Just like starting over: Motorola could face fallout over PrimeCo rumblings

Reported disputes between PrimeCo Personal Communications and Motorola over network performance issues could lead the vendor to overhaul its wireless network capabilities, industry analysts said last week.

The Wall Street Journal reported last week that defects in Motorola's code division multiple access gear have led PrimeCo to cancel its $500 million contract with the vendor and replace it with infrastructure from Lucent Technologies. Lucent officials said no changes have been made in its existing contract with PrimeCo.

However, a source close to the situation confirmed performance problems related to base station controller software. The source said Motorola's original contract with PrimeCo has been executed but that future contracts are under consideration.

A Motorola spokesman said, "PrimeCo is a valued customer and will remain so in the foreseeable future," adding that PrimeCo has made no announcements on any customers.

But one industry analyst said a shift in PrimeCo's vendor strategy is likely given the performance history of Motorola's equipment and the vendor's lack of an end-to-end network presence. If the PrimeCo performance issues are valid, Motorola will have to make substantial additions to its network capabilities to re-establish its credibility worldwide, said Bob Egan, research director at The Gartner Group.

"Motorola was first to market and unreliable. It comes down to limited functionality." Egan said. "They need to increase functionality in the network and develop some strategic relationships on the network side. My speculation is that Alcatel and Cisco make perfect sense."

However, PrimeCo is not likely to rip out the Motorola equipment it has installed so far because it currently supports a large portion of the carrier's covered pops, Egan speculated.

"Given the subscriber numbers, it's highly unlikely that we'll see a swap out of Motorola gear," he said. "The more likely scenario is that Lucent will pick up the balance."

PrimeCo officials had no comment on the Motorola issue.