Nortel to form Chinese joint venture for 3G

Nortel Networks is adopting the partnership route for 3G development, announcing this week it is forming a joint venture with one of Asia?s top CDMA vendors, China Putian, for the development, manufacture and sales of 3G network equipment.

The new joint venture, named Putian-Nortel Networks Telecommunications Equipment, will combine Putian's strengths in China's homegrown 3G technology Time Division-Synchronous CDMA (TD-SCDMA) and Nortel's expertise in Wideband CDMA, the basis for European UMTS networks. And in an odd turning of the tables, the smaller vendor Putian will own a slight majority stake in the venture, 51%, and will also base the company in Wuhan, China.

"Nortel and Putian are both leading telecom players in the market, and this collaboration will not only enable us to fully leverage our respective resources and expertise in wireless networking solutions, but will strengthen our capability to offer industry-leading solutions for our customers and new prospects in China."

TD-SCDMA has seen its share of controversy, ever since the Chinese government began pushing the 3G alternative based on time-division intelligent antenna technology. Though the technology's promotion comes from one government, it?s a significant one. China?s is the largest market in the world with a population of more than a 1 billion and wireless growth there has been astronomical over the last five years. The standard has not been fully developed, and while the theoretical performance of the technology is supposed to offer improvements on some aspects of CDMA2000 and Wideband CDMA networks, the development of the technology has been harried by problems. The TD-SCDMA Forum, however, expects China Unicom and China Mobile by mid-year.

Nortel is following a trend among larger vendors looking to partner with regional technology vendors to fill out their portfolios. Siemens has partnered with NEC for 3G gear, and Alactel and Fujitsu partnered to rollout a UMTS portfolio in record time, Ovum Research Director Jean-Charles Doineau said in a research note. By partnering with one of the top five Chinese vendors, Nortel is getting an entry pass into the lucrative Chinese market, which could account for half of the $250 billion 3G infrastructure market in the next 10 years, Doineau said.

China Putian will also gain access to Nortel's extensive UMTS portfolio, opening up markets in the U.S., Europe and other world regions where it has no presence. The two companies, however, will keep their CDMA2000 divisions separate from the joint venture. Nortel and Putian expect to finalize the details of the joint-venture by the end of the second quarter.

In a separate announcement, Nortel said this week that it has landed the 3G contract for one of Europe?s smallest markets. It will supply the UMTS network for Servei de Telecomunicacions d?Andorra, the national carrier of the tiny Pyrennes country of Andorra.