Nortel Flunks WiMax

Nortel Networks Ltd. has revamped its 4G wireless strategy by deciding to discontinue its WiMax access network products and concentrate instead on its LTE (Long-Term Evolution) development.

But Nortel isn't abandoning the WiMax market altogether. Taking the place of its in-house WiMax access efforts is a strategic partnership with established WiMax vendor Alvarion Technologies Ltd. (Nasdaq: ALVR). “Our original plan to deliver a pure Nortel-only [WiMax] radio product is being discontinued to favor this partnership with Alvarion,” says Gerry Collins, Nortel’s director of wireless in EMEA. “There will be no pure Nortel WiMax product.”

WiMax has been a key pillar of Nortel’s 4G strategy, but today’s news makes it clear the company’s 802.16e access equipment wasn't going to make the grade. (See Zafirovski: We'll Get 4G Right, Nortel Builds WiMax Ecosystem, Nortel, Toshiba Team on WiMax, Nortel Parters With SECI, and Nortel Demos WiMax.)

Nortel's decision won't come as a major shock to some industry watchers: Heavy Reading senior analyst and wireless technology specialist Patrick Donegan noted last year that Nortel's WiMax strategy was flawed, and that the vendor was trailing in the wake of rivals such as Motorola Inc. (NYSE: MOT) and Samsung Corp. (See Nortel's Big WiMax Bet.)

That analysis is backed up by market uptake: Nortel had a few early wins with WiMax, but it hasn’t been nearly enough to catch up with market leaders Samsung and Motorola. (See Craig Wireless Deploys Nortel, Chunghwa Uses Nortel WiMax, Nortel Helps Golden, Nortel Wins in Taiwan, and Nortel, Urban WiMax Team Up.)

Now Nortel is relying on Alvarion to give it a better chance in the WiMax market. The two companies will pool their WiMax resources to create an integrated offering from the base station to the core network, including applications and professional services. Alvarion will supply the 802.16e mobile WiMax base stations, while Nortel will contribute the gateway, core network, backhaul solutions, applications, and professional services.

Nortel said it will refocus its 4G research and development investment on LTE while still contributing some R&D to the WiMax partnership with Alvarion.

The news gave Alvarion's share price a leg up, sending it $0.35, or 4.7 percent, higher to $7.86 in morning trading. Nortel, which also reaffirmed its 2008 outlook and announced a carrier Ethernet deal with Verizon Communications Inc. (NYSE: VZ) today, saw its stock jump by $0.49, or 6 percent, to $8.60. (See Nortel Confirms Outlook.)

Heavy Reading’s Donegan says today’s move reflects badly on Nortel’s 4G program, and that the Canadian firm ought to reconsider its LTE strategy as well.

“What’s surprising about this announcement isn’t that Nortel is exiting WiMax -- it’s that the company is continuing to invest in LTE,” he says. “After the exit from UMTS, this is death by a thousand cuts. The company would be better off closing its internal 4G wireless development program altogether and investing its R&D dollars in areas where it can be a top three player,” adds the analyst. (See Alcatel Snags Nortel 3G Unit.)

The market's to blame...
Nortel says changes in the market prompted its decision to discontinue its own WiMax access product development.

“The market for WiMax is changing and has been for the last 12 to 18 months,” says Nortel's Collins. “Outside North America, we’re looking at a market that’s about serving under-served broadband areas. And Alvarion met that market requirement better. One or two of our customers had already asked to work with Alvarion.”

Adds Collins: “The [WiMax] market has shifted, it’s delayed, and the regional focus has shifted as well,” he adds.

Collins says the goal of the partnership with Alvarion is to be a No. 2 or No. 3 WiMax supplier.

“We’ll drive significant business for Nortel through this partnership,” says Collins. “It will allow us to build good share in WiMax.”

As Nortel’s R&D spend migrates over to its in-house LTE product development, so too will a number of employees, according to Collins. He said there has been a “significant redeployment” in the past two months of people from the WiMax product development over to the LTE program.

Collins would not comment on whether today’s tie-up with Alvarion will lead to Nortel acquiring the wireless broadband vendor.

— Michelle Donegan, European Editor, Unstrung

Interested in learning more on this topic? Then come to the Broadband Wireless World, a conference focused on the evolution of the broadband wireless market from 3G to 4G. Collocated with NXTcomm, in Las Vegas, June 17-19, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.

freetoair 12/5/2012 | 3:39:02 PM
re: Nortel Flunks WiMax If you went to any tradeshow this is no surprise...nothing to show and no one there with any knowledge. Furthermore the last few shows I have been at they have a "closed" area where they only allow fools in so they can feed them BS aboutwhat they have/or are doing -- when in fact they have/and are doing nothing! A real comedy show. So sad for a once great technology company...
lrmobile_Ziggy 12/5/2012 | 3:39:01 PM
re: Nortel Flunks WiMax I wouldn't say that "they have and are doing nothing". They simply weren't competitive and pulling the plug was probably the right thing to do. I'm just surprised that it took them so long to realize it.

Now, with respect to LTE, I'm sure that they're going to feel the pain of no longer having a UMTS business. One would have thought that they would know better, given the problems they originally had in UMTS due to their weak position in GSM.

In my humble opinion, they should consider exiting wireless altogether. They simply don't have an edge (no pun intended).
lrmobile_Ziggy 12/5/2012 | 3:39:00 PM
re: Nortel Flunks WiMax I have to agree with you. They're certainly not sending the message around that they are a serious wireless infrastructure player.
freetoair 12/5/2012 | 3:39:00 PM
re: Nortel Flunks WiMax Your statement to LTE reinforces my first point frankly -- are they just "talking" and not "doing"? Hard to be competitive unless you are pursuing it aggressively. I had some visibility and they were giving it lip service vs heavy lifting.

Talk is cheap...execute or exit (you are right).
nt_survivor 12/5/2012 | 3:38:58 PM
re: Nortel Flunks WiMax As an ex-norteller I could not be less surprised. The company has completely forgotten how to innovate or develop anything.

Nortel's philosophy is to move resources away from up & coming projects that need help but don't yet generate revenue onto tired old cash cows that need very little development but have a revenue stream. The bean counters are running the asylum.

Even after cutting so many, the remaining workers are either bored or overwhelmed. I talked to one about a year back and he said he can do his whole job in 5-10 hours a week.

The bottom of Nortel is long-gone due to layoffs. The top talent quit out of frustration. All that's left is the mediocre middle.
lrmobile_kumaramitabh 12/5/2012 | 3:38:56 PM
re: Nortel Flunks WiMax

One of the most common issues of discussion one finds today in either WiMAX or 3G fora are the technology growth path, will it be LTE or Mobile WiMAX? In fact this question has also led to a considerable debate amongst the regulators in different countries as it has a bearing on the way future resources such as spectrum need to be allocated.
It must be said at the outset that the LTE is the path most carriers ( 3G and CDMA) are planning to follow for the present, at least till they can see something better in Mobile WiMAX. All the carriers have been following the 3GPP ( and 3GPP2) upgrade paths, which now at HSUPA and EV-DO will take them to LTE and UMB.

Because the mobile community is very large and 3GPP is their own body for evolution, it is not surprising that almost all carriers have announced the upgrade paths as LTE. This is proving to be a hurdle for the uptake of Mobile WiMAX by many networks as they see heir upgrade paths as those specified as 3GPP.

But the fact is that LTE is still not yet fully defined, let alone tried as per frozen standards. This leaves many areas which could face delays as technology moves from Labs to trials and on to commercial use. Mobile WiMAX is right now fathered mostly by Intel and a few others, but its path is differnt and it has many advantages, particulary in the technology and availability of spectrum. This makes possible high bandwidth open applications, more than what can be said of even HSPA. A large ecosystem has also been built around Mobile WiMAX after over 300 trials. The ecosystem includes the chipsets, CPEs, plug in devices as well as Wave 2 compliant base stations, test apparatus and implementation aids.

Is is possible to harmonize 3GPP and mobile WiMAX or LTE and Mobile WiMAX? Potentially it has become easier now after the WRC has adopted OFDMA-TDD as one of the approved interfaces for IMT. This makes it possible for 3G ( and evolved systems including LTE) to coexist in different parts of the network as the higher architectural layers can follow the 3GPP.

The question is why would 3G operators use mobile WiMAX, if at all? I would say that there are many reasons for this. One, the Mobile WiMAX technology is now available including the wave 2 devices. So if the operators really want to grow on data, they can use the more easily available spectrum for Mobile WiMAX than that available for 3G or LTE. It also allows a second path to the internet, the first being via their own GNA techniques. Secondly WiMAX features are much more powerful for multimedia transmission ( such as support for MBS and service flows). Hence there is a good case for dual mode devices.

There are of course still many issues which the WiMAX forum needs to hasten to make Mobile WiMAX viable. They are seen as too slow in certifications and defining the higher layers of WiMAX. The technology also has some proving to do in so far as more advanced implementations such as those involving SFNs and micro-diversity handover are concerned.Potentially latency is higher in Mobile WiMAX particularly when it is operated as an SFN for MBS type operations. The synchronization is by means of IEEE 1588 precision timing protocol with the GPS source, which makes it +- 10 microseconds as compared to 2-3 microseconds for LTE and EVDO/HSPA, which are also based on the use of a GPS source. This means that multidiversity operation of Mobile WiMAX stations is more complex and can be subject to loss of synchronism or collision in transmissions. But it is compensated by its more advanced features of classes of service and support of service flows. We should soon have more data on this when more implementations are on the ground for MBS, though as yet they seem to be very few. This is also because of the WiMAX forum not being able to quickly move ahead on the network architectures.3GPP and LTE definitely score on this account as the architectures are fully defined up to the application level. This is the main reason why WiMAX applications are flagging and most operators who take up implementations based on WiMAX are in a quandry on how to integrate it and develop applications over it. Many of the MBS implementations are coming out as proprietary and not all operators are implementing them in the same way.

Proponents of LTE claim that it has an edge so far as latency is concerned, but this is based on the technology guidance, no one has seen it yet. But as the LTE standards move ahead, there is a good case for better harmonization of standards with WiMAX, which in any event is one of the permitted air interfaces in the network. We will need to also see how the Flash OFDM and OFDMA-TDD technologies can coexist and what implications arise from a commercial viewpoint as well.

There is however a much stronger case for Mobile WiMAX today. No wireless technology has been tested so widely as mobile WiMAX has, nor can any technology claim to deliver high quality multimedia with assured QoS to hundreds of thousands of devices as Mobile WiMAX can. The close to a million WiFi hot spots are a testimony to the fact that Wireless does provide value depite what mobile networks can offer and this remains the key reason why Mobile WiMAX will be used extensively in the near future.

Does WiMAX need to compete with 3G? See
freetoair 12/5/2012 | 3:38:54 PM
re: Nortel Flunks WiMax I realize your post is "propoganda" nonetheless can you provide some "rea;-world" statistics and data to support your claims that:

No wireless technology has been tested so widely as mobile WiMAX has, nor can any technology claim to deliver high quality multimedia with assured QoS to hundreds of thousands of devices as Mobile WiMAX can.

Can you? I doubt it but would love to see it to support your propoganda.
petercf 12/5/2012 | 3:38:51 PM
re: Nortel Flunks WiMax Excellent analysis.

As is always the case, when you dig deeper the arguments get very complex. This no more true for WiMAX, 3G or LTE all of which are reliant on regulators, standards and economies of scale.

If you dont get all 3 then it will not happen. In this case 3G, LTE and WIMAX have all 3 - its then down to market power and speed to market share capture.

If a WiMAX operator can deliver an 'open' experience on the scale needed (Clearwire have said any device can be attached - unlike Verizon's just our devices) then they do stand a fair chance of existing alongside. Remember this is a start from scratch v been here a long time fight.

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