NEW ORLEANS-The rising status of two Chinese vendors, U.S.-based UTStarcom Inc. and a few other players like IPWireless may raise the specter for consolidation, said Nortel Networks Ltd. chief Bill Owens during a keynote address at the CTIA Wireless 2005 trade show.
He made the remark during a session with CTIA President Steve Largent and chief executive of LM. Ericsson Karl Svanverg, Alcatel Corp. Chief Executive Officer Mike Squigley and Lucent Technologies Inc. CEO Patricia Russo.
“We have new conditions,” said Owens, explaining that industry players need to understand the competition. He said Chinese vendors Huawei and ZTE as well as UTStarcom have brought a new perspective to the subject.
“It’s important to understand what’s happening in the market,” Owens added.
Huawei, ZTE, UTStarcom as well as IPWireless have been generating tremendous interest, not only with their technologies but also with their business models and customer wins.
Huawei has launched its businesses and is forging partnerships in several countries, and it is beginning to make inroads in the U.S. market and is selling products around the world cheaper than its rivals. ZTE just signed an agreement with Alcatel and has launched a product drive in Europe.
“Anything is possible,” remarked Doug Black, spokesman for FutureWei, Huawei’s U.S. subsidiary. He responded to the keynote address in an interview with RCR Wireless News. “I don’t see any activities in that direction. I don’t know the timing or who is going to be the instigator.”
Indicating that no one can rule out the possibility of consolidation, Svanberg said no one could have expected 12 months ago the wave of consolidation that has hit the U.S market. He was referring to the Cingular Wireless L.L.C. and AT&T Wireless Services Inc. merger, as well as the Sprint PCS and Nextel Communications Inc. proposed tie-up.
He characterized the competitive frenzy in the industry with a quote from Lee Iaccoca, who said, “Americans love competition but hate competitors.”
However, he said it is different with the vendors because the various players have different platforms, although there is synergy in research and development. Speculation during the past few years has involved Motorola, Nortel Networks, Cisco Systems Inc. and Siemens. Alcatel and Lucent were in talks about three years ago, but floundered on fundamental differences.
“We are in the market to consolidate,” said Madelyn Smith, director of corporate communications at IPWireless also in response to the keynote address remarks by Owens. “We believe our technology is robust enough and adaptable enough to fulfill a variety of operator business cases, be they full mobile broadband, DSL replacement or mobile and enterprise solutions.”
Russo said the industry already is undergoing some form of consolidation in the form of partnerships. She said there are no “consolidations in terms of mergers, but there are new forms of partnerships.”
The vendors also weighed in on the importance of security in an increasingly complex network based on Internet Protocol.
Owens said governments around the world have not responded adequately to threats to network security, adding that telecom activities have suffered setbacks from lack of adequate security. Svanberg noted that users need to be educated on the value of security. Russo added that industry should take a bird’s-eye view of security by providing a full suite of applications.
Quigley said industry needs a standards approach to the challenge.
