NSN Back in Love With WiMax

Having stepped back from the WiMax equipment sector in 2009, Nokia Networks (NSN) is set to leap back into the market with a bang if it closes the US$1.2 billion Motorola Inc. (NYSE: MOT) wireless asset business acquisition deal announced today. (See NSN to Buy Moto's Wireless Biz for $1.2B and Reader Poll: NSN's Best US Fit.)

NSN announced in July 2009 that it was diverting R&D resources away from WiMax and into HSPA+ and Long Term Evolution (LTE). To cover itself in the WiMax market, NSN struck a partnership with Alvarion. (See NSN Backs Away From WiMax and NSN: Alvarion's New WiMax Buddy.)

But if the acquisition deal announced today goes through, NSN will find itself instantly crowned the WiMax equipment king, a position that Motorola currently holds in a market that was worth about $300 million during the first quarter of this year, according to Infonetics Research Inc.

Motorola currently has 41 WiMax customers in 21 countries, including Clearwire LLC (Nasdaq: CLWR) in the US, Imagine Communications Group in Ireland, Far EasTone Telecommunications Co. Ltd. in Taiwan, Wateen Telecom in Pakistan, Axtel in Mexico, Embratel Participações S/A in Brazil, Axione in France, and Vietnam Data Communication Co. (VDC) . (See Far EasTone Launches WiMax, Moto Boasts WiMax Shipments, Moto Wins Aussie WiMax Deal, Craig Picks Moto WiMax, Clearwire Uses Moto WiMax, Moto Does WiMax in Jordan, and Moto Touts Clear Role.)

So what's that WiMax business worth? The two vendors are saying only that the lines of business NSN is set to buy generated $3.7 billion in revenues in 2009, but won't break that figure down any further.

But it looks as if Moto's WiMax business was worth about $170 million last year, based on an Infonetics report that gives Motorola a 17 percent share of the total $1 billion global market for WiMax infrastructure and CPE (customer premises equipment) in 2009.

What will NSN do with its WiMax assets?
Initially, NSN plans to run Motorola's WiMax business as a standalone operation, because it doesn't have any equivalent NSN business line into which it can be subsumed: NSN has "complementarity" with the other lines it's acquiring, says a NSN spokesman.

The plan then is to engage with its WiMax customers about potential next-generation network migration paths, of which a shift to "TD-LTE is one option," notes the spokesman. The other option, of course, is WiMax 2.0, but it's clear NSN will be pushing the LTE route, which is the path regarded as the most likely for most of the world's WiMax network operators during the next few years.

The tough question is: What will be NSN's migration platform of choice?

That's going to be a critical question for Motorola's WiMax customer base, which will want to know as soon as possible the potential infrastructure roadmap.

And NSN has a tough choice, because it has a single radio access platform, the Flexi Multiradio Base Station (BTS), that supports TD-LTE, while Motorola has its own converged platform, the WiMAX Evolution – Single RAN, which supports 802.16e (mobile WiMax), 802.16e Enhanced, 802.16m (WiMax 2.0), and LTE.

Correctly managing the communication process will be critical to holding on the WiMax accounts already in place, states Heavy Reading senior consultant Berge Ayvazian.

"I am most concerned about how NSN will handle the WiMax-to-TD-LTE migration strategy that Motorola has already started with its WiMax contracts," says Ayvazian, who notes that the Motorola's new WiMAX Evolution – Single RAN solution "was designed to support existing technology, plan capacity for the next five years, and provide operators with a cost-effective way to upgrade their network offerings, preserving capital and protecting investments."

The analyst adds: "Half of Motorola's incumbent relationships are represented by this WiMax base. These operator customers will be watching closely over the next six months and prior to the closing of the acquisition. Motorola will need to act and communicate decisively on this point, and the hand-off to NSN will be key to retaining and expanding these relationships."

— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 4:29:37 PM
re: NSN Back in Love With WiMax

It's hard to see Wimax 2.0 getting much airtime within NSN, but how is NSN going to deal with Moto's existing WiMax customer base? Is it going to run two product lines?

cnwedit 12/5/2012 | 4:29:34 PM
re: NSN Back in Love With WiMax

I think NSN is going to have to show WIMAX customers some strong affection early on, or risk seeing them seek other suitors.

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