Nortel was chosen by Orange as one of its listed suppliers for UMTS only after the Canadian company threatened the French Government with the closure of its manufacturing facility in the country if it was not awarded 3G contracts, the head of Alcatel's mobile business group has alleged.
Etienne Fouques, president of Alcatel's Mobile Communications Group, told Mobile Europe during a wide ranging briefing, that Nortel had threatened the French government with the closure of its plant, and the loss of five thousand jobs, if Orange did not include it in its list of suppliers.
Orange was forced to issue a statement in September confirming that Alcatel, Nokia and Nortel would all be suppliers of UMTS equipment to the operator. The announcement embarrassed Orange, as its existing 2G supplier Ericsson was not on the contract list at all, and Nokia, which had expected to reap the lion's share was now sharing the limelight with two other vendors.
"Nortel have been saved in Orange for political reasons because they pressurised the French government. They threatened to close the plant, which employs 5,000 people," Fouques said. He added that where technical considerations had been to the fore, Nortel had lost out on UMTS, listing Taiwanese operator CST and French operator Bouygues as examples. Alcatel and Siemens are the two shortlisted companies for Bouygues' UMTS development, Fouques claimed.
But Fouques' suggestion that
Nortel had thrown its weight around to get on the list was summarily rejected by the rival vendor in a curt statement. ""Our contract negotiations are based on the viability of our technology and the value our wireless solutions provide to the operator business model," the operator responded in an official statement to Mobile Europe.
Other sources pointed out to Mobile Europe that such a threat would be almost impossible to make in a country such as France, which has very tough employment protection laws.
The two vendors also clashed over Fouques' interpretation of Nortel's EDGE strategy. Nortel's head of wireless Dave Murasighe told Mobile Europe that the vendor was having success selling EDGE to operators to complement their UMTS networks, rather than to augment GPRS coverage, as was originally envisioned in the 3G upgrade roadmap. But Fouques rejected such an interpretation of Nortel's strategy.
"The reason Nortel is pushing EDGE is because it lost the contract to supply UMTS to Bouygues. Nortel supplies 90% of Bouygues' 2G infrastructure and lost the contract for UMTS for technical reasons. It pushes EDGE where it is not selected for 3G."
The Alcatel man conceded that operators may be interested because it "can appear" a good strategy, but he claimed it was doing Nortel damage within Orange.
"Orange is not at all happy with Nortel because Nortel is pushing 2.5G in France. You have to choose your camp. They have taken a very big risk."
Nortel's official response to that allegation was that it was certainly not making up its EDGE strategy on the hoof. The vendor has EDGE implementations in the USA with AT&T Wireless, Singular and T-Mobile,
"Nortel Networks is a global infrastructure provider, and one of our primary business strategies is and has been to be industry's only end-to-end provider of all 3G technologies," the company stated.
Fouques did have the grace to admit that Alcatel's own UMTS history has been far from smooth. Its original joint agreement with Motorola had been annulled, leading to the loss of T-Mobile and SFR, he admitted. But the company's current relationship with Fujitsu had been far more profitable, he said, and there were a lot of battles still open. In particular there was room as the number two player with Telefonica in Spain. But being an Orange supplier means it is not likely the vendor will do business with other major international operators. "We are on the Orange ride and that's life," Fouques said.
Fouques added that he expected the division of revenues from Orange to be around 80% for Nokia in the UK, with Alcatel at 20%, supplying Scotland, Northern Ireland and Eastern England. In France he expects Alcatel to get about 505 of the pie, including the greater Paris area. Nortel and Nokia were looking at around 25% each, he said. "Nokia has lost a lot, compared to the first attribution."
But this would not be uncommon. "A lot of operators are going to be changing their minds and reviewing their lists of suppliers," he predicted.