Summary
1- Details of the AT&T LTE buildout begin to emerge
2- Chinese NEVs such as Huawei and ZTE will become forces to be reckoned with in North America.
3- Ramifications to the other NEVs and LTE
Analysis
At MWC in Barcelona this year, Verizon Wireless and AT&T both announced their intentions to deploy LTE, with Verizon going a step further and announcing the winners of the RAN, packet core and IMS portions of their LTE deployment. Given the more accelerated pace of the Verizon buildout (initial deployment plans for late 2009 with a couple of cities probably having only data card service), this was not surprising. AT&T's plans call for a deployment that will more likely start in the 2010-11 time frame.
However, some details began to emerge about AT&T's deployment. One story today suggests AT&T (NYSE: T) has chosen Ericsson, Alcatel-Lucent and Huawei for the RAN (Radio Access Network) portion of its LTE trials. Chances are AT&T will eventually pick two out of these three vendors for their actual deployment which could start sometime in 2011. The fact that Nortel was not on this short list is not surprising, given the uncertainty of the company, however the fact that NSN is not a part of the list is a bit of a surprise. The other parts of the LTE buildout (packet core and IMS) still remain to be decided, and it is likely that AT&T probably will make selections in either Q2 or Q3.
The inclusion of Huawei in the LTE RAN trial short list represents an important initial victory for Chinese vendors. After establishing an important beachhead in North America with mobile wins at Cox and Leap in the US and the joint Bell Canada/Telus HSPA overlay, a win in the actual AT&T LTE deployment would further establish Huawei as a force to contend with in North America. ZTE has been also aggressive in the Americas and one example is its voice mail win at Vivo (Brazil's largest wireless operator) with its AnyService platform. Western NEVs have to closely watch this better performance from Chinese players, as the latter improve their share of the market. Huawei has been particularly active in the swapout contracts (e.g. Vodafone Hungary, Ghana Telecom and Turkcell), perhaps the best indicator of the sharp end of the market. There have also been some reports of $15B loan for various activities including project financing for the #2 Chinese manufacturer (ZTE). During turbulent times like this, vendor financing can be, simply put, an irresistible temptation for telecom operators.
The implications to Ericsson, Alcatel-Lucent and NSN is to focus on differentiators such as services (this also includes advisory/planning) and compelling applications that can take advantage of the new LTE environment. Services will increasingly become more important and can serve potentially as a back-door to win future business. If NSN was indeed left out of this initial short list for RAN trials, this might serve as an impetus for the JV to consider making an investment in Nortel's carrier business in order to attain more scale in the US.
