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Alcatel Circles Tele.ring

Alcatel SA (NYSE: ALA; Paris: CGEP:PA) has made a small but significant step in its bid to rid itself of its 3G minnow status by striking a UMTS (Universal Mobile Telecommunications Service) network deal with Austria’s tele.ring (see Tele.ring Picks Alcatel UMTS).

The first phase of the contract, worth €15 million (about US$16.1 million) according to Alcatel spokesman Laurent de Segonzac, will cover Vienna, Graz, and Linz, and continues the relationship the companies share in the GSM/GPRS space.

This latest Alcatel deal follows its previously announced UMTS wins with Orange France (Paris: OGE) and Portugal’s TMN. “This is a significant contract, as the UMTS market is an important target for us,” Segonzac tells Unstrung. “It has been a clear intention of ours for a number of years.”

UMTS is the third-generation network upgrade favored by many GSM operators. The technology uses an air interface based on wideband CDMA (WCDMA) technology, while retaining the same core network used for GSM (2G) and GPRS (2.5G). In theory, UMTS offers up to 2-Mbit/s data transfer speeds, although the initial network tests have provided 150-kbit/s speeds or less to end users.

Although tele.ring is Austria’s no. 4 wireless operator in terms of revenue and customer base -- trailing rivals Mobilkom Austria, ONE, and T-Mobile Austria -- the carrier is currently well placed to roll out its UMTS network. Tele.ring claims to be the only wireless player in Austria with its own national fiber network and has recently invested €1.6 billion ($1.71 billion) in mobile, fixed-line, and Internet services, fulfilling both the technical and regulatory requirements for UMTS.

Alcatel has won plaudits recently by emerging from the telecom downturn with a profitable wireless business (see Alcatel Profits From Mobile and Alcatel Bucks the Trend). “I’ve nothing but praise for them,” enthuses IDC’s senior research analyst Paolo Pescatore. “They have been something of an unknown success story over the last few years. Their strategy is spot on; they just don’t make much noise about it.”

Unstrung’s research analyst Gabriel Brown also noted in November’s Wireless Oracle -- "Survival of the Slimmest: Competitive Positioning in GSM and UMTS infrastructure Markets" -- that he was “pleasantly surprised by the relative strength of Alcatel’s wireless equipment business. The focus on low manufacturing and operating costs is setting the trend for the competition.”

The French vendor is hoping to play a serious role in 3G and is continuing to make significant investment in R&D and marketing, having rolled out a number of "3G Reality Centers" worldwide (see Alcatel Gets Real With 3G). The business will also be helped by Alcatel’s involvement with 3G networks partner NTT DoCoMo Inc. (NYSE: DCM), through which it is teaming up to offer indoor optimization solutions outside of Japan (see Alcatel, DoCoMo Team on 3G).

Alcatel now lays claim to twenty pre-commercial UMTS network trials worldwide, and Segonzac adds that the vendor is currently on a shortlist alongside Nokia Corp. (NYSE: NOK) and Nortel Networks Corp. (NYSE/Toronto: NT) for Bouygues Telecom's future 3G services.

— Justin Springham, Senior Editor, Europe, Unstrung

Editor’s note: Neither Light Reading nor Unstrung is affiliated with Oracle Corporation

(nor with the Canadian Pork Council)
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