Nokia Corp’s ambitions to be world leader in mobile technology have been dented by the embarrassing revelation that it has failed to produce a 3G network on time. An IPO document filed by Singapore’s second largest mobile operator MobileOne (Asia) (M1) revealed that Nokia failed to meet a mid-year deadline to supply 3G software. Instead, the software in now expected to be delivered later this month.
M1 has a SGD 200m ($113.2m) contract with Nokia to supply and install its 3G network. Payment on the initial purchase order for SGD 50m ($28.3m) was deferred because Nokia missed its equipment delivery date of July 31. Nokia have not met their original schedule and timeline and we are in negotiations with them in relation to this, M1 said.
Nokia Networks said it had decided to delay the delivery of the software because fine-tuning and completion took longer than anticipated. Nokia has successfully tested an all-3G network, but the problem it faces in Singapore and every other market where it 3G networks will be deployed is the need for dual-mode handsets that can switch between GSM and UMTS cells.
This is exactly the same problem that has delayed the launch of Europe’s first 3G networks set up by Hutchison 3G in the UK and Italy. The handsets incorporate both standards, so they can switch from one technology to another if necessary as they move between cells. However, getting it to work has proved extremely difficult and calls have been dropped.
The fact that NEC Corp, which supplies Hutchison 3G and Nokia, has so far found it impossible to overcome the problem suggests that it is a far-reaching difficulty.
The problem in Singapore is doubly embarrassing for Nokia because while technical problems bedevil WCDMA technology, Qualcomm Inc’s rival CMDA2000 standard has proved a huge success in Asia. There have even been suggestions that at least one European mobile operator is considering switching to CDMA2000, even though Qualcomm itself has discounted a breakthrough in Europe.
Qualcomm’s big advantage is that it has total control of CDMA2000. In Europe, each manufacturer has its own flavor of WCDMA. Once they overcome the problem of getting their own 3G technology to work, the next challenge for mobile network suppliers is to overcome inevitable problems of interoperability with their competitors’ networks.