FEATURE: On The Hot Seat: Nortel's Richard Lowe



Richard Lowe, Nortel's president of mobility and converged core networks, has been busy answering questions lobbed by reporters about the company's strategy now that it has officially exited the UMTS business through a $320-million sale to Alcatel-Lucent in September. He tells them that Nortel has been set free. After all, it's difficult to protect a legacy 3G business while fully investing in 4G. I spoke with Mr. Lowe this week about the company's vision for WiMAX and what lies beyond WCDMA and CDMA2000. -Lynnette 

Arun Sarin of Vodafone said during the 3GSM conference that the GSM community needs to in effect get its act together when it comes to LTE to make sure WiMAX doesn't marginalize these operators. Do you agree with that assessment? 

A year ago most people felt like they were just getting their heads around 3G-what kind of feeds and speeds and what kind of applications would run on HSDPA. That is what they were deploying in any volume, and operators like Vodafone have publicly been concerned about the business model for UMTS. But I think operators saw what some would say the hype of WiMAX at 3GSM, namely a standard that has gone to product in 12 months. Sitting in the 3GPP camp and see LTE coming in 2011 and 2012 while seeing WiMAX coming in 2007 and 2008, they should be concerned. The wrong thing to do is ignore WiMAX, which will mature over the next 12 to 18 months. WiMAX has an opportunity to skim business customers and take advantage of the evolution of video services. This is a technology that is going to happen. LTE is really WiMAX, at least the underpinning of the technology is. [Sarin] is really talking about time to market.

Can LTE move faster than what is projected?

It can be accelerated based upon demand in the marketplace. The standard will be set by the end of this year and typically it can take two to three years for commercial equipment to come out. But we could see it as early as 2009. I would say this is a warning shot to the vendor community of 3GPP to be prepared to accelerate LTE because they don't want to be found wanting. Otherwise they might find they have to acquire spectrum and do WiMAX themselves. In 2005 we weren't really even seriously spending on WiMAX because we were just getting approval from our board to investigate the technology. We were spending $2.5 million a quarter and spending 10 times that now in about 15 months. We aren't alone.

How would you summarize Nortel's progress to date when it comes to WiMAX? What markets do you see coming to the forefront in terms of deployments?

We are in the middle of a war. There are a lot of bids out there. We are trying hard to focus on winning business with tier one operators who have spectrum. We are seeing bids in Eastern Europe, the Middle East, Asia and South America in addition to activity in North America, whether that is AT&T, which has retained some 2.3 GHz spectrum, Comcast, which won spectrum, NextWave or MSV. We are in the thick of it. The next three to six months will be critical to all of us. We didn't win the Sprint deal that we had hoped and played hard to win, but we are focused on other tier one operators. We are also focused on wireline operators that want to get into the space. BT and France Telecom are two examples. We are seeing how they might participate in WiMAX and how we can work with them. So far we have about a half a dozen wins, including Chungwa in Taiwan, Craig Wireless in Greece and a win in Alberta. We also have some wins with Telefonica in South America. I want a big win. At the same time, we are investing in the WiMAX ecosystem so that we can be ready to go commercial. We just hired an executive to lead our ecosystem play in Taiwan so he can be close to ODM manufacturers. 

What does it mean to invest in the ecosystem?

It is a bit of a new game for us. We didn't have to think about the ecosystem in prior technologies. For CDMA, Qualcomm defined the ecosystem with chipsets and base stations, and through BREW they could craft an entire ecosystem. There is no single company in WiMAX that is dominating. We're looking at the best way to leverage investments, whether that is spending on interoperability labs and centers of excellence. We're not just spending time with handset vendors, but with chipset manufacturers to ensure MIMO-based chipsets are coming out quickly. 

What are your thoughts pertaining to the future of the CDMA2000 market?

It is a pretty robust market, although there are some international operators that are challenged by international roaming that will drive them to reconsider the evolution path of CDMA2000. But I will tell you that global roaming is one of those key attributes that the evolution path of OFDM will solve. Therefore, an operator won't be marginalized. There is a fair probability that the CDMA2000 community will evolve to some form of OFDM and MIMO. Verizon and others will insist on global roaming and economies of scale. We will ensure that there is an evolution path. 

When will we see 3G licenses granted in China? What impact does China have on Nortel's business now that it is out of the UMTS business?

We have a GSM position with China Mobile and a GSM with China Unicom. As the 3G licenses have not been granted, those markets continue to expand as voice markets, and we continue to see our business in China move forward. One area we haven't seen a lot of uptake is CDMA network in Unicom because of handset prices. GSM has grown faster than the CDMA market. That could change with the issuance of 3G licenses. The current thinking, and this isn't a Nortel statement, is that there will likely be three licenses: one for TD-SCDMA, one for WCDMA and one for CDMA2000. I would imagine that would make sense. The Chinese government would be satisfying everyone that way. They would have the homegrown standard, a global standard and CDMA2000 so that investments are not stranded in China. If it goes 3G and a license is issued for CDMA2000 for China Unicom, Unicom may very well hand over the network to China Telecom. China Telecom is a marketing engine, and we could easily see that footprint of CDMA take off. There is talk that even PHS customers could be moved to the CDMA network to make better use of the capacity to drive additional growth. A lot of things could happen in the chain. It is a wild card. There is an expectation that licenses could be issued this year, but I'm counting it as upside. I'm not counting on it because we've been disappointed before. But with the Olympics coming in 2008, it's clear the Chinese government wants to see networks up and running.

Richard Lowe Dossier--

Current Reading: Ordinary Heroes by Scott Turow

Favorite Mobile App: RIM/Blackberry 

Current Project: Buying a vacation property