes from the access," says the ZTE man. "It would be difficult to maintain a business based purely on a core proposition without the access."

So, is he suggesting that Starent Networks Corp. (Nasdaq: STAR), a mobile core specialist that hasn't developed mobile access infrastructure products, has no future in the LTE world? (See After Verizon, What's Starent's Next Move?, Starent Adds Smarts to LTE Core, and MWC 2009: Starent Dines on LTE.)

Xu would not respond directly to that question, adding only that the future business models for an LTE world are "still unknown, but we do know that human resources are very important for development. We believe some competitors will ultimately leave the industry."

Starent, it's worth noting, is the only major vendor solely focused on next-generation mobile packet core developments, and it appears to be coping well, even in a depressed market. (See Starent Blazes Q1 Trail.)

— Ray Le Maistre, International News Editor, Light Reading

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