Some happy networking companies are about to get big checks in the Cingular upgrade sweepstakes.
The cell-phone service giant is ready to award some $4 billion worth of contracts for work on its fast wireless data network. The standout winner looks like resurgent
, which only a few years back bailed out of a similar bakeoff in Europe in a bid to slash costs.
People briefed on the situation say
are the other companies that will grab a big share of the deal. The buildout will use universal mobile telecommunications system, or UMTS, technology.
Ericsson will get about 45% of the deal, Lucent 35% and Siemens some 15%, according to Prudential Equity analyst Inder Singh and a person at one of the companies who is familiar with the plan. The contracts should be about four years long. Cingular is expected to outline its plan Dec. 1.
Lucent declined to comment. Representatives of Cingular and Ericsson didn't immediately return calls seeking comment.
Cingular, which recently swallowed wireless also-ran AT&T Wireless, is a joint venture of
While the deal is certainly a positive for Ericsson and Siemens, it's seen as a major victory for Lucent, which has been largely on the sidelines in markets outside the code division multiple access, or CDMA, arena.
The big losers in the deal are
. Both vendors have been suppliers to Cingular and AT&T Wireless in the past and were considered in the running for the UMTS upgrade.
Cingular, the largest U.S. cell-phone service provider, is locked in a data-networking arms race with rivals
. The company is anxious to bolster its standing by offering customers faster wireless Internet connections.
UMTS is third-generation, or 3G, gear that promises wireless users Internet connections at speeds that rival digital subscriber lines, or DSL. UMTS is a technology approach favored by many of the GSM-based carriers. Opponents like Sprint and Verizon Wireless -- a joint venture of
-- opted to upgrade using a different brand of 3G gear earlier this year. That standard is known as evolution data only, or EV-DO.
Each player is gambling billions on wireless data in the hopes that users will continue to flock to cell phones and pay more for faster mobile Internet connections. Meanwhile, the
has pursued so-called Wi-Fi, a wireless data technology embraced by airports and coffee franchises to serve laptop-toting customers. And
remains on the fence with its data upgrade plans. The Reston, Va., walkie-talkie specialist is testing high-speed gear from closely held
and also considering the EV-DO route.
The Cingular deal marks the third of three big data upgrades that Lucent has managed to secure in the U.S. Earlier this year, Lucent got a primary role with Verizon Wireless, and later won a split with Nortel to supply Sprint's plan.
Now, Lucent looks set to take a third of the Cingular job. That's not bad for an outfit that was forced to bail on much of the European wireless technology when cutting costs to stay afloat.
Though Lucent has been among the top players in CDMA, it was weak in the more widely used global systems for mobile, or GSM, standard. In fact, Lucent pulled out of the GSM upgrade race by yanking the plug on its enhanced data rates for global evolution, or EDGE, development.
Instead, Lucent pursued UMTS, in large part because of the component similarities it had with CDMA, which helped lower the cost of research and development.
Lucent shares were up 3% by midday Monday as investors cheered the company's persistence in wireless.