Two days ago, South Korea announced that Swedish telecom equipment manufacturer, Ericsson AB (ERIC) planned to spend $1.5 billion in South Korea to develop a high-speed wireless Internet technology. This program, which was scheduled to take five years, was allegedly backed by AT&T (T) and Verizon Wireless (VZ).
Before long, the web was rife with pictures and quotes from South Korean government officials proudly pontificating about the Ericsson deal. Under the agreement, the country was poised to become the test bed for Long Term Evolution (LTE), a futuristic wireless technology. Better yet, the deal was predicted to generate 1,000 new jobs in the country.
But then a somewhat befuddled Ericsson responded that it had no such plans in South Korea.
One would think that would be the end of it, but the confusion continued. Today, South Korea's presidential office, known as the Blue House, said once again that Ericsson may invest $1.5 billion in the country. According to the Blue House, Ericsson's new chief executive officer, Hans Vestberg, told officials at the Korea Communications Commission on July 11 that it would do just that.
While the agreement is hazy at best, it seems likely that Ericsson will eventually release LTE in South Korea. In the past, "The Land of the Morning Calm" has been a test bed for various wireless technologies, including WiMax, a high-speed interface that Sprint Nextel (S) and Clearwire have both said that they will deploy in the U.S. But WiMax has been slow to pick up, and South Korean companies are now warming up to Long Term Evolution, a fourth-generation (4G) wireless technology that will let users whisk data at even faster speeds than anything available today.
While LTE is similar in some ways to WiMax, it's a distinct technology. Although Sprint and Clearwire often bill WiMax as a 4G technology, this branding is largely indicative of an attempt to get a jump on existing third generation networks. At its core, however, WiMax is a 3G technology and was approved by telecom's standards body, the International Telecommunications Union, as a 3G standard in 2007.
While WiMax and LTE are both based on a similar technology, orthogonal frequency division multiple access (OFDM), there are key differences: WiMax offers users typical data speeds of 2 – 4 Mbps. LTE, on the other hand, will typically offer users data speeds up of 5 – 10 Mbps.
WiMax is currently being rolled out in the U.S., and some 120 million people are likely to have the service by the end of 2010. LTE, will likely come out next year, and already has tremendous support from manufacturers, including Ericsson, Sony Ericsson, Alcatel-Lucent (ALU), NEC (NIPNF), NextWave Wireless (WAVE), Nokia (NOK) and Nokia Siemens Networks. According to Infonetics Research, sales of LTE equipment are expected to reach $5 billion by 2013.
Many carriers around the world also plan to use LTE. Japan's NTT DoCoMo (DCM) says that it will introduce the service in 2010; in Europe, Vodafone Group and Deutsche Telekom AG's T-Mobile have announced that they also have LTE plans. Here in the U.S., long-time CDMA operator Verizon Wireless says it will switch over to LTE for its 4G future. The big question is whether Sprint Nextel may do the same.
Last week, Sprint Nextel announced that it would pay up to $5-billion over the next seven years to L. M. Ericsson Telephone to handle the daily operations of its network; this will allow Sprint to focus on developing new products and retaining its fleeing customers. While Sprint says that move has nothing to do with its dedication to WiMax, it certainly is conceivable that it will eventually make the jump to LTE as well.
Managing your Portfolio
Keeping your portfolio and financial life fit!View Course »