Huawei Selected By Cox For Wireless Network
Chinese telecommunications-equipment maker Huawei Technologies Co. Ltd. is making inroads in the U.S., a market it has previously had trouble cracking because of competition from Western rivals and national-security sensitivities.
The company has won a contract to supply the network infrastructure for a cellphone service that cable-TV provider Cox Communications Inc. plans to launch in some markets later this year, people familiar with the matter say. Financial terms couldn't be learned.
Huawei is also in the final running for a potentially bigger wireless-network contract with Clearwire Corp. (CLWR), according to a person familiar with the matter.
Kirkland, Wash.-based Clearwire is in the process of selecting vendors to build a wireless broadband network that would cover 120 million people by 2010, offering Internet speeds on par with today's cable connections.
Clearwire raised $3.2 billion for the rollout last year from a consortium of tech companies including Google Inc. (GOOG) and Intel Corp. (INTC) to build the network based on a fourth-generation technology called WiMax.
Other finalists for the Clearwire contract include Motorola Inc. (MOT), Samsung Electronics Co. (005930.SE) and Nokia Siemens Networks, the person said.
Clearwire will likely select more than one vendor for its network and it isn't yet clear what the size of the award will be, the person said.
Clearwire and Huawei declined to comment.
If Huawei wins a Clearwire contract, which would include providing equipment that runs cell towers, it would likely be the company's largest U.S. deal, depending on how big a slice of Clearwire's business it gets.
Besides the new Cox contract, which UBS analyst Nikos Theodosopoulos estimates at less than $100 million a year, the Shenzhen, China-based company's infrastructure business in the U.S. is limited to a deal with niche player Leap Wireless International Inc.
While other cable providers like Comcast Corp. (CMCSK) and Time Warner Cable Inc. (TWC) are partnering with Clearwire to offer wireless service, Cox is striking out on its own. The Atlanta-based company has purchased it own radio spectrum and plans to offer cellphone service in its cable-TV markets.
U.S. wireless carriers are expected to spend $19 billion on infrastructure this year, according to UBS, down 12% from last year but still a huge prize for equipment vendors.
Cracking into the U.S. has been difficult for Chinese manufacturers such as Huawei and rival ZTE Corp. (000063.SZ), because incumbents like Alcatel-Lucent (ALU), Motorola and Telefon AB L.M. Ericsson dominate the market.
Big challenges for the Chinese manufacturers are political and national security concerns. Some companies fear they may lose U.S. government business if they pick Chinese vendors for their networks, some analysts say.
Huawei was stymied in attempts last year to complete another U.S. deal-the buyout of 3Com Corp. (COMS) - due to national-security concerns.
'Fairly or unfairly, there is probably a prejudice against them especially if they want to buy companies to enter the U.S.,' said Ping Zhao, telecom equipment analyst at research firm CreditSights.
Still, Chinese vendors could be poised to take a greater role, as U.S. carriers seek to cut equipment spending while adding capacity to handle a crush of messaging and video traffic.
Huawei and ZTE have had more success in developing regions that have never had landlines. Huawei also has become a major vendor in Europe, where it has won numerous contracts. And Huawei has gained a foothold in Canada, where it is building networks for BCE Inc.'s (BCE) Bell Canada and Telus Corp. (TU).
Clearwire will initially focus on providing mobile-Internet connections for laptops, but could eventually use its network to power mobile handsets and advanced devices like multimedia players.
The other finalists for the Clearwire business had 4G agreements with Sprint Nextel Corp. (S) before it merged its own wireless broadband operations with Clearwire last fall. Clearwire didn't inherit Sprint's agreements with equipment vendors, so it is awarding new contracts. |
|
/1 
