The Q&A: Richard Lowe

Richard Lowe is president of carrier networks at Nortel Networks Inc. The Carrier Networks group, which is Nortel’s largest division, includes a large portfolio of mobility and converged solutions including CDMA, GSM, VoIP/IMS, WiMAX/4G.

Q: It seems the infrastructure market has experienced some turbulence over the past several years. How do you view the strength of the infrastructure market today?

A: In the market today, we are seeing a lot of trends that bode well for Nortel’s success. First of all, consumer demand for high-bandwidth mobile services like streaming video, music downloads, and high-speed file transfers is exploding. Carriers are recognizing this and looking to 4G technologies that will give them the speed and capacity to meet consumer needs. We’re seeing carriers committing to 4G and we expect the market to be very strong with commercial deployments starting in 2010. While the future for 4G is looking quite bright, we continue to see strength in today’s infrastructure market with operators investing in expansions and upgrades of the current technologies. In particular, Nortel has shown great strength in CDMA over the past year with CDMA up 5% year over year in the fourth quarter of 2007. We see this strength continuing in 2008.

Q: How is Nortel positioned along the technology front in North America as wireless carriers begin their transition from 3G to 4G networks?

A: Nortel is in an excellent position to help North American and global carriers transition their networks to 4G. Nortel has all the elements needed to bring carriers successfully into the 4G world: innovation in LTE and WiMAX, a strong ecosystem, all IP-core, and a deep understanding of what consumer and business users are looking for from their wireless experience. Nortel has been instrumental in working with the standards bodies, particularly with 3GPP and 3GPP2, to drive LTE standardization and ensure smooth interworking between CDMA and LTE. Consequently, Nortel is building LTE solutions that will allow Nortel’s existing CDMA customers to cost effectively evolve to LTE. Additionally, Nortel is leveraging its leadership in metro and long haul optical networks to tailor solutions for wireless operators. The winners in 4G will be the vendors who have the experience, the quality technology, and a deep understanding of what consumer and business users are looking for from their mobile broadband experience … and we believe Nortel fits that bill.

Q: LTE, WiMAX, UMB. Is there a place in the industry for the bevy of next-generation technologies?

A: The markets for 4G, while vast, can probably only support two major technologies. LTE and WiMAX have emerged as the key 4G choices. There are some areas where these technologies will compete but ultimately both LTE and WIMAX will each have their place. LTE is expected to be the bigger market in the end because it has the advantage of being a technology focussed on bringing 4G to an existing telecom industry. However, WiMAX is a strong player in its own right with a lot of potential in underserved broadband markets, allowing a service provider to go in there and with relatively low start up costs, offer not only voice but also high-bandwidth applications like video and data.

Q: Some carrier executives have recently called on a more unified approach to network evolutions that might include a variety of standards. What is Nortel’s position on a move to a more unified approach?

A: The next generation of wireless technologies is not being developed in silos. LTE and WiMAX are based on many of the same underlying technologies and have been very complimentary in the R&D process. There are many technical similarities between LTE and WiMAX — OFDM/MIMO for example — and through a common 4G R&D strategy at Nortel, we have been able to take best practices learned through one technology and apply them in the other. I’ve said before that a dollar invested in WiMAX is a dollar invested in LTE and while the ratio can’t truly be that exact, the idea is that spending time on one, benefits both. Nortel is also developing FDD and TDD solutions in LTE and WiMAX to support any combination of technologies. With this unified approach already taking place on the R&D side, a move to a more unified standardization or implementation of the technologies is certainly one that Nortel can support if carriers wish to travel that route.

Q: Where do you see a majority of Nortel’s business coming from in the near-term?

A: In the context of Nortel’s Carrier business, we have seen significant momentum in CDMA, momentum which we expect to continue in 2008. Nortel continues to develop our 2G and 3G portfolios with advancements like CDMA EV-DO Rev. A and GSM Evolved EDGE which allow operators to cost effectively add speed and capacity to their networks as they build a bridge to 4G. In addition, we see a strong market opportunity for 4G LTE with operators that have yet to make an investment in UMTS. These operators are looking to 4G to deliver the cost structure and performance expected of UMTS, rather than building out a 3G network. Nortel’s WiMAX solution is also being deployed by customers around the globe, including Chunghwa Telecom and Far EasTone in Taiwan, as well as Wind Telecom in the Dominican Republic.

Q: What impact if any do you expect from the 700 MHz auction on infrastructure business?

A: Any time new spectrum is made available, it is good news for the entire ecosystem of companies developing wireless products and services. In fact, it’s also good news for consumers. The 700 MHz spectrum auction opens up possibilities for higher bandwidth mobile services (video-calling, music downloads, etc.) and expanded coverage areas. There is also the potential for improved cost structures for wireless broadband service based on the RF coverage advantages and the higher efficiency of 700 MHz. CDMA and LTE and potentially WiMAX are key technologies that could be deployed in 700MHz. Vendors who can quickly provide solutions in these areas are poised to benefit from the auction. As a leader in wireless, Nortel is in an excellent position to support any of the operators who may purchase spectrum in the auction whether they plan to deploy 3G or advanced 4G mobile broadband and is poised to deliver equipment as early as Q1 2009.

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