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Ericsson and Alcatel-Lucent Win the Verizon Wireless LTE Sweepstakes; Clearwire Talks Trash

February 18, 2009

The battle for the fourth generation wireless networks is officially on.

At the Mobile World Congress trade show in Bareclona today, Verizon Wireless announced that it has selected Ericsson and Alcatel-Lucent to provide the bulk of the telecom equipment for its new fourth-generation wireless network. Verizon also tapped Starent Networks to provide some gear as well. This win can translate into billions of dollars in business over the next few years.

The stocks of all three companies jumped 1.5% today, while the major indexes were flat or down slightly.

There were a few losers as well. The decision is a blow to other equipment suppliers that participated in trials with Verizon and Vodafone but weren’t selected to build the network: Nortel Networks Corp., Motorola Corp., Huawei Technologies Co., and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG.

Nokia Siemens wasn’t a total loser, though. It got picked to be a supplier for one of the network’s subsystems that will run multimedia applications.

Known as Long-Term Evolution, or LTE, the new technology will give wireless consumers a true broadband experience on their cell phones and handheld devices so they can watch high-quality video and listen to music without delay or interruption.

Verizon plans to offer the so-called LTE network starting in 2010. Field trials of the network in Minneapolis, Columbus, Ohio, Northern New Jersey and Europe have demonstrated download rates of 50 to 60 Mbps.

Verizon’s announcement also spooked investors in Clearwire, which is offering a service on a competing technology called WiMax. Verizon Wireless’ 4G LTE deployment uses the company’s recently acquired 700 MHz spectrum. WiMax, which is backed by Sprint, Clearwire and tech industry heavyweights such as Intel and Google.

Clearwire’s stock fell more than 2% on the news, as well as the announcement by Comcast that it took a $600 million write-down on its $1 billion investment in Clearwire.

Clearwire even put out a release in response to the Verizon news, trying to spin a negative into a positive. In the statement, Clearwire made the bold claim that “today, Clearwire customers experience better speeds and bandwidth than what is being described as next year’s LTE networks.”

Let the trash talking begin!