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Recovering Nokia Siemens sees hope in data growth

But CEO Rajeev Suri doesn't expect to see any more wholesale carriers like LightSquared soon

By 2020, the average wireless network user will generate 1GB of data traffic on wireless networks every day, and this will require networks 10 times as fast, Nokia Siemens Networks CEO Rajeev Suri said at an NSN event on Sunday, the eve of Mobile World Congress in Barcelona.

With so much mobile growth ahead, it's too early to name the winners and losers in mobile infrastructure, said Suri, who leads the second-biggest player in that industry behind Ericsson. His company has announced several new products in the weeks leading up to the show, including SaaS (software as a service) for analyzing floods of network information and a technology for increasing capacity for users on the edge of a cell. On Sunday, NSN said it had achieved a speed of 1.429Gbps (bits per second) over an LTE (Long Term Evolution) Advanced connection in a lab. That feat required an almost unheard-of bandwidth of 100MHz, however.

NSN held up its latest technology advances as a signal that it's coming back from fiscal and competitive woes, which led the company to announce 17,000 layoffs last November. Suri said the company has completed the first phase of its turnaround and that 1,000 of the job reductions have already taken place. NSN is fully funded to pursue its strategy, he said.

Suri not surprisingly targeted LTE as the biggest opportunity in the industry, saying that there are now 49 commercial deployments of the technology chosen by almost all 4G operators. NSN has had a role in 22 of those, Suri said.

But he was frank about LightSquared, the would-be wholesale mobile operator whose planned LTE network was effectively shot down by the U.S. Federal Communications Commission earlier this month. LightSquared had planned to sell access to that network to other carriers, hoping to foster more competition to dominant U.S. carriers Verizon Wireless and AT&T.

NSN was the major supplier in that project, but it doesn't expect to see more such networks arise in LightSquared's wake. Suri wasn't talking about the company's problems with GPS (Global Positioning System) interference, but about its business model. The wholesale business model won't play in mobile data in the next two years, according to Suri. "There's no known example where it will work," he said.

"It's one of those things. Network sharing took five years to come before it got serious, and I think this is one more of those developments that's more hype than substance," Suri said. Some carriers, especially in Europe, have begun sharing networks to save money. That trend has yet to hit the U.S., where Sprint Nextel has been the only major U.S. carrier to show interest in it, signing a 15-year deal with LightSquared last year.

Critics of LightSquared's business model had already dismissed the wholesale concept. It doesn't work, at least in mature markets, because big carriers would rather find a way to get more out of their own networks than to deal with another carrier's system, said Tolaga Research analyst Phil Marshall, who attended the NSN event. Even if it did sell the capacity, a wholesaler wouldn't be able to make enough margin to succeed, he said.

Suri said his prediction of 1GB per user, per day by 2020 amounts to about an hour of high-definition video. In addition to 10 times their current network speed, carriers will also need about 10 times the radio spectrum used today, as well as 10 times more efficient use of that spectrum, Suri said. He noted that LTE Advanced allows carriers to cobble together different pieces of spectrum to achieve a greater total.

Making what were clearly broad forecasts, Suri also predicted such a network would require 10 times as many cells. But he said 80 percent of those would be so-called small cells, which can fill out coverage and provide more capacity beneath an overarching network of traditional, larger macro cells.

Small cells will be a major focus for many vendors at Mobile World Congress, including for NSN. Last week, it announced Flexi Zones, an approach to managing small cellular and Wi-Fi base stations that can turn as many as 100 of them into a local network that looks to the core network like a single base station. Flexi Zones are intended for areas where users gather in high density, such as shopping malls and sports venues, and can cut a carrier's cost to deliver a bit of data by more than half, according to NSN. Other vendors, including Ericsson, Alcatel-Lucent, and Ruckus Wireless, are also showcasing technologies for managing small cells at this week's conference.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is [email protected]


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