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Nokia scores $1.53bn China Mobile deal and confidence boost for cloud offering

Nokia has signed a one-year frame agreement to accelerate China Mobile’s plans to upgrade to a flexible cloud network infrastructure. The deal, valued at around $1.53bn, will deliver technologies to support IoT devices and eventually embrace 5G in the country.

The world’s largest MNO has struggled to translate its colossal 833.8m-strong mobile subscriber base into impressive financial results, despite hefty investments in LTE technologies. It has looked to diversify its business by launching subsidiaries focused on new revenue opportunities, such as China Mobile Internet Company (CMIC) last year.

And it has been an aggressive trailblazer of new network architectures which could support new services while transforming the economics of mobile data. It recently tapped ZTE to support its bid to set NFV (Network Functions Virtualization) orchestration standards.

Many of its efforts focus on virtualization, including several years of Cloud-RAN trials. Alcatel-Lucent was a central player in those, and Nokia’s acquisition of ALU will have enhanced its profile within China Mobile. The new deal will be delivered by Nokia Networks China and its subsidiary Alcatel-Lucent Shanghai Bell (ASB.

Much of the technology involved, however, has a Nokia pedigree. The cornerstone is Nokia’s AirScale Base Station, which was launched at Mobile World Congress as a “5G-ready” successor to the Flexi base station. Nokia says the Chinese operator is the first to select this technology, making this a breakthrough win, which also saw off rivals Huawei, ZTE, and Ericsson.

Nokia notes that AirScale “allows multiple radio technologies to operate simultaneously in one base station and offers virtually unlimited scalability to support 5G speeds and IoT demand”.

In addition, China Mobile will use Nokia’s fixed access, IP routing and optical transport, customer experience management, operational support system (OSS), as well as further features of its mobile radio access and core portfolio.

The two companies add that the partnership will continue into the future to support increasing demand in China where 620m of the 688m internet users access the internet on mobile devices.

Nokia Networks has promised the launch of 5G-ready small cells mounted on lamp posts,with 10Gbps capacity by 2017 – for service providers seeking to exploit 5G to relieve network congestion or for non-FTTH (fiber to the home) residences. The Finnish firm says its AirScale equipment will be software upgradeable to 5G and easily adaptable for M2M use cases.

Mike Wang, president of the joint management team of Nokia Networks China and ASB, said: “This is a highly significant agreement with our longstanding partner; it strengthens Nokia’s position as a leading provider of next-generation technologies in China, and reflects our larger footprint in the country following the acquisition of Alcatel-Lucent. We are committed to delivering mobile broadband capabilities that will allow operators to optimize their networks and open up new opportunities for them and their subscribers.”

At the tail end of last month, Nokia Networks also revealed it had entered discussions with Indian carriers to trial 5G services, for commercial deployment expected some time in 2020.

Talking to the Hindustan Times, Nokia’s head of mobile broadband, Milivoj Vela, said: “It will be used for purposes beyond voice and data communications carried by people today. It will have less than 1 millisecond latency that will be used by machines for quick action like for to stop in case it identifies any obstacle, surgery from remote location etc.”

“Discussion about spectrum (at global level) in which 5G will operate will finish by 2019. Commercial 5G deployment will start in 2020. Then you will see 100Mbps guaranteed speed everywhere. One cell (mobile antenna) in 5G will be able to handle 1,000 times more data traffic in 2020 compared to data traffic in 2010. We have already achieved one million devices connected to single cell sites and 30Gbps speed on 73 GHz band in lab,” added Vela.

China Mobile recorded a 2015 operating revenue of $101.3bn, up 2.6% year-on-year, of which telecommunications services was accounted for $88.57m, down 1.3% from last year. Nokia announced a loss of $687m for Q1 2016 mainly down to charges related to its $17bn acquisition of Alcatel-Lucent last year.

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