Telecommunications equipment suppliers Nokia and Ericsson both said Monday that they have been chosen by T-Mobile USA, the fourth largest mobile carrier in the United States, to participate in the $2.66-billion, third generation (3G) upgrade of the carrier’s network.

 

Neither company said how much their deals are worth, but the contracts are contingent on T-Mobile USA being awarded all or part of the AWS (advanced wireless services) spectrum for which it bid more than $4 billion in the U.S. Federal Communications Commission’s spectrum auction in August.

 

Espoo, Finland-based Nokia will provide base stations that support the wideband code division multiple access (W-CDMA) protocol for high-speed mobile transmission, while Stockholm-based Ericsson will provide its W-CDMA prime radio technology and an array of services.

 

The W-CDMA protocol will support T-Mobile USA’s universal mobile telecommunications system (UMTS) technology, which will replace its old 2G global system for mobile communications (GSM) technology.


‘This will allow T-Mobile to relieve congestion in the urban areas where they currently have capacity problems.’

 -Joe Nordgaard,

  Spectral Advantage



 

T-Mobile, which is owned by the German telecommunications giant Deutsche Telekom, has had problems keeping up with its free-spending competitors in the United States, most of which own large chunks of spectrum.

 

Shares of Nokia fell $0.67 to $20.26 in recent trading, while Ericsson shares dropped $1.22 to $38.73 and Deutsche Telekom shares decreased $0.31 to $17.57.

 

Big Spender

T-Mobile USA sought to reduce its spectrum disadvantage with a spending spree this summer. The company was by far the biggest spender in this summer’s spectrum auction, spending about double what the next largest bidder shelled out.

 

Parent company DT also plans to spend another $2.66 billion on the construction and installation of T-Mobile USA’s upgraded network. The combination of the upgraded network and the new spectrum will not be a complete solution, however (see Deutsche Telekom Sinks, BT Soars).

 

“2100 MHz will be expensive to cover much beyond urban/suburban and transport corridors, but this will allow T-Mobile to relieve congestion in the urban areas where they currently have capacity problems,” said Joe Nordgaard, director of the wireless consulting firm Spectral Advantage. “The UMTS phones will drop to GSM when out of range.”

 

DT is spending heavily on its U.S. subsidiary, in part because, unlike Europe, the U.S. market has not yet approached the saturation point. In the U.S., the company is encouraging big talkers with an unlimited calling plan for their users’ top five contacts (see T-Mobile Gets Loud).

 

The new campaign, launched in October, marked a change in T-Mobile USA’s marketing strategy. The carrier dumped spokesperson Catherine Zeta-Jones for a fresher, younger marketing image involving groups of young people, rather than a celebrity of a certain age.

 

Contact the writer: CMedford@RedHerring.com