Ericsson at LTE starting gate

Michael Morisy
SearchTelecom

Ericsson, quiet up until the very end, has won Nortel's CDMA and Long-Term Evolution (LTE) assets, giving the telecom equipment vendor the perfect launchpad into the early 4G North American market and leaving loser Nokia Siemens Networks (NSN) in a tricky position.

The auction outcome is the second bold North American move for the Swedish telecommunications giant, which has historically struggled in North America. Those days may be over. In the largest deal of its kind in the United States, Ericsson was earlier this month chosen to run Sprint's day-to-day network operations, a deal worth $5 billion over seven years.

With Nortel's LTE technology and expertise at the ready, Ericsson is poised to capture a good deal of Verizon's business as it races to build out its 4G network faster.

Early LTE successes could then pave the way to easier global wins in the longer term, but first Ericsson will have to keep the momentum rolling by integrating Nortel's assets and people and performing what could prove to be tricky legal maneuvering around opponents of the deal -- Research In Motion (RIM), for instance, and the Nortel Retirees Protection Committee.

"What Ericsson has done, with no disparagement to them, [is bring] themselves onto the launchpad, but they still have to get up into space," said Tom Nolle, president of CIMI Corp. "There are still a million ways for them to screw this up."

Ericsson's numerous Nortel challenges

The first challenge will be making sure the deal actually goes through in the first place.

Even before it was publicly known that Ericsson would be bidding for, let alone winning, Nortel's CDMA and LTE assets, RIM, the Waterloo, Ontario-based manufacturer of BlackBerry smartphones, filed a complaint alleging that it was unfairly blocked from bidding on even ground.

RIM's interest in the assets is surprising since the manufacturer has generally stayed away from the network infrastructure market, but the company is arguing that a win for RIM would keep more jobs and more of Nortel's legacy in Canada.

The Nortel Retirees Protection Committee has also chimed in, expressing conecern over the deal, but not opposing it outright, as long as former employees receive a share of the proceeds.

Finally, questions have been raised about exactly which patents and technology Ericsson now lays claim to: While the older LTE patents and CDMA technology appear to be fully transferred, some other patents appear to be licensed to Ericsson through the deal, with the actual patents being auctioned off later.

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