Nortel Networks increased its presence in the European mobile-phone market last week, garnering a $700 million third-generation equipment contract with BT Cellnet in the United Kingdom and displacing several of the carrier’s traditional European manufacturers.
Nortel will provide an end-to-end Universal Mobile Telecommunications System network, and the vendor hopes this relationship with the operator will carry it into British Telecom’s global properties.
“We have already started to see some displacement of incumbent vendors with the 2.5G infrastructure announcements,” said Dave Berndt, director with the Yankee Group in Boston. “The North American vendors are picking up market share in Europe. We think that with solid execution on these early contracts, the North American vendors have an opportunity to take additional market share from Nokia and Ericsson.”
Nortel’s market share in Europe is about 8 percent today, said Lloyd Carney, president of Nortel’s Wireless Internet Network Solutions business. Globally, the vendor holds about 12 percent of the wireless market. The manufacturer’s goal is to grab 25 percent of the 3G market.
“For us to get 25 percent of the market share, we’re going to have to be assertive and show up with better infrastructure,” said Carney.
Carney attributes Nortel’s win with BT Cellnet to the company’s end-to-end system, which employs a cost-effective optical backhaul solution.
“A lot of people bidding against us have a similar radio interface, but if you look behind the radio and look at the infrastructure with our packet-switching infrastructure to manage end-to-end with our optical backhaul capability, there really is no one else out there that comes close … Our competitors partner with others for that solution.”
Nortel also has formed an alliance with Panasonic, the handset player Nortel believes is furthest ahead in developing UMTS handsets because it is the only vendor that can show a development schedule.
The world’s largest vendor, L.M. Ericsson, shows no sign of losing its substantial lead in the infrastructure business as carriers transition into the 3G market. Vodafone AirTouch plc chose Ericsson as its principal supplier for its new UMTS network in the United Kingdom. Ericsson also has won W-CDMA contracts in Japan and Finland.
“Ericsson is showing no signs of losing their lead anywhere,” said Matt Hoffman, infrastructure analyst with Wit SoundView in Stamford, Conn. “The winners tomorrow will come from the group of winners today.”
Berndt noted that Ericsson is picking up more market share in North America.
“Because of Ericsson’s persistent efforts to develop wireless Internet solutions, it is further ahead than the other vendors,” he said. “As the Internet continues to become more important to wireless operators, this will play to Ericsson’s advantage.”
