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Hutch's Nokia Network Woes?

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LR Mobile News Analysis
Light Reading
5/29/2003

The industry rumor mill is in full flood over the possibility of a growing rift between Hutchison 3G UK Ltd. and Nokia Corp.'s (NYSE: NOK) network division, over the rollout of the British carrier’s 3G network.

According to industry sources close to Unstrung (who requested anonymity) Hutchison has experienced continuing problems with the performance quality of Nokia’s W-CDMA (Wideband Code Division Multiple Access) infrastructure and is considering dropping the Finnish company from the second phase of its U.K. rollout.

Financial analysts say the latest issues highlight a history of similar experiences. “This would all point to a certain amount of dissatisfaction with Nokia,” says Stuart Jeffrey, telecom equipment analyst at Lehman Brothers. "I know they haven’t been enormously chuffed with Nokia’s past performance.”

In April 2001 Nokia signed a €500 million (US$586 million), three-year agreement with Hutchison 3G UK to provide W-CDMA network infrastructure kit. According to a company statement, Nokia was to be the “core 3G network supplier,” including delivering packet core elements and mobile switches, and would be responsible for covering “approximately 50 percent of the U.K. population spanning the southern half of the U.K. as well as Northern Ireland.” Nokia was to share the radio access network contract (including base stations): A joint alliance of NEC Corp. (Nasdaq: NIPNY) and Siemens Information and Communication Mobile Group was to run sites north of the River Severn and the Wash.

This deal was later reversed, however, and Nokia was made responsible for the network in the North. NEC and Siemens won control of the contract in the South. No specific reasons were given by Hutchison at the time for the sudden compass-point turnaround.

According to Lehman Brothers’ Jeffrey, however, there were technical issues with the performance of Nokia’s base stations. “The fire brigade came to inspect the base stations and discovered that the operating temperature was too high,” he says. “I understand this made it difficult to obtain insurance. Nokia claimed it was an installation problem.”

Thomas Jönsson, Nokia Networks’ communications director, says such claims are unfounded. “There was an isolated incident with one base station a year ago that was resolved and was not related to Hutchison. It was concerned with the heat of the base station but it wasn’t serious. I am not aware of any problems with Hutchison. We have a public contract with Hutchison in the U.K. and there is no change to that.”

Hutchison 3G spokesman Edward Brewster is also playing down the regional trade in contract awards and the latest market rumors. “That wasn’t a major swap-out,” he claims. “There is no public announcement to be made now. There is no problem.” [Ed. note: No! No! No!]

Recent developments certainly hint to the contrary. Last month NEC and Siemens issued a joint release announcing the successful completion of the first stage of its radio network for Hutchison 3G UK (see NEC, Siemens Power 3). No corresponding claim was made by Nokia.

It's also noteworthy that Hutchison Telecommunications (Hong Kong) Ltd.'s 3G operation is expected to opt for LM Ericsson (Nasdaq: ERICY) infrastructure rather than a previously touted Nokia deal. “I believe it has been confirmed,” says Jeffrey. “It is being spoken of as fact in the financial markets.”

Hutchison has proven itself capable of terminating supplier agreements with little notice. In November last year the carrier severed relations with one of its OSS suppliers, TTI Telecom International Ltd. (Nasdaq: TTIL) (see Hutch 3G Dumps Supplier).

Unstrung geographical tidbit du jour: The Severn is the longest river in England and floods almost yearly.

— Justin "Chuffed" Springham, Senior Editor, Europe, Unstrung

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incards
incards
12/4/2012 | 11:57:13 PM
re: Hutch's Nokia Network Woes?
I find it odd that Unstrung which generally picks up on PR from the various wireless manufacturers has failed to pick up on Nokia's PR dated June 05, 2003, about 3 UK launching its Nokia WCDMA network in Northern England, Scotland, Wales and Northern Ireland:

http://press.nokia.com/PR/2003...

Unstrung's "Senior Editor, Europe" (aka "Chuffed", aka ...), of the cute names he names himself and amuses himself if not others with, published an article here on May 29 called "Hutch's Nokia Network Woes?"

I think Unstrung readers should hear from Ms/Mr. xxxx-Springham or another Unstrung journalist on this subject forthwith.

Is Nokia out to lunch or is Ms/Mr xxxx-Springham who just published a totally obnoxious and senseless poll on WiFi here, OTL?

- IC -
IPobserver
IPobserver
12/4/2012 | 11:57:08 PM
re: Hutch's Nokia Network Woes?
I'll leave it to Justin to explain why he wrote the Nokia story, but for the record, Unstrung did pick up the press release. We posted it here: http://www.unstrung.com/docume...

Maybe Justin's working on a follow-up, I'll ask him.

Personally I wouldn't say Nokia's out to lunch, I've just interviewed two top (and I mean top)guys from their WCDMA business and was hugely impressed.

And I just did a Q&A with a the head of WCDMA systems at Ericsson... again very impressed.

Next (this) week I'm also speaking to Siemens and Nortel and I'm looking forward to writing up a non-biased, informative article about the insider's view of 3G and where they think its headed.

It's just a hunch, but I think were at the end of the beginning with UMTS (and EV-DO) and are about to see an unrelenting shift toward this technology. Check out 3's latest price-cut on voice calls and you'll get the idea: http://www.unstrung.com/docume...

There's a lot more to come in the sector and I know everyone at Unstrung is very excited about it.
incards
incards
12/4/2012 | 11:57:01 PM
re: Hutch's Nokia Network Woes?
Gabriel: Good to hear from you and I am hoping that some of the nuggets of knowledge you have gleaned from interviews with Ericsson, Nokia, Siemens and Nortel execs filter into print here.

A "non-biased, informative article about insider's views of 3G and where they think its headed" would be right up everyone's alley, methinks.

While obviously it is not the only issue hindering 3G deployment, I would be most interested in hearing where the industry thinks it is at with both voice and data intermodal and interfrequency handover GSM to WCDMA to GSM.

I am, like you, hopeful that we are at the "end of the beginning" of 3GSM WCDMA and CDMA2000 1xEV-DO broad scale implementation.

- IC -
spc_canute
spc_canute
12/4/2012 | 11:56:09 PM
re: Hutch's Nokia Network Woes?
Gabriel,

Many of us have always been excited by 3G. It is a pity that the operators messed it up for themselves and us by burdening themselves with debt.

Some analysts take the view that Hutch's recent price cuts are going to force a renewed interest in 2-2.5G services. Profitability will suffer note how the share prices of the incumbents dropped when Huth announced its price cuts.

Also note that Hutch's smorgasbord of Sex, Football and Films has failed to lure the Brits. Perhaps the Brits wisely prefer to spend their money on going to Films, football games and paying for real sex. Hutch clearly recognises this by announcing new price palns which leave more money in the British pocket allowing them to enjoy themselves elsewhere ....

Larfs aside, Hutch is now enticing people to its service based on VOICE and PRICING. Not based on 3G data services. I don't think we are at the end of beginning. There is a lot of 3G kit rolled out there, its gathering dust. The beginning is yet to start.

WF


IPobserver
IPobserver
12/4/2012 | 11:56:02 PM
re: Hutch's Nokia Network Woes?
All good points WF, but...

3 had to do something to boost subscribers, and history tells us the best way to do this is cut prices. It screws with the financials, but if you have a network without users, what you gonna do?

Trying to look at this positively, from 3Gs perspective it has least to loose and most to gain from a price war. It has spare capacity (at least where itGs using its own network), and I guess the hope is that if it can entice subscribers with voice tariffs, then it can up-sell its expensive content services. This is kind of how premium SMS works with kids, and how Vodafone appears to be developing the Live! service.

In fact, this might actually be the best way to get people interested in wireless data, and if it works, then competing operators will follow the lead.

Personally IGm not very attracted to 3Gs content (apart from the football), and walled-garden wireless data isnGt really my thing. Carrier-hosted content is rarely any good; in general theyGre bunch of unimaginative Gǣbrand-bunniesGǥ content to play it safe and bland.

The other problem 3 has is the phones G from talking with friends at the pub, its clear they think these first 3G handsets are just too chunky, clunky and, well, uncool.

But I do still think 3G is coming and we can start dusting-off all that 3G kit.

I especially like user-generated content, such as IM and presence, MMS and video messaging, straightforward access to the Internet and web, a bit of browsing, location services and maybe some m-commerce.

Shame about those license fees and all that debt.
caw_blimy
caw_blimy
12/4/2012 | 11:55:48 PM
re: Hutch's Nokia Network Woes?
Hmmm...maybe 3G is at the beginning of the end instead :-)

Has anyone looked at what WOULD happen if 3 goes belly up?

Does Oftel sell re-sell licence or does 3's bancruptcy managers sell it off? If it is offered cheaply I assume the other 3G operators will buy it up to avoid a low-cost competitor.

What u think Unstrunglings?

/X
IPobserver
IPobserver
12/4/2012 | 11:55:44 PM
re: Hutch's Nokia Network Woes?
Awww, don't say that. Surely we can't be at the beginning of the end already, can we?

What happened to the middle part?

I'd guess if Hutch does pull out of 3 (no evidence for this at the moment) it would be bit like the Mobilcom situation in Germany.

A competitor would buy the network and the license would be held until it's legal to transfer spectrum, or returned to the regulators.
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