Summary:

The companies are to work together on developing small cells — devices that may help mobile carriers cope with rising data usage. As part of the deal, Qualcomm is taking a stake of under 5 percent in Alcatel-Lucent.

The lightRadio Cube, Alcatel-Lucent's vision for the small cell.

Chipmaker Qualcomm and telecommunications equipment manufacturer Alcatel-Lucent have announced a major partnership to co-develop small cells, with the deal involving Qualcomm taking a small stake in Alcatel-Lucent.

Small cells are one way of dealing with the so-called capacity crunch. They are like small versions of the big cells – or base stations – that form our cellular networks, and the idea is to deploy them in relatively dense formations that ensure better coverage on busy streets and deeper penetration into buildings.

Alcatel-Lucent’s lightRadio small cell architecture incorporates Wi-Fi radios to make it easier for carriers to have customers offload their data traffic wherever possible – this heterogeneous network or “hetnet” strategy of combining different wireless technologies in one box should effectively allow for more connections at higher speeds, while making it easier for the carrier to roll the devices out. (Ericsson, a key rival of Alcatel-Lucent’s, is doing something similar.)

According to newish Alcatel-Lucent CEO Michel Combes, who used to head up Vodafone Europe:

“This initiative perfectly illustrates The Shift Plan we announced last month, which will see Alcatel-Lucent focus on growth technologies, including those facilitating ultra-broadband access. We also said we would actively seek collaboration with key industry players. In working together with Qualcomm Technologies — a world leader in advanced wireless platform solutions such as its small cell chipsets — Alcatel-Lucent will continue to be positioned at the forefront of innovation in the small cells market.”

The two companies said future Alcatel-Lucent lightRadio small cells would include Qualcomm’s FSM9900 family of small cell chipsets, which was announced in June, and that they would jointly invest in a strategic R&D program to work on these products.

The Financial Times quoted a source as saying the joint investment would be worth more than $100 million, and also that Qualcomm would take a stake of less than 5 percent in Alcatel-Lucent. The size means the stake doesn’t need to be reported, which the source said shows it to be symbolic more than financial in nature – a demonstration of how seriously the two companies are taking their partnership.

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