a week in wireless

Fightin’ talk

Yesterday the Informer received an email containing a press release which opened with the following sentence: “Nortel today made two announcements, highlighting its leadership in Carrier VoIP and its continued commitment to its carrier customers.” While its carrier customers across the globe may have rejoiced at these glad tidings, Israeli firm Alvarion probably muttered some blue language under its breath.

You may remember that Alvarion, a WiMAX kit supplier, had a supply deal with Nortel that left it somewhat exposed to the Canadian firm’s recent Chapter 11 bankruptcy filing. Well, this week the Informer got on the phone to Alvarion’s CEO and president, Tzvika Friedman, and held the receiver an arm’s length from his head while Friedman made it quite clear how he feels. How he feels is how you or I would feel if someone owed you $2.4m: A bit humpty.

Friedman reckons that Nortel, which is widely believed to be perched atop cash reserves in excess of $1bn, despite debts of $4.5bn, is treating Chapter 11 like a crook on the run treats a church. “They are hiding behind bankruptcy rules,” he glowered, before issuing a warning: “We intend to get this money any way we can!”

Cripes, what can he mean? Are a rag-tag bunch of cigar-chomping Alvarion mercenaries for whom violence and death are a way of life – one of whom is certifiably insane but very likeable, although unlikely to survive the caper – going to storm Nortel HQ, bursting out of the gates in a cash-filled Hummer amid volleys of automatic gunfire?


Are a crack team of sharp-suited Alvarion confidence men going to spend weeks staking out a Las Vegas casino, adopting various disguises and using individual specialities such as safecracking, electronic surveillance and pick-pocketing, before scamming the money out of a Nortel executive at the craps table? And get the girl too?

You can’t rule it out.

Will a masked man on horseback, dressed in Georgian finery, stop Nortel’s coach and four one moonlit night and take several silk purses from a fat man seated within, before removing a locket from the alabaster breast of the man’s beautiful daughter with the tip of his drawn sword and galloping away with a devilish laugh?

It could happen.

More likely, though, is that they’ll use lawyers. That’s the problem with this industry, it’s nothing like the movies.

Anyway, Friedman went on: “I am very unhappy with the way Nortel behaved with the bankruptcy. They owe me money and they are not paying it. Very simply, we shipped to [Nortel] and they shipped to customers and collected the money. They can pay the money. It is not as if someone owes them and they owe us. They are using the Chapter 11 bankruptcy [rules] to their maximum advantage. Naturally, that is something I don’t like.”

As well as the lost $2.4m revenue. Alvarion had to write-off the cost of the equipment related to the Nortel sales during 4Q 2008, which hurt gross margins and profitability. “We still managed to meet our financial target of $70m revenue but we could have done better,” said Friedman.

Friedman also believes a case can be made for retrieving more than $10m from Nortel related to the subsequent breaking up of Alvarion’s WiMAX partnership with the Canadian supplier. As part of this agreement, Nortel was to provide Alvarion with substantial funding for WiMAX development during 2009. That money, said Friedman, is no longer there.

To rub salt into Alvarion’s wounds, Nortel said Tuesday that it has been granted a 30-day extension to its Chapter 11 bankruptcy protection.

And as one relationship ends in heartbreak and acrimony, another begins many thousands of miles away – in Australia to be exact. Forced together by harsh economic conditions, Vodafone and 3 have decided to merge their Aussie operations in order to better take the fight to Telstra and Optus. The new operation will be known as VHA and ownership will be split equally between Vodafone and 3 parent Hutchison. Vodafone will trouser A$500m from the newly established firm to compensate for the difference in the two carriers’ valuations.

From a user perspective in Australia, it might appear more like a takeover, as VHA will offer services under the Vodafone brand – although it will apparently retain exclusive rights to the 3 brand in Australia (it’s not clear who else would have a claim on these rights). Vodafone Australia’s CEO Nick Reed will become chairman of the new outfit, while Hutch’s top man in-country, Nigel Dews, will be the firm’s CEO.

Australia is sparsely populated for a nation of its geographical size, with a little over 21,000,000 inhabitants (the other half are in London). Four carriers competing for their custom is probably one carrier too many, so the amalgamation of the third and fourth-placed players makes sense.

Vodafone Australia had 3.85 million subscribers at the end of 2008, according to Informa’s giant abacus, while Hutch had just over two million. Both were some distance behind market leader Telstra with 9.7 million and second-placed Optus, with 7.58 million.

Telstra, meanwhile, has been busying itself in China, taking controlling interests in a couple of local mobile content businesses. It now owns 67 per cent in each of China M, which supplies consumer mobile content, and Sharp Point, which provides technical services for China Mobile’s central mobile music platform. The carrier said its moves are part of a plan to achieve A$1bn in revenue with strong margins and cash flow from its Chinese media assets by 2013.

In other consolidation news STMicroelectronics and Ericsson mobile platform have put Marvin Gaye’s ‘Let’s Get It On’ on the turntable, turned up the heat and spawned ST-Ericsson, hailed by analysts as one of the largest chip suppliers in the industry, delivering products to Nokia, Samsung, Sony Ericsson, LG and Sharp. The firm had pro-forma revenues for 2008 of $3.6bn.

ST-Ericsson said it will focus on designs for GSM, EDGE, WCDMA, HSPA, as well as TD-SCDMA and LTE. The company also develops multimedia and application processors, as well as broadcast solutions for Bluetooth, FM, GPS, WLAN, Near Field Communications and USB.

There was consolidation of another kind in the air for unlucky satellite operator Iridium this week, as one of its birds collided with an out of service satellite believed to be owned by Russia’s Cosmos Telecom, leaving a large cloud of hazardous high speed space debris.

Meanwhile, LG, Nokia and Samsung had news of their own this week, with LG becoming the latest in a long line of industry vendors to announce cost cutting manoeuvres. The firm has targeted savings of E1.6bn, although the mobile handset unit – a strong performer for LG – is probably relatively safe.

The vendor said it would probably increase its R&D, though, which runs contrary to the plans at market leader Nokia. The Finnish phone maker announced this week that it is closing one of its R&D sites in Finland and downsizing another one. The firm’s site at Jyvaskyla will be gradually starved of love and attention until it expires altogether at the end of 2009, leaving 320 former employees standing in the space where it used to be. In Salo, meanwhile, Nokia will rest 20 to 30 per cent of its 2,500 staff on a rotational basis in a bid to save some Euros.

Samsung, on the other hand, has announced the availability of a solar powered mobile phone. The ‘Blue Earth’ handset, which will not, the Informer presumes, be made available in the UK, will be officially unveiled at next week’s little industry get together in Barcelona.

Solar power is not the phone’s only green boast. It’s made out of recycled plastic water bottles (take that, Vertu!) and is free from nasty stuff like Brominated Flame Retardants, Beryllium and Phthalate. Not only that, it has a special energy efficient mode which reduces brightness, backlight duration and Bluetooth and sports a built in pedometer, because walking is more environmentally friendly than driving. It probably doesn’t have an in-flight mode, because it doesn’t agree with air travel.

They should have called the damned thing the Sanctimony. It will be interesting to see how much packaging it gets.

In related news, it is believed that Samsung is also experiencing delays in getting its first Android-based handset to market. Many had expected the Korean firm to launch a device based on the Google-backed operating system at Mobile World Congress next week, but it now looks like that launch has been pushed back to the second half of the year.

Across the Linux fence from Android is the LiMo Foundation, which got a nice little tickle this week with the announcements that NTT DoCoMo, Orange, SK Telecom, Telefonica, Verizon Wireless and Vodafone have all committed to deploying handsets based on the latest version of the LiMo platform. Already active operator participants in the LiMo Foundation include KTF, SFR, Softbank Mobile, Swisscom, and Telecom Italia.

The Informer likes this story as it has enabled him to significantly boost his company name quotas for this edition of AWIW.

To date 33 commercial handset models have been certified as LiMo compliant, including ten being displayed at MWC next week by NEC and Panasonic together with new prototype models from LG Electronics and Samsung.

And that’s about the size of it this week. Like many of his readers, the Informer is Barcelona bound this weekend. The credit crunch probably means that numbers will be down a bit this year, but the MWC is still most violent brutal assault on the senses that the mobile community has to offer. Running at it full tilt, screaming some primeval war-cry, is really the only way to cope.

If you get any great news tips at the show – and we’re not talking about your company’s press releases or product announcements here – make sure you email them to:

[email protected]

Make sure, also, that you drink plenty of water – and remember that however many canapés you eat, they will never feel like a full meal.

Take care out there

The Informer

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