Wireless Broadband Bonanza: Nortel bids on BNI, garners top Teligent contract

With two bold strokes, Northern Telecom has quickly established itself as the reigning leader of broadband wireless.

The vendor announced last week that it has secured a $780 million contract to provide network equipment and services to Teligent, which is creating 23 GHz point-to-multipoint digital microwave networks to provide fixed voice, data and video services to businesses nationwide. Its spirits buoyed by the award, Nortel also bid $400 million to buy Broadband Networks Inc., an up-and-coming radio equipment manufacturer.

The Teligent contract was not contingent on Nortel's decision to buy BNI, but the synergies are clear. BNI helped build a trial system for Teligent in Richardson, Texas, and was providing radios to Nortel for fixed wireless. Given the burgeoning opportunities in broadband wireless, Nortel decided to bring the radio spoke in house rather than work with BNI on an OEM basis or go through its own long R&D process.

"Looking at the Teligent opportunity and others around the world, we saw that this was a core capability we wanted to have," said Matt Desch, president of Nortel's wireless networks group. "If you're looking at a multibillion-dollar business, you want to be able to control your destiny and make sure you have security of supply."

Nortel's offer has yet to be accepted by BNI, but the smaller vendor views the acquisition as favorable for both businesses. "It's a very good match," said Doug Smith, vice president and general manager of BNI. "The corporate cultures are clearly aligned, and the technologies that both companies bring to the table are complementary."

One analyst said the move is typical of Nortel. "They're doing what they do well, which is incorporating new technology into their various wireless strategies," said Clint McClellan, senior analyst for wireless programs at Dataquest.

The Teligent win is an important image-booster for Nortel globally, particularly as the Federal Communications Commission prepares to auction new spectrum for broadband wireless in the local multipoint distribution service frequency band. "This is going to be a global phenomenon, and if you have one Teligent in each of the markets, that's a pretty interesting worldwide business," Desch said.

The vendor edged out Lucent Technologies and Ericsson for the contract in a contest that likely came down to bare-bones issues of price and financing. Nortel would not specify what portion of the $780 million it would finance but said the contract covers equipment and some operating expenses. Teligent is preparing for an initial public offering and was unable to comment.

Nortel will supply Teligent with an end-to-end network. The vendor's Proximity B system will be used to provide last-mile radio access. Nortel's AccessNode Express remote access systems will be used at customer sites.

"We're using the same access node products we already have in the market, substituting the fiber or copper or [hybrid fiber/coax] feed with wireless access," said Don Richmond, assistant vice president of marketing and business development for access networks at Nortel. The Teligent deployment will mark the vendor's first use of wireless as a feeder technology, he said.

Nortel's experience in network integration and its ability to provide a complete network-with or without the radios from BNI-is likely one of the main reasons Teligent tapped Nortel, said one analyst.

"There's a lot more to it than just the radio piece," said Ira Brodsky, president of Datacomm Research. "[Teligent] figured Nortel could put it together."

t 240 employees

t Headquartered in Winnipeg, Manitoba. Also has offices in Dallas

t Manufactures RF equipment, network nodes and CPE for radio systems ranging from 2 to 42 Ghz

t Equipment in commercial use in networks in Canada, Korea and Japan, and in WinStar's networks in the U.S.