Motorola lagging in big cellphone race

By Richard Braddell

WELLINGTON - Lucent Technologies and Nortel appear to be ahead of Motorola in the contest to provide Telecom with a new digital cellphone network worth up to $200 million.

Both companies have put considerable effort into the tender, which is likely to follow the format of Telecom's recently completed information technology outsourcing in which neither IBM nor successful bidder EDS knew until the final call who was likely to win.

By taking things to the wire in the cellular tender, Telecom should heighten the incentive for the competing bidders to offer more favourable terms.

Of the three bidders shortlisted when Telecom announced it was proceeding to roll out a new network last month, Motorola, which has said it may install a substantial New Zealand development centre, seems to have lost ground.

Telecom's new network will be based on CDMA, a relatively new technology which overcomes voice-quality problems associated with GSM, the world's dominant cellular technology, and has lower running costs.

Nortel has a well-established position in the New Zealand market as supplier of switch equipment to Clear and Saturn, while Lucent so far has only a small office in Wellington.

But while the tender is ostensibly for telecommunications equipment, Lucent has also been advising Telecom on marketing and product-related matters and could be pursuing an outsourcing agreement to manage the CDMA facility.

Perhaps the world's largest telecommunications equipment supplier, Lucent was barred from trading outside the United States until 1985 and has only in the past year established a presence in the Australasian market, although it has business interests worth billions in the Chinese and Asian markets.

In a recent interview with the Business Herald in Singapore, Lucent's Asia Pacific president and chief executive, Mike Butcher, said it was somewhat of an accident that Australia and New Zealand had been overlooked.

A Briton who came to Lucent in 1997, Mr Butcher has moved quickly in the Australian market.

He said Lucent had "a number of discussions under way in New Zealand" and had looked at acquisitions, although with whom and about what he would not say.

"We would hope that we could be successful soon on the CDMA contract and start building our operations in New Zealand."