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Nortel, BLU Sign GSM Deal with Eye to Wireless Internet

Nortel Networks and BLU S.p.A. Monday inked a $138 million deal with wireless Internet written all over it.

The two will create a nationwide digital wireless network in Italy, where BLU is currently the fourth largest GSM operator, in an agreement said to be worth $138 million over 18 months.

As a result of the deal, BLU will be able to exploit what is being hailed in Europe as the "Wireless Internet revolution" -- the move to wireless-based Internet applications using new protocols to enable high-speed data transmission to mobile devices.

Matt Desch, president, Service Provider Solutions for Nortel Networks in Europe and Asia, said that winning the contract gave his company a strong foothold in a very important market.

"BLU will soon be able to give Italians access to a high-performance Wireless Internet, ready to provide a wide range of exciting multimedia services," said Desch.

The contract with BLU includes a turnkey GSM 1800 network with a packet-based, IP (Internet Protocol) backbone. Eventually the network will evolve to General Packet Radio Service (GPRS) and Universal Mobile Telephone Service (UMTS), the two protocols that will spearhead the move to high-speed applications.

The two largest shareholders in BLU, a relative newcomer to mobile operations in Italy, are Autostrade with 32 per cent and BT with 20 per cent.

Several hurdles still have to be overcome before the shareholders can reap the rewards of Internet-based mobile services in Italy.

BLU and Nortel Networks now have to deploy the GSM 1800 network, and integrate it with third generation UMTS systems. BLU will also need to acquire a license to operate services using the new protocols.

If all goes well, say BLU and Nortel Networks, the deal between them could be worth $500 million over five years to Nortel, which is concentrating extensive resources on developing wireless solutions for the Internet.