Motorola wraps up Vodafone LTE trial; clarifies 4G position

Vodafone (NYSE:VOD) has concluded its European trial of long-term evolution technology, and at least one of the vendors has passed with flying colors, according to Motorola (NYSE:MOT). While waiting for Vodafone’s decision, Motorola is reconfiguring its LTE gear in Budapest for China Mobile’s trials, preparing to launch a new trial network in Asia, and finalizing its commercial LTE product line, said Fred Wright, senior vice president and general manager of Moto’s cellular and WiMax networks group.

In an interview this week, Wright also sought to clarify CEO Greg Brown’s recent comments on Motorola’s 4G outlook. Speaking at Moto’s first-quarter earnings call in April, Brown said that the vendor was adjusting spending in WiMax and LTE research and development to reflect the current market. While it is true that Motorola is rationalizing its development spending in light of carriers lower network capex budgets this year, Wright said, Brown’s statements were misinterpreted to mean Motorola would cut its investment in the technologies themselves.

“That’s just simply not correct,” Wright said. “Our overall development spend on LTE will be double what it was last year.” Motorola will cut its R&D in WiMax, Wright said, but only because most development work is already done. Unlike LTE, WiMax base stations are being deployed in high volumes. “We’re over the hump in product development,” Wright said. Combined, LTE and WiMax spend will be higher in 2009 than total 4G in 2008, Wright said.

Motorola expects to recognize $500 million to $600 million in WiMax infrastructure revenue, much it coming from Clearwire’s $1.5-billion-to-$1.9-billion expansion this year. LTE revenues, however, will take a lot longer to recognize. The only major LTE contract announced so far is for Verizon Wireless’ deployment in 2010, which went to Alcatel Lucent and Ericsson. Vodafone and Verizon (NYSE:VZ) conducted joint trials of LTE this year and last, testing three networks in the US and three networks in Europe. Alcatel-Lucent (NYSE:ALU), Ericsson (NASDAQ:ERIC) and Nortel Networks built their networks domestically, while Motorola, Huawei and Nokia Siemens Networks (NYSE:NOK, NYSE:SI) deployed theirs overseas.

While the North American trial ended with Verizon’s vendor selection in February, Wright said the European portion ended just recently. While he couldn’t speak for the other vendors, Wright said Motorola met every trial benchmark and test set by the two operators. Vodafone, however, may not be making any vendor decisions anytime soon. While Verizon is moving to LTE as quickly as possible, Vodafone’s high-speed packet access (HSPA) networks still have several upgrades the multi-national operator plans to pursue. AT&T also plans to pursue LTE in 2011, but Motorola has said it is not bidding for that business since it has not been an AT&T vendor in the past.

China Mobile (NYSE:CHL), on the other hand, is fast-tracking LTE, and while Moto may not have incumbency with AT&T it certainly does with the Chinese operator. On Thursday, Moto racked up another infrastructure deal with China Mobile, this one a $310 million contract for internetworking gear bridging its 2G and 3G networks. Motorola is conducting two trials with the operator, one using the same network it used for the Verizon-Vodafone trial in Budapest and the other in China itself. Ironically, Motorola’s trial gear isn’t its commercial LTE kit. It’s using a repurposed version of its WiMax base station for the trials, and for China Mobile, it will merely change the radio configuration from split-channel frequency division duplexing (FDD) to single-channel time division duplexing (TDD).

Wright explained that Motorola’s WiMax hardware and LTE hardware are essentially the same, just with different radios and software. The commercial LTE product will look different, though, as Motorola is redesigning the base station to meet the different deployment preferences of cellular operators. CDMA operators, for instance, prefer ground-based base stations with high-power amplifiers and dumb antennas, while GSM operators favor remote radio heads, Wright said. Motorola’s WiMax gear uses a different setup entirely, mounting most of the active electronics near the antennas themselves.