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Alcatel-Lucent Inks Deal to Lend LTE Technology for EAN

Alcatel-LucentALU inked a contract with German telecommunications company, Deutsche Telekom, to develop speedy Internet access for passengers on European flights. In particular, Alcatel-Lucent will offer its LTE technology to Deutsche Telekom's ground network for creating a hybrid system that would seamlessly connect with the S-band satellite services of the telecommunications firm Inmarsat.

In the past, Deutsche Telekom and Inmarsat had collaborated for European Aviation Network ("EAN"), a project that pioneered the development of an integrated satellite and LTE ground network for airline passengers. Leveraging Alcatel-Lucent's Radio Access Network ("RAN"), remote radio heads and IP mobile core technologies, Deutsche Telekom plans to create the "ground network" component for the project. EAN is scheduled to go commercial in Europe after a test flight program in 2017.

Alcatel-Lucent and Deutsche Telekom had also partnered for a research project back in 2009. In 2011, their first test flight was successful, which ultimately paved the way for air-to-ground networks. In 2014, Inmarstat joined the team after it collaborated with Alcatel-Lucent for deploying the latter's LTE technology in its S-band.

Once EAN becomes fully operational, it will offer benefits to both passengers and airline companies alike. While passengers will be able to enjoy any Wi-Fi-enabled mobile devices in flight, airline companies can come up with a host of customer-oriented data offerings.

The fact that EAN is pioneering the hybrid air-to-ground network provides Alcatel-Lucent with a major first-mover advantage in the market. As the incidence of communication blackout in air has been a pressing issue for long, the company's capability to turn EAN into a reality will help it to outshine its peers.

Alcatel-Lucent's LTE technology has been deployed by 8 of the 10 largest mobile network operators in the world who own over 50% of the LTE market. According to Garnter's latest Magic Quadrant analysis, the company also happens to be one of the top 5 LTE vendors in the market, preceded by Nokia NOK , Ericsson ERIC and Huawei. Given that the LTE network infrastructure is projected to grow to $36.3 billion in 2019 from $18 billion in 2015, Alcatel-Lucent will likely reap significant benefits from its merger deal with Nokia as well.

Despite its leading position in the market, Alcatel-Lucent has been severely impacted by political and economic uncertainties in the countries it serves. Moreover, stiff competition from major rivals like Cisco CSCO , Avaya and ZTE adds to its woes. This apart, the company's rising debt level and operating expenses are proving to be a drag on its financials. Based on these factors, the company currently has a Zacks Rank #5 (Strong Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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