"We are pleased to expand our long standing relationship with Nokia Siemens
Networks," said Tzvika Friedman, president and CEO of Alvarion.  "For
certain operator customers, we believe this collaboration will deliver a strong
business case through the most advanced, best-in-class WiMAX network solution
that leverages Nokia Siemens Networks’ solid experience in local market
execution and support capabilities — key elements that fit well within our Open
WiMAX strategy."

Alvarion continues to
win new WiMAX business globally and is considered a stable company that
offers transparency through it’s public listing on both the Tel Aviv and NASDAQ
stock exchanges.  Alvarion was burned  last year by a similar
arrangement with now bankrupt Nortel Networks, causing an impact to its fourth
quarter earnings.  Alvarion’s  partnership with NSN should help them
sell more equipment through a new "value added" sales channel.  Nokia
Siemens Networks has a significant professional services division and OSS
capabilities that can support network planning, integration, and management
(more on this below).

Comment and Analysis: A Shift in Strategic Direction for NSN

There have been other WiMAX original equipment manufacturing (OEM) deals that
involved collaboration and joint investment – Fujitsu partnered with Airspan and
Nortel Networks also resold Alvarion’s equipment.   But this agreement
does not involve any joint development or investment.  Why not?

Probably because NSN views the overall WiMAX market as being much smaller then
it envisioned just a couple of years ago.  More importantly, they evidently
see much better potential in being a "managed equipment and operations" or OSS
provider.  We think that NSN wants to concentrate on management and
maintenance of network equipment in order to score more network outsourcing
deals like the one they cut with Embarq last summer (NSN is managing Embarq’s
U.S. network operations centers).  We’re sure that Sprint’s multi-billion
dollar outsourcing deal to Ericsson caught the attention of senior NSN
executives. 

Meanwhile the WiMAX network equipment market has likely turned out to be more
competitive and smaller than anticipated.  Low cost Chinese vendors like
Huawei and ZTE are driving prices down.  So the profit margins on hardware
are just not there.  But OSS and network management are another story and
NSN will maintain its WiMAX services business by supplying consulting, systems
integration and network management for any operator that needs help.

"While we’re no longer developing an in-house product for WiMAX, mobile WiMAX is
still a part of our portfolio, and we continue to work with customers interested
in WiMAX through a partner or reseller approach, using products from third
parties and then offering our suite of services capabilities," an NSN
spokesperson wrote in an e-mail.

What Can NSN’s Existing WiMAX SP Customers Expect?

According to the

Nokia Siemens Networks web site :  "Our track record already comprises
18 WiMAX references in 14 countries."  It also talks quite a bit about end
-to-end solutions, which will no longer be pursued:  "Our WiMAX E2E
solution can be a key factor in assuring your users a true quality of experience
and reducing your costs.  Nokia Siemens Networks now unlocks the true
potential of broadband with this end-to-end solution for the deployment and
operation of WiMAX networks.  WiMAX delivers a unified stream of voice,
data, and video, meaning that you can offer a better service at a lower cost
while improving customer satisfaction.  Each WiMAX base station enables
operators to provide cost-effective broadband wireless access for hundreds of
users and, of course, both mobile and fixed services can be provided by
deploying networks based on WiMAX."

In our opinion, the challenge for NSN will be to integrate Alvarion’s Mobile
WiMAX gear with that of their own in the 18 WiMAX networks they reference. 
It should be noted that the IEEE 802.16 standard is only a RAN (radio access
network) interface from Base Station to Subscriber Station and not an end-to-end
specification.  While the WiMAX Forum profiles provide complete end-to-end
specifications, they are not standardized across all vendors (see the

controversy regarding Profile C,  a WiMAX Forum spec on the interface
(R6) between the BTS and the ASN Gateway.)

NSN Still Very Bullish on the Mobile Internet:  But Focus is on 3G and
LTE

According to a

press release issued Thursday, NSN predicts that Mobile data will outstrip
voice traffic by 2011.  The company also just recently notched its 500
millionth mobile data user.  "With an increasing number of subscribers
logging on to the Internet to access and download data on mobile devices, mobile
data traffic growth is doubling every year.  In fact, Nokia Siemens
Networks expects that at current rates, by 2011, mobile data will overtake voice
traffic*, growing exponentially until 2013.  Keeping pace with this rapid
growth is Nokia Siemens Networks- the company has reached the 500 million mobile
data user milestone, accounting for roughly 40% of global mobile data traffic
today."

Interestingly, there is no mention of Mobile WiMAX in the press release. 
Instead, NSN’s range of packet core network solutions is highlighted.  The
packet core technology is said to allow operators to handle a huge number of
mobile consumers, even if they are using data services heavily, with a very
small amount of network equipment.  The "Direct Tunnel innovation" is said
to "provide operators with a simpler "flat" connectivity architecture, makes
scaling with growing traffic much easier and more importantly, commercially
viable."

So it looks like this is where NSN sees its future growth in wireless
infrastructure equipment.  It’s in 3G-HSPA+ and LTE packet core network
equipment.  It was not likely a coincidence that this press release was
posted on the same day the Alvarion reseller agreement was announced.

Alan J.  Weissberger
WiMAX360 Moderator