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Having secured $45m in new funding recently, UK-based soft modem maker Icera has gained a flagship deal with Vodafone. The cellco is to use Icera's Livanto chipset and Adaptive Wireless technology in its new K3805-Z USB stick.

This is an important win for the firm, which has mounted an impressive technical challenge to the baseband giants over the years, but has often failed to convert that into tier one customers, with Softbank the main exception. However, its early LTE moves and software defined technology are expected to put it in a stronger position as carriers approach 4G. It also plans to use its recently raised new funding to expand out of dongles into smartphones.

For now, the Vodafone deal is a traditional one, for an HSPA dongle. The K3805-Z will incorporate Icera's IceClear technology, which uses signal processing software algorithms to cancel the effect of interference from other cells. This can treble average real world connection speeds, says the vendor, getting the user experience on Vodafone's HSPA network closer to the theoretical peak of 14.4Mbps. The dongle will be available in the carrier's European and some African markets.

With the top four baseband providers (Qualcomm, MediaTek, STE and Infineon) controlling 75% of the market between them, it is hard for start-ups to get an inroad, but LTE may open new doors. Icera, with its software defined modem, could even grab third place after Qualcomm and STE in the early market for LTE basebands, said Strategy Analytics in a recent report, especially as MediaTek and Broadcom currently have no near term LTE strategy. Of course, that situation also raises the prospect of one of the giants make an acquisition bid for Icera.

Christopher Taylor, director of Strategy Analytics' RF and wireless components service, said in a recent statement: "In terms of size, power, consumption and reconfigurability, Icera appears to have a one to two-year technology lead on mainstream suppliers Qualcomm, ST-Ericsson and Infineon in the slim modem space. This should help the company win LTE share as volumes ramp up in 2011." Icera's chipsets have reportedly been evaluated by Nokia, Samsung and LG and they are used in Nokia dongles.

The company recently announced a new round of $45m in equity capital to accelerate growth and push its technology into smartphones. The new funding came from the existing investors, Accel Ventures, Amadeus Capital Partners, Atlas Venture, Balderton Capital and DFJ Esprit. CEO Stan Boland says Icera now has over 30 design wins and is looking towards an IPO.

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