Cisco will provide the backend while NEC provides the base stations to swing carrier deals in the U.S. Why one analyst thinks it’s better for the former than the latter
Cisco Systems Inc. and NEC Corp. will jointly sell LTE networks to carriers under a deal announced on Tuesday.
Cisco [NASDAQ: CSCO] will provide its ASR 5000 mobile packet core switch (pictured) and NEC [OTC: NIPNF] will supply base stations for the high-speed mobile data networks around the world. They have verified interoperability between the products after extensive testing in the real world, the companies said.
LTE (Long-Term Evolution) represents a big opportunity for makers of both radio access networks and the core infrastructure that sits behind them. Demand for mobile data capacity is expected to grow rapidly over the next several years thanks to broad adoption of mobile devices and services designed for them.
NEC, based in Tokyo, built the LTE network for Japanese carrier NTT DoCoMo and has provided base LTE stations for Korean carrier KDDI, and participated in trials at SingTel and Telefonica.
The ASR 5000 switch is based on technology that Cisco acquired through its purchase of Starent Networks in 2009. It is equipped to carry out traffic management, service provisioning and other back-end tasks for 3G and 4G mobile networks and allows carriers to migrate smoothly to 4G technology, according to Cisco.
The deal is likely to help NEC more than Cisco, because NEC is a fairly small player in the RAN (radio access network) business outside of Japan, said analyst Daryl Schoolar of Current Analysis. The biggest RAN vendors, such as Ericsson, Alcatel-Lucent and Huawei Technologies, don’t need to make such arrangements with Cisco because they sell mobile packet core equipment themselves, he said.
Cisco competes against those companies and has won deals with many carriers on the strength of its existing back-end switches and its data networking heritage, Schoolar said. Large carriers prefer to use multiple vendors so they aren’t totally reliant on one supplier.
Upgrading from 3G to 4G boosts the capacity of networks and increases the speed of an individual user’s service. Carriers are quickly adopting LTE to keep up with mobile data demand that has networks around the world operating at an average of 65 per cent of capacity, according to a recent Credit Suisse survey. The Global mobile Suppliers Association (GSA) reported earlier this month that there were 24 commercial LTE networks up and running in 16 countries, and that there would be 71 networks by the end of this year.