Nortel's $2B CDMA Bump

Verizon Wireless has inked a five-year, $2 billion extension of Nortel Networks Ltd. 's deal to provide CDMA infrastructure and services for the number two U.S. mobile operator. (See Nortel Wins $2B.)

The 3G deal comes at a key moment for Verizon as its EV-DO-based V CAST video and music services and high-speed Internet and email offering are seeing significant take-up among users. Data services made up around 14 percent of Verizon Wireless's revenue in the third quarter of 2006.

With this deal, Verizon Wireless plans to deploy additional CDMA2000 radio base stations, switching, IP platforms, optical networking systems, and related equipment with professional services from Nortel. The Canadian vendor will also supply Verizon Wireless with CDMA 1xEV-DO Revision A technology. The operator is gearing up to launch Rev. A services soon, although it hasn't made an official announcement yet.

For its part, Nortel has sold off some of its 3G assets and is looking instead to become a major player in next-generation 4G technology. The firm sold its UMTS (3G) access business and assets to Alcatel-Lucent (NYSE: ALU) for $320 million. (See Alcatel Snags Nortel 3G Unit.) Although Nortel has kept its 3G CDMA unit and GSM/GPRS and EDGE business, it has made no secret of its desire to move to the new generation.

Nortel sees the 4G landscape as one dominated by three technologies –- WiMax (802.16e), CDMA DO (data only) Revision C, and UTRAN LTE (long term evolution) –- all of which promise increased performance at a lower cost than today's 3G technologies.

So far, however, it hasn't won any contracts -- that have been announced officially at least -- with what is likely to be the largest next-gen deployment in the U.S., Sprint Corp. (NYSE: S)'s planned mobile WiMax deployment in 2008. Nortel says it hopes to be in the second round of contracts. (See Nortel Takes WiMax MIMO.)

— Dan Jones, Site Editor, Unstrung

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