Huawei poised for two major US network deals
Published: 27 March, 2009
Huawei is set to break into the citadel of the US carriers at last, with reports that it has won infrastructure deals with Clearwire and Cox Communications, for WiMAX and 3G respectively.
If the contracts detailed in The Wall Street Journal are confirmed, this would be a major breakthrough for the Chinese firm, which has listed expansion in the US as one of its primary targets for 2009-2010. It has so far been largely left outside the infrastructure gates by the major operators (with Leap its main customer, though it is involved in the Canadian build-out by Telus and Bell). This has been for various reasons - powerful relationships with their established suppliers; suspicion of buying strategic equipment from Chinese vendors; and a perception that Huawei's kit was cheap but of lower quality than its rivals' offerings.
The third of these factors has been swept away by a recent string of successes with tier one, and highly demanding, carriers in Europe, such as Vodafone. And as the US carriers look towards new network technologies and new economics, and as some of their vendors are thrown into turmoil, they are being forced to look beyond their traditional supply chain. Admittedly, Huawei has not yet breached the big four, but is taking advantage of two disruptive new entrants to the wireless sector - but these are big operators with large budgets and wide area plans, and success with them could well lead to an entry into the largest cellcos, putting the 'Chinese issue' to rest at last.
Huawei, reports the WSJ, is in the final shortlist for some of the next round of build-outs by Clearwire, which aims to cover 10 new cities and 120m people by 2010. The incumbent suppliers are Motorola, which provided kit to both elements of the venture, the original Clearwire and Sprint Xohm; and Xohm also brought in Samsung, which says it has built out the largest number of base stations so far. Xohm also selected Nokia Siemens, which is also reported to be on the shortlist for new deals, but would be a surprising winner, since it seems
to be backing away from WiMAX. Nortel is also out of the WiMAX game, and Alcatel-Lucent is targeting its products at markets where they do not arouse conflicts of interest with its 3G/4G base (so the Verizon LTE deal would clearly take priority in the US). This shake-up in the vendor ranks on both the WiMAX and 3G sides has opened up a valuable window for Huawei.
The other deal, said to be already signed, is with Cox, one of the only large cablecos to be pursuing its own wireless build-out in order to offer a quad play, rather than joining the Clearwire venture as an MVNO/investor, as its rivals Comcast, Time Warner Cable and Brighthouse Networks have done. Cox has acquired significant swathes of AWS and 700MHz spectrum (though far less than Clearwire has in 2.5GHz), and plans to use HSPA and make an early move to LTE. It will complement these activities with an MVNO with Sprint Nextel, at least until it has full 3G coverage in its cable territories (and probably indefinitely outside these areas. It serves 23m pops in New Orleans, Omaha, Las Vegas, Kansas and Southern New Mexico). The cableco has already brought in BCI Communications to help with cell site acquisition, and network design and construction.
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