MWC: Huawei competing for Verizon LTE contract

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Huawei is bidding for a piece of Verizon Communication’s upcoming long-term evolution (LTE) contract, making it one of six vendors that could make the operator’s list of finalists, Verizon Wireless has confirmed. The winners will be unveiled Wednesday during Verizon chief technology officer Dick Lynch’s keynote at Mobile World Congress in Barcelona, giving the lucky few bragging rights to one of the first and largest commercial LTE deals in the world.

Huawei was first linked to the Verizon deal when part-owner Vodafone named the Chinese vendor as a participant in its European LTE trials. Vodafone and Verizon have been testing LTE jointly in Europe and the U.S., using equipment from Verizon’s incumbent CDMA vendors Alcatel-Lucent, Motorola and Nortel and dominant Vodafone suppliers Ericsson and Nokia Siemens Networks, but both operators are awarding their contracts separately. Verizon confirmed today that all five of the original vendors have submitted bids for the commercial contract, as well as Huawei.

While Alcatel-Lucent, Motorola and Nortel have an ingrained advantage due their incumbent status, the new LTE network isn’t a simple upgrade. It will require a new network over new spectrum (700 MHz) and new core architecture, which may put Ericsson, NSN and Huawei on equal footing. Huawei, though, is also CDMA equipment supplier, which may give it an edge, along with the three incumbents, in managing the tricky integration between CDMA and LTE networks particularly in the deployment of the evolved high rate packet data (eHRPD) core, a critical LTE transitory step for CDMA operators.

Morgan Keegan & Co. communications equipment analyst Simon Leopold, however, indicated global scale will likely be Verizon’s prime consideration in picking vendors. “We think it’s in Verizon’s best interest to keep several players in the fray so it has options, but it needs to trim the list to manage costs,” Leopold said in a research note on Alcatel-Lucent. We suspect Verizon will name Ericsson, Alcatel-Lucent and Nokia-Siemens. Our contacts do not know for sure, but based on checks, we think Verizon has pushed the suppliers hard, so we have limited conviction.”

While Ericsson and NSN likely have the better technology, Verizon needs at least one vendor that can handle the transition from CDMA, Leopold said. Of the incumbent vendors, Alcatel-Lucent is by far the most dominant, supplying 60% of Verizon’s CDMA network, Leopold said, and due to Nortel’s recent Chapter 11 filing and Motorola’s financial woes, Verizon may have lost confidence in its other two incumbent vendors.

As for Huawei, Leopold considers it a long shot. If Huawei were to win a piece of the deal though, it would be a major coup for the vendor, one that would firmly establish itself among the North American vendor elite. Huawei has been trying to crack North American wireless market for years, but only in the last year has it made significant in-roads. After winning a few smaller contracts with Tier II operators, it was a finalist in T-Mobile’s high-speed packet access (HSPA) rollout, but lost out to NSN and Ericsson. Last year, however, Huawei scored its first big win, a contract with Telus and Bell Mobility in Canada to build an HSPA network that can be upgraded to LTE. As in the Verizon deal, Telus and Bell Canada have CDMA networks they eventually plan to integrate with LTE.