The next group of Nortel Networks assets to hit the auction block will be most of its GSM-based voice core wireless carrier equipment and related patents.
Pending court approval in the U.S. and Canada, offers from buyers will be submitted Nov. 5 with the actual auction itself to be held Nov. 9. Any final sale would be subject to agreement by the courts plus Industry Canada.
GSM, short for Global System for Mobile communications, is the most popular wireless standard for mobile phones among carriers in the world compared to the other standard, CDMA.
In Canada, Rogers Communications is the only carrier with a network based on GSM/HSPA, while Bell Canada and Telus Corp. have CDMA-based networks. However, Bell and Telus are about to go live with their new shared HSPA-based network, which is compatible with GSM cellphones. The newly-licenced wireless carriers such as Globalive Wireless (which will do business under the Wind Mobile brand), DAVE Wireless (which will do business under a yet-to-be announced name) and Videotron will also be HSPA-based.
How much Nortel can fetch for its GSM business, which includes its base stations, Mobile Switching Centre Server, Media Gateway and Home Location Register (HLR) server, is a question. “We have seen interest in this business during extensive initial discussions,” Pavi Binning, Nortel’s chief restructuring officer said in a news release.
However, many wireless carriers are looking at the next-generation technology called LTE (Long Term Evolution). Perhaps that’s why at a July auction equipment maker LM Ericsson was willing to pay just over $1billlion for Nortel’s LTE Access business. (That price included Nortel’s CDMA carrier business.)
LTE, whose standards have not yet been finalized, is an all-IP technology promising data speeds of more than 100 Megabytes per second.
But thanks to HSPA, the data side of GSM, industry analysts say GSM-based networks still have a lot of life in them. Rogers is just now rolling out an HSPA Plus (also called HSPA+ or HSPA Enhanced) network that is initially offering data speeds up to 21Mbps. But Ericsson says HSPA Plus can go up to 42Mpbs. Analysts say that will be fast enough for a number of GSM carriers for a few years before they have to shift to LTE for competitive reasons.
Still Nortel, was late to the GSM business and doesn’t have anywhere near as many carrier customers as Ericsson and Alcatel-Lucent. Nortel concentrated on CDMA equipment, which is why it bundled the CDMA unit with the LTE Access business for auction. Unlike GSM, CDMA doesn’t have as straight an upgrade path to LTE. Nortel’s CDMA-based carriers, anxious about their GSM competitors gaining an edge, would be relieved if their new supplier sport Nortel LTE technology specifically designed to help them upgrade, which would increase its value to any buyer.
In the upcoming auction Nortel will also be selling a special version of GSM tailored for railways called GSM-R, allowing communications from rapidly-moving trains.
In its most recent win, Czech Railways selected Nortel GSM-R technology for the 207 km Czech section a railway corridor between Austria and Poland. It’s scheduled for completion by end of the year.
Nortel is auctioning assets after going into bankruptcy protection earlier this year.
So far, the Ericsson auction has pass scrutiny of Industry Canada. In September, Avaya bid $915 million for Nortel’s enterprise business, an offer that still has to pass Industry Canada scrutiny.
There has been no announced auction for another major Nortel division, its Metro Ethernet business.
In May the company announced it is looking for buyers of its stake in the four-year old LG-Nortel joint venture, which combines products from the two manufacturers to make wired and wireless solutions for service providers and enterprises.