Wireless

Acer Aspire One

(Credit: AT&T)

AT&T is hoping for happy holidays with the launch of two new Netbooks offering Windows 7 and mobile broadband.

The company announced Monday its new Netbook lineup--the Samsung Go and Acer Aspire One--both with built-in access to its 3G network. Available later this month in stores and online, both portables will cost gift buyers $199 after a mail-in rebate and two-year data plan contract.

The required DataConnect plan will offer 200MB of data for a new lower price of $35 per month, or 5GB for $60 per month, said AT&T. The plan will let consumers hop online via AT&T's 3G mobile network or any of the company's 20,000 Wi-Fi hot spots across the U.S.

"Demand for Netbooks remains strong among consumers, small business customers, and those who desire constant access to the Internet while on the go," said David Haight, vice president of product development for AT&T emerging devices, in a statement. "Paired with the nation's fastest 3G network, AT&T Wi-Fi service, and now the value and ease of use of Windows 7, these devices will make very attractive and affordable gifts this holiday season."

Samsung Go

(Credit: CNET)

Weighing less than three pounds, the Samsung Go is equipped with a 10-inch screen, 160GB hard drive, 1 GB of RAM, and a 1.3 megapixel Webcam. A bit skinnier at 2.2 pounds, the Acer Aspire One also includes a 10-inch screen, 160GB hard drive, 1GB of RAM, and built-in Webcam.

Both Netbooks also come with AT&T's Communication Manager software, which tries to help Internet users better manage their connections by automatically tapping into AT&T hot spots.

The Samsung and Acer machines have one potential limitation, however. Like most Netbooks, they come with Windows 7 Starter Edition, a stripped down version of Windows 7 that lacks certain key features of its beefier brethren.

Damaged by lower sales, huge operating losses, and a falling market share, Nokia Siemens Networks is pinning its hopes on a major reorganization.

The network equipment maker, jointly owned by Nokia and Siemens, announced Tuesday that it will lay off 5,700 employees and cut its five business units to three as part of a plan to slash expenses by 500 million euros ($740 million) by the end of 2011.

The layoffs will represent around 7 percent to 9 percent of the company's 64,000 global employees and is likely to be felt across all countries in which Nokia Siemens has a presence. The company did not state which jobs would be affected but did say that any disruption to sales positions that deal directly with customers should be limited.

The three new revamped business units are expected to launch on January 1 and will include Business Solutions, Network Systems, and Global Services.

"As our customers make purchasing decisions, they want a partner who engages in issues well beyond a traditional discussion of technology," said Rajeev Suri, chief executive officer of Nokia Siemens Networks, in a statement. "Business models, innovation, growth and transformation are now very much front and center when it comes to the selection of a technology partner - and our planned new structure will position us well in this changing market."

The company said it's also looking at potential new acquisitions and partnerships that could enhance its product line or expand its customer base. In June, Nokia Siemens bought Nortel's wireless technology for $650 million.

"We recognize that we are operating in a market where customer needs are evolving fast," said Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, in a statement. "We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible."

Formed in early 2007, Nokia Siemens has seemed cursed from the start. Its launch was initially delayed a few months due to a bribery scandal involving several former Siemens executives.

The new company had hardly gotten off the ground when it announced it wouldn't meet financial expectations. And it's struggled since then, hurt by the economic downturn and increasing competition.

Third-quarter sales fell 21 percent to 2.8 billion euros, while its operating loss widened to 1.1 billion euros. Parent Nokia was recently forced to spend 908 million euros to write down the value of the deteriorating business.

Nokia on Thursday reported a loss for its third quarter of 559 million euros ($832 million) compared with a profit of 1.09 billion euros in the same quarter of 2008.

The net loss for the period that ended September 30 was triggered by declining sales, which fell 20 percent to 9.18 billion euros from 12.2 billion euros the prior year's quarter. A write-down of the company's weak Nokia Siemens Networks unit also put a big drag on the bottom line.

Net sales for the third quarter came in at 9.8 billion euros, down 20 percent from 12.2 billion in the year-earlier quarter.

Following the news, shares of Nokia stock fell 6.6 percent to 9.62 euros.

Though Nokia's mobile phone sales managed to eke out some gains, overall revenues were hurt by a shortage of components for many of its products.

"The demand for mobile devices improved in many markets during Q3," Nokia CEO Olli-Pekka Kallasvuo said in a statement. "With the average selling price of our devices holding firm quarter-on-quarter, our higher device volumes translated into increased net sales in our Devices & Services business. Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio.

The company said that its share of the mobile device market for the quarter was 38 percent, the same as in the year-earlier period and in the second quarter of 2009.

Nokia Siemens Networks, the network equipment unit formed in 2007 and co-owned by Nokia and Siemens, has struggled to turn a solid profit from the get-go. In a write-down of this failing business, Nokia was forced to spend 908 million euros.

(Credit: Nokia)

"The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks," said Kallasvuo.

Despite weakness in the mobile phone sector, Nokia is optimistic about its near-term outlook. The company now sees volume for its phones hitting 1.12 billion units for the year, down 7 percent from 2008, but better than Nokia's earlier estimate of a 10 percent decline.

Nokia expects the market for its mobile infrastructure and related services market to fall 5 percent for the year from 2008 levels, an improvement over earlier estimates of a 10 percent drop.

However, the future remains cloudy for Nokia Siemens Network, which is likely to see its market share drop even further for 2009 than previously forecast, said the company.

During the third quarter, Nokia also completed its acquisition of GPS map specialist Navteq.

Cisco Systems plans to buy Starent Networks for about $2.9 billion as it sharpens its focus on mobile networks.

Under a deal announced Tuesday, Cisco will pay $35 per share in cash and assume outstanding equity awards for Tewksbury, Mass.-based Starent. The deal is expected to close in the first half of 2010.

Starent's products are designed to help service providers scale their mobile infrastructure and to manage access from 2.5G, 3G, and 4G radio networks to their packet core network. Its technology is deployed in CDMA2000 (1X, EV-DO), UMTS/HSPA, and WiMax networks.

Smartphones such as the Apple iPhone and other mobile devices are putting increased demands on Internet access. Cisco said that mobile data traffic worldwide is expected to more than double every year through 2013.

"Combining Cisco's strength in video and IP with Starent Networks' leading mobile infrastructure solutions creates a compelling portfolio of products that provides an integrated architecture to offer rich, quality multimedia experiences to mobile subscribers on 3G and 4G networks," Starent CEO Ashraf Dahod said in a statement.

When the deal is completed, Starent will become Cisco's new Mobile Internet Technology Group, under the leadership of Dahod.

Avian Securities viewed the deal favorably in the context of wireless carriers making the transition to 3G and 4G networks, saying in a note Tuesday morning that it "puts Cisco into play within the mobile infrastructure sector, which the company has not has much success in over the past eighteen months."

In addition, Avian analysts wrote, "Cisco is intent on remaining relevant within the core networking equipment segment and snatching (Starent) out from under (Juniper Networks) is an indication of how far Cisco will go to maintain its market share within core networking products."

Cisco expects the acquisition to dilute its earnings in its fiscal years 2010 and 2011 and to be accretive in fiscal 2012. In calendar 2008, Starent, which has approximately 1,000 employees worldwide, reported revenue of $254.1 million, up 74 percent from the preceding year.

The deal has been approved by the boards of both Cisco and Starent. It now awaits regulatory review.

Earlier this month, Cisco said it would spend $3 billion in cash to acquire Tandberg, a global supplier of video communications equipment.

Updated 8:08 a.m. PDT with comment from Avian Securities.

SAN DIEGO--AT&T's chief technology officer, John Donovan, is defending his company's wireless network, despite complaints about dropped calls and slow Internet access from frustrated iPhone users.

Donovan, who gave a keynote speech here at the CTIA Fall 2009 trade show Thursday, said that despite what people might be saying about problems on AT&T's network, his company is focused on providing customers with an excellent wireless experience.

John Donovan, AT&T CTO

(Credit: Marguerite Reardon/CNET)

"I'm not ignoring the criticism of our network," he told the audience. "I'm well aware of what's being said in the press, in blogs, and on Twitter. But I don't base my network plans on what I read on blogs. No one knows more about the wireless data customer experience than AT&T."

Since Apple's iPhone launched exclusively on AT&T's network over two years ago, customers have been complaining about dropped calls and slow data connections. The problems only seemed to get worse when AT&T and Apple began selling the iPhone 3G. In many cities, such as San Francisco, customers have complained that their iPhone 3G devices operate more on the slower 2.5G EDGE network than on the 3G network. And still others say that dropped calls have gotten worse.

Donovan and Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, whom I talked to after the keynote, each acknowledged that they have heard the complaints. But they wouldn't go so far as to admit that there is an actual problem. Instead they pointed to the rapid growth of data usage on their wireless network and the change in customer usage patterns. They also said that AT&T is doing everything it can to stay ahead of customer demand.

Surprisingly, Donovan and de la Vega downplayed the iPhone's role in this rapid increase in data usage on the AT&T network. Instead they pointed to the entire category of "integrated devices," which are mobile devices that can connect to the Internet. This category of phone includes smartphones, like the iPhone, as well as quick-messaging devices like the LG Neon.

Donovan said that AT&T has more customers using "integrated devices" than any other carrier in the U.S. In fact, in the second quarter of 2009 nearly 60 percent of AT&T's wireless subscribers bought an integrated Web device, he said. He said that wireless packet data has increased more than 18 times in the last two and a half years. And voice traffic on the AT&T wireless network has nearly doubled in that time.

Out with the old planning models
These customers and the increase in data traffic are putting strains on the network. Because data traffic tends to come in bursts and because it's often difficult to predict when and where subscribers will flood a given cell site with mobile Web usage, AT&T has had to rethink how it plans its network.

"There is nothing I look at more than customer usage patterns," he said. "There have been big changes in usage, which has forced us to throw our traditional planning models out the window."

While most people would assume that most of the wireless data traffic growth on AT&T's network comes from the iPhone, AT&T's executives said that isn't the case. De la Vega said that quick-messaging devices are actually driving a significant portion of data usage on the network.

"We have seen unprecedented growth on our network in the past couple of years," he said during an interview on the sidelines of the conference. "And the iPhone has certainly played a role. But it's not the only device driving growth. We have a lot of people going from basic feature phones to quick-messaging devices and other smartphones, which is driving data usage."

Donovan said that quick-messaging devices are the fastest growing category of device on AT&T's network.

In an effort to keep ahead of customer demand, AT&T has been spending billions of dollars on upgrading its network. Donovan said that AT&T spent more money in 2008 on its network than in previous years. The company's annual report indicates it spent about $20 billion in capital expenditures for its wireless and wireline networks in 2008. And this year AT&T is estimating it will spend between $17 billion and $18 billion on its wireless and wireline networks.

"We have been upgrading our network for two years," de la Vega said. "We are putting more of our 3G traffic onto our 850MHz spectrum, which will improve coverage and the quality of our network. We are down to the end of that process with only a few cities, like San Francisco, left."

Donovan said during his speech that AT&T has completed 90 percent of its 850MHz upgrade, with cities such as New York, Atlanta, Houston, and Denver already done. He said six major cities will get the faster network speeds this year, including Charlotte, Chicago, Dallas, Houston, Los Angeles, and Miami. And the company will have the HSPA 7.2 network up and running in 25 to 30 markets by mid-2010 with the goal of reaching 90 percent of its current 3G wireless footprint in 2011.

Looking ahead to 4G
Donovan also mentioned the company's plans for its 4G wireless network, which will use a technology called LTE, or Long Term Evolution. It's the same technology that AT&T's rival Verizon Wireless is using to build its 4G wireless network. Verizon has already begun building its LTE network and expects to launch the network commercially in 2010.

AT&T is testing LTE this year and will begin commercial deployments sometime in 2011. Donovan defended his company's plan to upgrade to HSPA 7.2 (for High Speed Packet Access) first rather than going straight to a 4G wireless technology, as its competitors are doing.

AT&T's slide showing growth projections for LTE devices.

(Credit: Marguerite Reardon/CNET )

"If you're questioning whether AT&T will be left by its competitors who are in a rush, the answer is no," he said. "Succeeding in this market isn't just about fast speeds, but wide coverage. And it's not just about a device or two, but an entire portfolio of products."

Even though he didn't cite Verizon Wireless by name, it was clear which carrier he was targeting with his sharp comments. He showed a chart indicating how many LTE devices will be on the market in 2010, the year that Verizon is launching its LTE network, and it showed a very small number, with the curve indicating a rapid increase in LTE devices a few years from now.

"A rich network without devices is not the best of use of capital," he said. "AT&T's market timing will be right."

The Apple iPhone has boosted AT&T's subscriber numbers, but network problems and a bevy of complaints from frustrated customers are likely hurting the company's reputation.

While a recent survey by the consulting firm CFI Group found that iPhone users are the most loyal smartphone users with 90 percent saying they'd recommend the device to a friend, half of all iPhone owners surveyed said they would like to jump ship to another provider if given the chance.

And for the first time, AT&T has scored worse than all four major U.S. wireless operators in terms of overall customer satisfaction for smartphones. According to the survey, AT&T scored 69 out of 100 among users, and 73 among non-iPhone owners. Verizon Wireless was the most satisfying carrier with a score or 79 out of 100 among smartphone users. Even Sprint Nextel, which has struggled to retain customers due to its poor reputation, scored better than AT&T among smartphone users. It got a 74 out of 100 in terms of customer satisfaction.

The figures are among the first to quantify growing dissatisfaction with AT&T's network.

"AT&T has never fared great in customer satisfaction surveys," said Doug Helmreich, program director with CFI Group. "But they've never been last. Now AT&T is coming up last among smartphone users. The iPhone has been a cash cow for AT&T, but that cash comes at a cost in terms of overall satisfaction."

Public relations and brand experts warn that if AT&T doesn't take steps now to correct its image that it could come back to haunt the company in the future. The main issue for customers is that many users, especially those in urban areas, report poor network coverage and service. Problems with AT&T's 3G wireless have been widely reported on blogs, Twitter feeds, and even in published reports from BusinessWeek and The New York Times.

Customers all over the country have complained about dropped calls and the inability to connect to the 3G network. CNET News writer Elinor Mills documented her frustrating experience with her iPhone in a blog post recently. The story hit a nerve among fellow iPhone users, and more than 400 comments were left on the story. Most of the comments corroborated the writer's plight. And the follow-up story on the same issue garnered at least another 300 comments from readers.

AT&T's company line
And yet, AT&T has not admitted any problem with its network. When questioned about potential problems with the AT&T network being overburdened by iPhone users, Mark Siegel, an AT&T spokesman, reiterated the company line: "We have a strong, high-quality mobile broadband network. It is the nation's fastest 3G network, now in 350 major metropolitan areas."

In fairness to AT&T, the company has acknowledged that it is upgrading its network to deal with increased demand from the iPhone. Siegel said the company plans to spend $17 billion to $18 billion on improving its wireless and wireline broadband networks in 2009. Of course, this is a few billion dollars less than what the company spent in 2008. During that year, AT&T's annual report indicates it spent $20.1 billion on capital expendituresfor its wireless and wireline networks. Still, $17 billion is nothing to sneeze at.

Some of these improvements include deploying 850 MHz technology across AT&T's 3G markets to improve in-building coverage, adding nearly 2,000 new cell sites to improve overall coverage, and increasing capacity in thousands of cell sites with more backhaul infrastructure.

"We are the leader in smartphones in the U.S." Siegel said. "We carry more iPhones than any other carrier in the world and handle more wireless data traffic than other U.S. carrier. Because of smartphones like the iPhone, among many others, people have dramatically changed the way they use the wireless network with data usage exploding."

Indeed, Siegel is correct. iPhone users use the mobile Internet more than other mobile subscribers. So even though Verizon may rank high in terms of customer satisfaction, people are not using the network as much or in the same way as heavy iPhone users.

Still, Siegel said the company will look into the survey results from the CFI Group.

"We welcome and value all feedback from our customers," he said. "We view such feedback as an important opportunity to help us continuously improve our products and services. We will certainly look carefully at the CFI Group survey results to see what we can learn from it."

Of churn and confidence
For now, AT&T's potential image problems haven't been hurting the company. In July, it reported that it had reduced its churn rate, or the rate at which customers dump it service, yet again to 1.09 percent for subscribers on a contract. This is one of the lowest churn rates in the industry.

"The surest indication of customer satisfaction is churn," AT&T's Siegel said. "And ours is at record-low levels. Our own internal data suggests that our iPhone customers are very satisfied with AT&T."

But AT&T's confidence may be misleading. Currently, AT&T is the only U.S. wireless operator offering the iPhone. Once the exclusivity deal ends, which many believe will happen within a couple of years, dissatisfied customers may flee from AT&T to another carrier.

"I think it's safe to say that the same percentage of people who switched to AT&T for the iPhone, would likely leave if they believed they could get the same experience on a better network," said Helmreich. "And that could cause huge problems for AT&T since nearly half of its iPhone users switched from another carrier."

Public relations and brand experts such as Rob Adler, vice president at Vantage Communications, a technology public relations firm in San Francisco, say that AT&T must fess up to the reality if it doesn't want customers to punish it in the long run. Adler, who is an iPhone subscriber living in San Francisco, says there is no question that AT&T's network has been overwhelmed. Like many people living in a city, he experiences frequent dropped calls and a sluggish wireless Internet connection.

Even though AT&T is trying to fix its network, he said that denying there is a problem won't win it any points with frustrated customers.

"AT&T can say that there is nothing wrong with their network all they want," he continued. "But when someone is experiencing dropped calls and no access to the 3G network every day, they take it very personally. And it is very frustrating."

Andrew Gilman, CEO of CommCore Consulting Group, which specializes in helping companies manage their brand image, agrees. He said the first thing AT&T needs to do is correct whatever problem it is experiencing. And then it needs to listen to its customers and prove to those customers that the problems have been resolved.

He said that in today's highly connected online communities, companies that refuse to acknowledge their customers' complaints do so at their own peril.

"Even if the network is perfectly fine, if several people in a social network complains, they have immediate influence over a large group of people," he said. "So even if people aren't experiencing the same problem, the negative comments have planted a seed."

Gilman said that the power of social networks has changed the game for companies who find themselves the target of negative customer sentiment.

"The world has changed over the past couple of years," he said. "A few years ago you might have been able to ignore some customer complaints and get away with it. But not anymore. With social media things spiral out of control very quickly. "

He cited the example of how Johnson & Johnson was forced last year to pull an online advertisement for its over-the-counter pain pill Motrin after it triggered protest on the Internet from consumers who thought an ad that depicted mothers with back pain carrying babies in a sling as being insensitive toward mothers. Angry consumers viewing the ads took to blogs, YouTube and Twitter to call for people to boycott Motrin, arguing the ad trivialized women's pain and the method of carrying babies.

Switchers as "satisfaction saboteurs"
Experts have said that AT&T's image problems likely go beyond its network troubles. Helmreich said that AT&T has invited trouble through its exclusive deal to carry the iPhone. About 40 percent of iPhone users dropped their carrier to get the iPhone. These customers weren't switching carriers because they wanted to be on AT&T's network; they wanted the iPhone. As a result, Helmreich argues that these customers are more likely to be dissatisfied with AT&T's service. And they are more likely to complain and to share their complaints with friends.

Helmreich points out that people with one of T-Mobile's exclusive Google Android phones or Sprint's Palm Pre are also more likely to be dissatisfied with their service if they switched providers for those phones.

"In effect, switchers can be satisfaction saboteurs if they were not already inclined to choose AT&T," he said.

Adler also points out that AT&T's marketing and public relations strategy for the iPhone also helped create animosity toward the company. He said that from the start, Apple has established itself as the more valuable brand in the relationship with an iPhone customer. Even though AT&T is making the device more affordable by subsidizing each device by at least $300 to $400 a pop, it doesn't highlight this fact to consumers. But Apple is the company that has designed the device. It sells it for $200. And it also offers the cool applications, which are either free or are relatively low cost.

"iPhone users love Apple," Adler said. "They are loyal to the brand and they love the device and all the great applications. All they associate AT&T with is dropped calls, a hard-to-access 3G network, and high network fees. They even make iPhone users pay extra for SMS. It seems crazy to me that AT&T hasn't done anything to throw customers a bone to say, 'We love you as a customer.'"

Adler said that AT&T's exclusivity deal with Apple is a gift, which AT&T should be taking advantage of to create customer loyalty. He said that AT&T likely has plenty of time to redeem itself, but the company must take steps now.

He suggested it does three things: for one, he said that AT&T must admit its network has problems and then fix those problems. The challenge from a marketing standpoint is convincing its customers that the network has been fixed. And to do that, brand expert Gilman suggests that the company use specific examples.

"Once they fix whatever problems they have, they have to get testimonials to back up those claims," he said. "Maybe they could drive through neighborhoods and show people that calls aren't dropping and that the dead zones don't exist anymore."

The second thing AT&T needs to do is to more overtly market and explain its value to the consumer.

"AT&T needs to be more aggressive in promoting what they offer the customer," he said. "All they do is say they have the fastest 3G network, which everyone who owns an iPhone knows is absolutely not true in the real world. It may be true in a lab, but not on the street."

And the third thing AT&T must do is make goodwill gestures to its loyal iPhone customers. Gilman suggests the company give out coupons or anything that shows how AT&T values its customers. Adler thinks that AT&T needs to offer customers, who are already spending a lot of money on their service, more features and services for free. But he said that free Wi-Fi at AT&T hot spots is likely not enough of a perk, since it only highlights deficiencies in the 3G network. Instead, he thinks that AT&T could offer free SMS to iPhone users renewing their contracts.

"Customers remember small gestures like that," he said. "And they tell their friends."

Clearwire Communications has created a sandbox more than 20 square miles in size where developers can play with WiMax.

Clearwire announced on Tuesday the launch of the largest test area yet for its 4G WiMax service in Silicon Valley. Covering a wide area from Santa Clara to Mountain View to parts of Palo Alto, the company's Clear 4G WiMAX Innovation Network will let developers test the mobile broadband network on a large scale.

First announced in April by Clearwire, the Clear 4G WiMAX Innovation Network is seen as a testbed to prepare for the launch of commercial WiMax service in the San Francisco Bay area next year.

The 20-square-mile service will hit the campuses of Intel and Google, two investors of Clearwire's 4G WiMax network who've already begun their own own internal 4G testing. Cisco Systems, which will provide equipment to Clearwire, will get coverage in a few months as the network grows.

To play in the new WiMax sandbox, developers must register with Clearwire's development program and describe the WiMax ideas they'd like to pursue. Developers would also need to buy a Clearwire WiMAX USB modem for $49.99. Clearwire says it will provide the service for free to a limited number of qualified developers prior to the commercial launch.

Clearwater will also join and help sponsor the Sprint Open Developer Conference running October 26 to 28 in Santa Clara. The company encourages developers working with Clear 4G WiMax to attend the conference to learn more about the service.

Clearwire touts its Clear 4G WiMax service as offering peak download speeds of up to 10 Mbps, with an average of 3 Mpbs to 6 Mbps. As a comparison, the company says that today's 3G networks can only reach speeds of about 600 kbps to 1.4 Mbps.

WiMax has faced tough competition from LTE for the battle to become the wireless 4G standard. Backed by AT&T and Verizon Wireless, LTE is sometimes forecast as the ultimate victor with potentially the more dominant share of the market. But WiMax is also expected to grow as deployments ramp up.

Nortel Networks CEO Mike Zafirovski

(Credit: Nortel Networks)

Nortel Networks CEO Mike Zafirovski, who led the company into bankruptcy protection earlier this year and oversaw the sell-off of its wireless assets to Ericsson, will reportedly leave Nortel within weeks, according to a Wall Street Journal report citing "people familiar with the matter."

Nortel representatives did not immediately respond to e-mail seeing confirmation of and comment on the report.

Zafirovski was hired in 2005 to help turn around the company, much like he had done for Motorola's cell phone division. Initially, he had some success building profits from selling wireless gear to U.S. operators. Under his leadership, Nortel invested in new technology, and the company was preparing for the next wave of wireless networks. But then the economy tanked, and phone companies started to pull back on spending, which resulted in a sharp revenue drop for Nortel.

Once a giant in wireless gear, Toronto-based Nortel filed for bankruptcy protection in Canada and the U.S. earlier this year. And just last month, Ericsson cast the $1.13 billion winning bid in an auction for Nortel's wireless assets, picking up its cash cow, it's CDMA and next-generation LTE wireless technologies. That purchase virtually ensured that Nortel would be selling off the rest of its businesses, instead of reorganizing into a smaller company, making Zafirovski's departure someone inevitable.

Reuters is reporting that Nortel representatives on Friday appeared before a Canadian government committee to answer questions about the sale to Ericsson, which was opposed by BlackBerry maker Research In Motion, also of Canada. "It covets Nortel's next-generation LTE--or "long-term evolution"--wireless assets, which are being licensed as part of the Ericsson transaction. It has argued it was effectively prevented from bidding on them by Nortel," Reuters says.

CNET News reporter Marguerite Reardon contributed to this report.

This was originally posted at ZDNet's Between the Lines.

Sprint Nextel will outsource its network to Ericsson in a seven-year deal valued at $4.5 billion to $5 billion.

The deal, announced Thursday, allows Sprint to offload the costs associated with running its network. Sprint will transfer 6,000 employees to Ericsson.

Ericsson will now handle all the day-to-day operations and maintenance. The transfer of the network and the employees that go with them is set to happen by the end of the third quarter.

Steve Elfman, Sprint's president of network operations and wholesale, said on a conference call that Sprint still owns its network and is responsible for strategic plans and investments. Elfman added that the goal is to improve the quality of the network and deploy next-generation technologies. Sprint will keep its customer service operations.

Sprint didn't disclose exact numbers on savings. Elfman said Sprint expects to cut cost per labor unit. Sprint will also avoid investment in the tools that Ericsson already has. Economies of scale will enable Sprint-Ericsson to cut costs on software licenses and other expenses. Those savings will be invested in expanding network coverage.

Among other key parts of the deal:

• Sprint chooses technology platforms and vendors.

• Ericsson maintains Sprint's wireless and wireline networks.

• Ericsson will optimize Sprint's inventory of network assets.

• Ericsson and Sprint will focus on improving processes.

• No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kan., Sprint's headquarters.