Zafirovski: We'll Get 4G Right

Nortel Networks Ltd. CEO Mike Zafirovski today outlined the reasons why his company didn't build a sustainable UMTS access business and pledged not to repeat them as his company strives to become one of the market leaders in 4G wireless.

Talking on a conference call about the sale of Nortel's UMTS access business to Alcatel (NYSE: ALA; Paris: CGEP:PA) for $320 million, the "Zed Man" said Nortel had learned three main lessons from its experiences in the UMTS access market, where the CEO said the company had "a significant advantage in the late 1990s." (See Alcatel Snags Nortel 3G Unit and Analysts: Alcatel Got a Bargain.)

First, he said, Nortel had ploughed a "lot of resources into UMTS, but maybe not enough into 2G [GSM]," and the mix didn't suit operators that needed a lot of GSM developments first before moving on to UMTS for 3G access.

Secondly, Nortel "didn't necessarily have the ecosystem with suppliers" of complementary elements, such as devices, that carriers needed. That's something that market leaders Ericsson AB (Nasdaq: ERIC), Nokia Corp. (NYSE: NOK), and Siemens Communications Group , as well as some of the Asia/Pacific vendors, have had.

And finally, some of the "accounting and other issues that put a question mark over the company" would have got in the way of better traction and a healthier market share, said Zafirovski. Richard Lowe, president of Nortel's Mobility and Converged Core Networks business, added that Nortel also had the applications and IMS (IP Multimedia Subsystem) know-how to go alongside its 4G wireless developments -- WiMax (802.16e), CDMA DO (data only) Revision C, and UTRAN LTE (long term evolution) -- that would help create a more complete ecosystem for carriers' needs.

Zafirovski also said the inclusion of Nortel's UMTS access staff in the business unit sale to Alcatel wouldn't affect 4G research and development. "We have different teams working on UMTS access, WiMax, LTE, and Revision C. They aren't disconnected, but they are separate groups."

And the CEO is bullish about Nortel's ability to open doors at carriers and be able to sell its 4G story even without a UMTS access business as part of a high-speed wide area wireless package. "We have the ability to fundamentally change the game," he gushed, while Lowe added that there were opportunities to migrate some carriers in emerging markets straight from 2G networks to 4G.

— Ray Le Maistre, International News Editor, Light Reading

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