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4G/3G/WiFi

Telefonica Picks AlcaLu for LTE Pilots

Telefónica SA (NYSE: TEF) will launch pre-commercial Long Term Evolution (LTE) pilot networks in Madrid and Barcelona using equipment from Alcatel-Lucent (NYSE: ALU), the vendor announced on Wednesday.

For the project, AlcaLu will supply LTE base stations, evolved packet core and IP Multimedia Subsystem (IMS)-based subscriber data management capabilities. The vendor will build and operate the network.

In July, Telefónica, Vodafone España S.A. and Orange Spain won spectrum for LTE services in an auction. (See Big 3 Win Spanish LTE Spectrum and Euronews: Giants Grab Spanish Spectrum.)

Why this matters
While just a pilot LTE network, this is a big deal for AlcaLu because it's the first sign that the vendor can win at a major European operator to supply radio access network (RAN) equipment.

According to Heavy Reading Senior Analyst Gabriel Brown, "Alcatel-Lucent needs to extend its presence outside the U.S., and especially break into Europe, where it is the weakest of the four major mobile infrastructure vendors. Telefónica is a Tier 1 global operator and one of the so-called European G-5 -- so this is crucial engagement, even if it is a pre-commercial trial."

And now is a good time for AlcaLu in Europe, especially with its LTE deployment experience from the U.S., which Brown calls its "trump card."

"European operators are strategically considering which vendors they will support and how to maintain a good level of competition," said Brown. "Barriers to entry in single-RAN products are so high now that there's only really Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. and Nokia Networks to choose from in Europe. Operators are putting Samsung Corp. , Alcatel-Lucent and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) through their paces to identify a fourth strategic supplier."

For more
Here's the latest LTE activity from AlcaLu and Telefónica:

— Michelle Donegan, European Editor, Light Reading Mobile

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