US paranoia could be Nortel's downfall

THE NEWS that one of Canada's greatest companies Nortel Networks has filed for Chapter 11 in the US and Canada for protection from its creditors, is casting doubt on its Olympic sponsorship.

One of the things that could get Nortel out of the mire would be a tie-up with a similar equipment supplier and China's Huawei is the most obvious candidate as a White Knight.

However, Nortel is a major supplier of mobile phone infrastructure equipment to the likes of Verizon, Sprint and Qwest which run Cdmaone based mobile networks.

There are fears that the Chinese company could somehow create a 'back door' into these networks to listen into military traffic. [CDMA is viewed by most Americans as US military technology].

This is a supreme example of paranoia. What on Earth would the US generals be doing making sensitive phone calls over their mobile phones in the first place? It's absurd.

The threat, sadly, is quite real as the same kind of twisted patriotism put paid to earlier efforts by Huawei to acquire 3Com. The INQ would be prepared to bet that components in certain Nortel products are already manufactured in China, anyway.

The big news is that Nortel is actually a major sponsor of the Olympic Games not just for 2012 in London but 2010 in Vancouver, too. As a Tier One sponsor, if Nortel went under there'd be a major hole in the Olympic budget.

Another possible loser could be the GSMA's Mobile World Congress (MWC) in Barcelona next month. Losing Nortel would cast a major shadow over the event.

Luckily there's a precedent. Lucent was actually in Chapter 11 a few years back (before the Alcatel merger) and it still came to the show.

Sadly, nobody at the MWC returned the INQ's calls. µ