Lucent gets $5 billion contract from Verizon Wireless

Lucent Technologies Inc. finally caught a break today after being steadily pummeled by financial problems since last fall.

The beleaguered vendor of telecommunications equipment announced a contract, valued at $5 billion over the next three years, to supply Bedminster, N.J.-based Verizon Wireless Inc. with infrastructure technology that will be used as part of a nationwide third-generation (3G) mobile network. Deployment of the 3G technology is scheduled to start later this year, the two companies said.

The 3G network planned by Verizon Wireless will be based on Lucent equipment that supports the latest version of the Code Division Multiple Access technology standard developed by the Arlington, Va.-based Telecommunications Industry Association. The network will carry mobile voice traffic and should provide untethered data transmission speeds that rival those of wired connections, according to Lucent and Verizon Wireless.

A Verizon Wireless spokeswoman said the provider achieved data speeds of 144K bit/sec. during tests of the technology in New Jersey. She declined to disclose the geographic areas where the new equipment will first be rolled out by Verizon Wireless, which was formed last year through a merger of Verizon Communications Inc. and Vodafone AirTouch PLC.

About 65% of the equipment used by Verizon Wireless comes from Lucent, the spokeswoman noted, with the remainder being split between Nortel Networks Corp. in Brampton, Ontario, and Motorola Inc. in Schaumburg, Ill. For example, Verizon Wireless today also said it has deployed 3G-capable wireless networking equipment from Nortel in Las Vegas and San Diego.

Murray Hill, N.J.-based Lucent said its contract with Verizon Wireless includes mobile switching centers and base stations and technology for IP routing and Asynchronous Transfer Mode switching. The deal follows a swirl of bad news for Lucent, including big financial losses, workforce cuts and an overhaul of the company's senior management team.

Jim Slaby, an analyst at Giga Information Group Inc. in Cambridge, Mass., said the upcoming 3G network could be "really good news for end users if Verizon [Wireless] can execute." But he cautioned that networking projects of this scale are typically fraught with implementation issues that don't become apparent until the commercial rollout begins.

After all its problems, Lucent sorely needs positive developments such as the Verizon Wireless contract, Slaby added. Last month, Lucent announced that it had secured $6.5 billion worth of new credit lines to help fund operations in the wake of a $1.02 billion loss in the company's fiscal first quarter ended Dec. 31.

This story, "Lucent gets $5 billion contract from Verizon Wireless" was originally published by Computerworld.

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