[from wsj]
Moving Away From WiMax,
Nortel Shifts Focus to LTE
June 11, 2008 2:06 p.m.
Nortel Networks Corp. said Wednesday it is reducing its investment in developing the ultrafast wireless Internet technology called WiMax to focus its research dollars on a competing technology preferred by major U.S. and European carriers known as LTE.
The decision, announced at the Toronto-based company's annual analyst meeting, comes as Nortel is coming under pressure to focus on fewer new technologies that can make up for the erosion in its core business supplying telecom carriers. The telecom-equipment maker, which posted losses in the last two quarters, has pared costs while it waits for sales of its most promising innovations to pick up.
Nortel shares were trading up 9.6%, or 78 cents, at $8.89 in New York Stock Exchange trading Wednesday.
Nortel's decision also signals how much of the telecommunications industry is gravitating toward LTE—or Long Term Evolution—as the primary fourth-generation wireless broadband technology. The biggest U.S. carriers, AT&T Inc. and Verizon Wireless, are pursuing LTE, as is Vodafone Group PLC, the European telecom giant which owns Verizon Wireless in a joint venture with Verizon Communications Inc.
Nortel's switch comes two months after some of the world's largest network-equipment makers agreed to a licensing framework they hope will accelerate adoption and deployment of LTE.
Over the past several years many equipment makers including Nokia Siemens Networks, Samsung Electronics Co. and Motorola Inc., invested in development of WiMax products, believing it would let carriers offer mobile broadband services sooner. But some carriers are announcing they will begin to upgrade their so-called third-generation, or 3G, networks to LTE within two years. That evolution has come particularly quickly in the U.S., where 3G devices are only now becoming popular. Fourth-generation technology allows for faster Web browsing and downloads over mobile phones and other wireless devices.
Most of the interest in WiMax is coming from carriers in emerging markets that are expanding wireless coverage to many areas for the first time.
In the U.S., WiMax is being pursued by Sprint Nextel Corp., the No. 3 carrier which is struggling to stem subscriber losses, through a $12 billion venture with Clearwire Corp., a startup also backed by cable-TV companies such as Comcast Corp. and Time Warner Cable Inc., Internet giant Google Inc. and chip maker Intel Corp.
Further reducing Nortel's interest in WiMax, the company wasn't among the suppliers chosen for the Sprint venture, and the thin margins offered in emerging market contracts forced the company to step away from its investment. Nortel said Wednesday it had established a joint agreement with Alvarion Ltd. to provide WiMax-compatible equipment to its customers.
.... more on WSJ
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