ZTE, Vodafone Germany Team Up on LTE

ZTE and Vodafone's German unit have teamed up to jointly promote LTE, reports Telecompaper. As a launch of their co-operation, the two companies have been showcasing ZTE's LTE equipment and solutions in Germany, where the Chinese vendor has a research and development (R&D) centre for the technology.

Outlook and Implications

• Vodafone Germany to Deploy LTE in 800 MHz: For its future LTE deployment, Vodafone's German subsidiary is going to utilise the 800-MHz band, of which telecoms regulator BNA plans to auction frequencies around next April, and the commercial network launch is expected to take place in the latter half of 2010 or the first half 2011. So far the operator has trialled the technology by using Ericsson's and Huawei's equipment, and the recent showcase with ZTE hints that it is likely to include also the other Chinese vendor in the list of its prospective suppliers (see Germany: 11 August 2009: Vodafone, Huawei Test LTE over Digital Dividend in Germany and World: 25 November 2009: GSA Survey Reports 42 LTE Commitments in 21 Countries). As such, the future pilots—and possible network contracts—between the two firms represent an important reference for ZTE, as it attempts to win its own share of the European LTE market. This beachhead approach, as well as the proximity of the current and earlier workforce of the European vendors, is the main reason why ZTE set up an R&D facility in Germany in the first place.
• LTE to Give Extra Momentum for Chinese Vendors: Going forward, LTE deployments have particular significance for both Huawei and ZTE in the sense that they mark an opportunity to establish new client relationships with European and North American carriers. The Chinese vendors have typically gained market share namely in the field of GSM equipment, where the demand has come from the emerging markets and price has thereby been a determining purchasing criterion. However, as far as existing LTE trials indicate anything, the operator industry is finding also Huawei's and ZTE's technological edge increasingly competitive in comparison to the other leading suppliers (see Norway – Sweden: 15 January 2009: TeliaSonera to Launch Commercial 4G LTE Network and Hong Kong: 26 November 2009: CSL Launches LTE Lab in Hong Kong). What then adds further importance to the LTE roll-outs is the fact that so far their rivals have resisted competition for European GSM and UMTS contracts partly due to their long client relationships, with the agreements for network upgrades and expansions running often over several years. The LTE tenders are more of a level playing field, which by default is giving both Huawei and ZTE a relative advantage, particularly against Nokia Siemens Networks and Alcatel-Lucent—being the clear market leader with related scale benefits, Ericsson's position is somewhat more secure.