Verizon Wireless Picks Alcatel-Lucent, Ericsson For LTE and to launch commercially in 2010

Verizon Wireless Picks Alcatel-Lucent, Ericsson For LTE and to launch commercially in 2010

Verizon Wireless on Wednesday said it has chosen Alcatel-Lucent and Ericsson AB as the prime contractors for the initial rollout of a faster wireless network technology called LTE.

LTE, or Long Term Evolution, has been touted in industry circles as the next big thing in wireless technology for a few years now. It is many times faster than the existing third-generation networks, but also than fixed-line broadband. It will allow users to download a song in three seconds for instance.

Verizon Wireless, a joint venture of Verizon Communications (VZ) of the U.S. and Britain's Vodafone Group (VOD), is the largest operator to date to commit to the technology.

In Japan, it was adopted last year by NTT DoCoMo .

But in other parts of the world operators have been reluctant to invest massively in the technology, especially as the financial crisis has put pressure on them to reduce capital spending. Analysts expect the telecoms infrastructure market to contract by at least 5% in 2009.

So winning the Verizon Wireless contract is a huge step forward for the companies selected.
"Alcatel-Lucent must be breathing a huge sigh of relief this morning...This puts the company, which has had a torrid time since the merger of Alcatel and Lucent, on a strong footing for future deals," said Julien Grivolas, principal analyst in the networks and technologies practice of telecoms consultancy Ovum.

Grivolas said that Ericsson's (ERICY) involvement is also excellent news for the Swedish company, which has not worked with Verizon Wireless in the past.

U.S.-listed shares of Alcatel-Lucent (ALU) and Ericsson were mixed, with Alcatel falling and Ericsson advancing on Wednesday.

In the meantime the big loser is Canada's Nortel Networks , which Grivolas said seems to have suffered from "poor timing." Verizon Wireless was looking for a long-term partner, he said, and Nortel could hardly tick that box after filing for bankruptcy late last year.

Starent Networks, a hardware and software provider for mobile telephony, will also provide some of LTE infrastructure, and so will Nokia Siemens Networks, the telecoms equipment joint venture of Nokia Corp. (NOK) and Siemens AG (SI).

Verizon Wireless said LTE services are expected to launch commercially in 2010.