Nortel/LG venture score Korean win

Nortel Networks joint venture with Korean vendor LG Electronics gathered steam today as the two companies announced a major UMTS win with KTF, South Korea’s second-largest wireless operator.

In a country known as a CDMA hotbed, KTF is rolling out the first large-scale UMTS network proscribed by government mandates. LG Electronics will supply the UMTS core while Nortel will supply radio access gear and the high-speed downlink packet access (HSDPA) overlay to boost its data capacity. KTF plans to roll the network in 17 cities, including Seoul, by December and in an additional 45 cities by June of 2006, blanketing most of the country.

The announcement builds off initial testing the two companies did on KTF’s network in March after forming the 50/50 joint venture two months earlier. While both KTF and SK Telecom have launched trial UMTS networks, the expansion announced today will be the first that tackles the Korean government’s mandate of having 45 cities covered by UMTS by 2006.

South Korea has the highest broadband penetration and one of the most sophisticated wireless infrastructures in the world. The vast majority of that wireless footprint, however, is built on CDMA technology that carriers such as SK Telecom and KTF championed. The government, however, has issued new spectrum for UMTS with the aim of aligning Korea’s wireless industry with global GSM market. So just after completing nationwide rollouts of EV-DO technology and setting new industry benchmarks for wireless data usage, the country is undergoing a technology overhaul.

The transition to UMTS, however, is likely to be beneficial to Nortel and other vendors that can establish footholds in Korean and other Asian markets. While Nortel, along with Lucent Technologies, is the leading vendor of CDMA networks, the Korean market has been very insular, with most of the business going to Samsung and other Asian vendors. This has led many Western vendors to partner with Asian manufacturers in Korea, China and Japan to secure a piece of the lucrative wireless contracts in those markets. The deal with LG and KTF will be Nortel’s first UMTS contract in Asia, and Peter MacKinnon, Nortel president of GSM and UMTS, said the joint venture hopes to use that success as a stepping stone to more UMTS contracts both inside and outside of Korea.

“If any innovations are going to happen, they’re going to happen in Korea first,” MacKinnon said. “If we get into that innovation stream early, than we have a definite edge.”

Part of the problem in penetrating the Asian markets is the different requirements and regulations for carrier networks in those countries, McKinnon said. The way the KTF deal is structured, LG will provide the call switching and packet switching in the core, built to Korean standards, while Nortel will supply its standard UMTS base stations, base station controllers and HSDPA software, which require no additional revisions, McKinnon said.

Nortel’s announcement is just the latest in several new network infrastructure deals in recent weeks.

Lucent Technologies on Tuesday announced it has completed the first phase of a CDMA 1X network in Pakistan for TeleCard, marking the South Asian countries entry into the CDMA fold. TeleCard will use the network as a wireless local loop technology over the 1900 MHz frequencies. The first phase supports the equivalent of 500,000 access lines of voice and basic data service. The announcement comes on the heels of another CDMA contract for Lucent: Last month it signed a contract to expand Brazilian operator Vivo’s EV-DO networks in Sao Paulo and Rio de Janeiro.

Last week Nortel announced a plan to build out a Hawaiian regional operator’s CDMA network. Hawaiian telco Coral Wireless this week said it plans to launch its own wireless network using Nortel’s CDMA 1X radio access gear and packet mobile switching center. Neither company put a price tag on the ground-up deployment, but Coral Wireless indicated it planned an aggressive launch covering most of Oahu, Hawaii’s third-largest but most populous island containing the capital city Honolulu.

Nokia on Tuesday also announced it is supplying an EDGE network for Swiss operator Sunrise to be commercially launched at the end of the year. And last week Comverse landed a deal with Vietnamese carrier GPC for its MMS Center and Gateway.