Microcell signs $70 million deal with Nortel

Nortel Networks Inc. on Friday penned a $70-million deal with Microcell Solutions Inc. — operator of the Fido mobile network — whereby the hardware vendor will exclusively provide equipment for the wireless carrier’s Global System for Mobile Communications (GSM) Mobile Switching Centres (MSC), Home Location Register (HLC) and its call centre products.

Microcell’s intent, said Claire Fiset, a company spokesperson in Montreal, is to move to a single-vendor network to take advantage of cost and performance efficiencies associated with using equipment from only one source. She said having only one network nationally makes it easier to launch services.

Alan Pritchard, vice-president, global marketing for GSM at Nortel in Richardson, Tex., said his company will be providing both core and access equipment for Microcell, adding that this makes Nortel the dominant vendor inside Microcell’s network.

Nortel will also be providing Microcell with a small Universal Mobile Telecommunications System (UMTS) network, which Microcell plans to set up in Montreal as a showcase of the technology and to get feedback from users, said Microcell’s Fiset.

UMTS is a third-generation (3G) mobile technology based on GSM. Packet-based, this protocol allows for the transmission of text, voice and video at rates of up to 2Mbps.

“What [Microcell] is going to be able to showcase there is video telephony, and other high-speed data applications, but with UMTS the big deal is the ability to do video telephony over wireless in a public wireless environment” said Nortel’s Pritchard.

Lawrence Surtees, senior research analyst, telecom and Internet at IDC Canada Ltd. in Toronto, explained that wireless contracts tend to be shorter in duration than contracts for wireline, but they also tend to be for smaller amounts.

“The $300-million level is pushing a sizeable wireless contract,” he said.

Mark Quigley, an analyst at the Yankee Group Canada in Ottawa, noted that this deal is simply a “drop in a much larger bucket” for Nortel. However, the deal marks a return to capital spending for the Microcell, which has been plagued with financial troubles over the past few years, including filing for bankruptcy and undergoing a restructuring.

“So from that perspective, it’s more of a return to normalcy,” Quigley said.

The deal runs through until Dec. 31, 2006.

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