OXFORD, United Kingdom-The developers of third-generation (3G) infrastructure technology are complaining that mobile operators, which have spent billions acquiring licenses, are demanding heavy discounts on equipment deals.
The major manufacturers are saying big pan-European operators are running parallel negotiations with up to six bidders and eliminating those that do not cut their prices to the bone. New Orange, now owned by France Telecom, is reported to have cut its list of potential suppliers down to four vendors- Nokia, Ericsson, Nortel and Alcatel-and expects to cut one of these firms out of the bidding within the next two weeks.
The New Orange deal is complicated by the long-term partnership “old” Orange has with Nokia; the close working relationship France Telecom has with Alcatel; and Nortel’s determination, seemingly at almost any price, to win another major deal in Europe. Nortel recently won the contract to supply the Spanish 3G license winner Airtel with equipment valued at US$100 million to deploy services in 23 urban areas.
According to one insider, large operators are also inserting heavy financial penalty clauses in supply contracts. At a minimum, these involve the delivery of equipment within days of any agreed deployment plan, against several month’s leeway that had been allowed on second-generation (2G) rollouts.
