Nortel spends a bundle on WiMax

Nortel Networks is spending 10 times as much on mobile wireless WiMax technology research today as it did a year ago, part of an initiative by Nortel Chief Technology Officer John Roese’s first year in his post.

Nortel’s research investment in mobile WiMax, also known as 802.16e, is now US$100 million, up from $10 million a year ago, Roese said in a recent interview as he celebrated his first anniversary. He assumed the CTO position in June 2006.

As CTO, Roese oversees the $1.7 billion R&D budget for the networking equipment maker. That amount is about 17 percent of Nortel’s revenues, slightly down from 19 percent a year ago, although the division still employs about 12,000 professionals, he said.

The biggest shift at Nortel R&D is a stronger emphasis on WiMax and other emerging technologies, which was accomplished by lowering Nortel’s R&D in what Roese called “late life cycle products” such as GSM technology that still need research but are generally well defined in the market, he said.

A year ago, half the R&D budget went for late life cycle products; now that figure has been reduced to 20 percent of the R&D budget. “Fifty percent on late life cycle products was inefficient,” Roese said.

Roese said it is important in R&D to have top developers working on the next wave of technology, not on declining segments. In all, about 20 percent of R&D is now devoted to emerging technologies such as mobile WiMax, while 60 percent is devoted to products in the middle of their life cycle.

Nortel also sold its UMTS (Universal Mobile Telecommunications System) unit to Alcatel-Lucent, which will help R&D focus on other areas, Roese said. The unit was not profitable, he said.

Roese believes unified communications products, including mobile WiMax, will bring “huge productivity” to network providers and large businesses alike.

Fixed WiMax, or 802.16d, is already being shipped to carriers to provide backhaul communications for cellular networks, but has been implemented in some parts of the world to provide broadband access instead of using copper cable.

Mobile WiMax will be a high-performance wireless data network for laptops and consumer devices, Roese said, and will eventually be used for voice service as a competitor to cellular voice.

“WiMax is just emerging,” he said. “It can be a reusable network for mobile data, DSL replacement, video distribution and real 4G wireless. It will be built once and used for many purposes.”

Some cities and towns building municipal Wi-Fi networks have been interested in whether WiMax, fixed or mobile, might be the next generation technology that threatens Wi-Fi, but Roese said Wi-Fi and WiMax will likely be complementary.

Wi-Fi runs in an unlicensed spectrum, while WiMax will run in a licensed spectrum, he noted. “You’ll want endpoints from unlicensed and licensed, so you want Wi-Fi and WiMax to both come together. You may be uplinking Wi-Fi endpoints via WiMax.”

The WiMax Forum expects WiMax-based systems to deliver up to 40Mbit/sec. of data per channel over as much as six miles.

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