The U.S. Department of Commerce has agreed to remove Chinese telecommunications equipment maker ZTE Corp from a trade blacklist after the company pleaded guilty to violating sanctions on Iran and agreed to pay nearly $900 million, the agency said in a notice.
Removal from the list marks the end of a tense period for ZTE, which faced trade restrictions that could have severed its ties to critical U.S. suppliers.
“By acknowledging the mistakes we made, taking responsibility for them … we are committed to a ZTE that is fully compliant, healthy and trustworthy,” said ZTE Chief Executive Zhao Xianming said in an emailed statement.
Last year, the U.S. Commerce Department placed export restrictions on ZTE as punishment for violating U.S. sanctions against Iran. The restrictions would have prevented restricted suppliers from providing ZTE any U.S.-made equipment, potentially freezing the Chinese handset maker’s supply chain.
Over the past 12 months, as ZTE cooperated with U.S. authorities, the U.S. Commerce Department temporarily suspended the trade restrictions with a series of three-month reprieves, allowing the company to maintain ties to U.S. suppliers.
Earlier this month, ZTE agreed to pay a total of $892.4 million and pleaded guilty to violating U.S. sanctions by sending American-made technology to Iran and lying to investigators.
The Commerce Department said on Tuesday it would impose severe restrictions on former ZTE CEO Shi Lirong, whom the agency accused of approving efforts to skirt sanctions and ship equipment to Iran.
The Commerce Department said Shi approved a systematic, written business plan to use shell companies to secretly export U.S. technology to Iran. Reuters could not immediately reach Shi for comment.
The U.S. investigation followed reports by Reuters in 2012 that ZTE had signed contracts with Iran to ship millions of dollars’ worth of hardware and software from some of America’s best-known technology companies.
U.S. authorities have said the size of the financial penalty against ZTE also reflects the fact that the company lied to investigators when executives were approached about the allegations.
As part of the deal, ZTE will be under probation for three years and agreed to cooperate in the continuing investigation.
High-speed fiber broadband service, with 1 Gbps download speeds, can add more than $5,400 to the value of an average U.S. home, according to a study commissioned by the Fiber to the Home Council Americas (FTTH), an advocacy group made up of fiber equipment vendors and broadband providers.
That $5,400 figure is approximately equal to adding a new fireplace, half of a new bathroom or a quarter of a swimming pool, according to the study, conducted by researchers at the University of Colorado at Boulder and Carnegie Mellon University.
Speed matters, the study found. For homes where 1 Gbps broadband was available, sale prices were 7 percent higher than for homes in areas with broadband speeds of 25 Mbps or lower.
The study, possibly the first to look at the link between home values and fiber service, could help drive a new “fiber boom,” like late in the late 2000’s, said Kevin Morgan, FTTH’s board chairman and director of marketing communications at Adtran, a telecom equipment maker.
Several broadband providers have announced new deployments in recent months, and the study can help local governments push providers for new fiber deployments, added Heather Gold, FTTH’s president and CEO.
FTTH helps local officials work with providers on deploying new or faster broadband service, Gold said. “If a community wants to get fiber to the home and they understand the economic value … both to homeowners and the community in total, that helps them decide, ‘Hey, we’re going to help this broadband provider make an attractive investment case,'” she said.
In 2014, FTTH released a study finding higher per capita gross domestic product in communities where gigabit Internet was available.
The study used home sales data from 2011 to 2013, U.S. Census Data and the U.S. Federal Communications Commission’s 2012 and 2013 national broadband maps to investigate the relationship between broadband availability and home prices.
The broadband speed users get depends on a myriad of different factors, but in the network it all starts with the amount of spectrum their operator uses. Future increases will be fueled by a technology called carrier aggregation, which lets operators treat up to three radio channels in different frequency bands as if they were one.
This month, chip maker Qualcomm and network equipment manufacturer Ericsson have been doing their best to let the world know speeds at up to 450Mbps will be possible next year, with product launches, interoperability tests and a demo with Australian network operator Telstra.
The demonstration used 60MHz of spectrum made up of three separate 20 MHz LTE channels in the 2600MHz, 1800MHz and 700MHz bands. That the mobile operators need 20MHz in each of threebands to get to 450Mbps makes the technology an option for only a select few.
For example, because spectrum in the U.S. is often licensed in 10 MHz chunks, North American subscribers are unlikely to see 450Mbps anytime soon, according to Malik Saadi, practice director at ABI Research. In Europe, LTE penetration is still low, so mobile operators are more focused on migrating subscribers to regular LTE. The first to get 450Mbps will instead be users in Asia, Saadi said.
Ericsson and Qualcomm are more upbeat, and think there is potential in North America and Europe as well. But the bulk of the deployments will use carrier aggregation at slower speeds, according to Peter Carson, senior director of marketing at Qualcomm. Speeds of 300Mbps or even 375Mbps are within reach of many more mobile operators, and that’s still a big step for users.
The outfit is trying to think how it can grow after the planned sale of its handset business to Microsoft. While no formal talks are underway with Alcatel-Lucent, Reuters claimed that Nokia held “on again, off again” discussions about buying Alcatel’s wireless business as recently as late 2012 and that the two companies could still come back to the table.
Both companies have struggled to compete with market leader Ericsson, and Huawei and ZTE. With Microsoft buying Nokia’s phone business and license its patents for $7.3 billion, the former rubber boot maker has said it will evaluate strategy for its remaining operations before the deal closes.
With consumer demand for wireless data services like mobile video streaming growing significantly, network operators say they need access to more wireless airwaves soon or they will risk running out of capacity to support their customers.
Since it may be years before enough new spectrum becomes available, carriers are looking for technology solutions now to try to avoid network congestion that could send customers away in frustration or stunt industry-wide revenue growth.
As a result, operators came to the CTIA annual wireless showcase in New Orleans this week keen to discover how they might use existing spectrum more efficiently.
One promising area is so-called small cells – mini versions of the giant wireless broadcast towers that send and receive all the cell phone calls carried by today’s networks. Installing these small cells in between the bigger towers will boost capacity in those areas.
Since these devices have smaller price tags and are more compact than traditional cell sites, operators will be able to place them more easily in buildings or even on lamp posts on busy city streets.
Various types of small cells were on display by network equipment makers at the New Orleans trade show. Wireless carriers do not expect the first products to come to market until later this year, and they say it is still too early to estimate total costs for using the technology.
AT&T Inc and Sprint Nextel, the No. 2 and No. 3 U.S. mobile providers, both said at the CTIA trade show that they already have plans for small cells. Market leader Verizon Wireless and No. 4 player T-Mobile USA say they are looking at the technology and eyeing future developments.
Telecom operators globally are expected to slash spending on their networks this year, hitting equipment makers that were only just beginning to recover from intense price wars and the last economic downturn.
European operators are likely to be more cautious as recession looms and consumers are less willing to splurge on high-end smartphones, while carriers in China and the United States slow their frenetic pace of mobile investments.
The shift will pressure long-struggling mid-sized gear makers like Alcatel-Lucent SA and Nokia Siemens Networks, which are more vulnerable than market leader Ericsson or low-cost Chinese player Huawei.
Some smaller equipment vendors such as Juniper Networks Inc and Acme Packet Inc have already issued profit warnings in recent weeks, blaming slower spending at big U.S. carriers like Verizon Communications Inc and AT&T.
Alcatel-Lucent also had to scale back its margin and cash flow targets for 2011, and Nokia Siemens Networks announced mass layoffs and restructuring.
Behind the warnings is a economic slowdown that began in the second half of last year and has already begun weighing on telecom gear makers’ shares.
“While it won’t be as bad as 2009 when operators drastically cut their spending, we expect only very weak growth this year and continued pressure on prices,” said Cedric Pointier, a portfolio manager at Natixis Asset Management, which holds Alcatel-Lucent, Nokia and Ericsson shares in its funds.
“In tough economic times, telecom operators choose between seeking growth and protecting cash flows, and they usually just adjust their capital expenditures to maintain cash flow.”
Telecom network investments tend to follow economic cycles, as operators hold back spending when their customers become more price conscious.
In recent years, however, underlying demand for new equipment has grown as networks strain under a rising data load brought on by Internet-connected smartphones and tablets.
Operators especially in the United States have invested heavily in mobile networks to keep up, increasing spending BYaround 10 percent last year, but this year analysts expect many to be more prudent.
Microsoft’s patent application for Legal Intercept was filed in 2009, well before the company’s $8.5 billion purchase of Skype this May. The patent was granted last week.
From Microsoft’s description of the technology in its patent application, Legal Intercept appears similar to tools used by telecommunication companies and equipment makers to comply with government wiretap and surveillance requests.
According to Microsoft, Legal Intercept is designed to silently record communications on VoIP networks such as Skype.
According to Microsoft, Legal Intercept fixes the gaps in current monitoring tools that are designed mainly for intercepting Plain Old Telephone Service (POTS). “With new Voice over Internet Protocol (VoIP) and other communication technology, the POTS model for recording communications does not work,” Microsoft noted in the patent application.
Michael Froomkin, a professor of law at the University Of Miami School Of Law, said that from the patent description it sounds as if the technology would allow Microsoft to do is make Skype CALEA capable.
CALEA (Communications Assistance for Law Enforcement Act) requires telecommunications carriers and makers of communications equipment to enable their equipment so it can be used for surveillance purposes by federal law enforcement agencies.
But the implications of the technology are much broader, Froomkin added. “First, making a communication technology FBI-friendly means also making it dictator-friendly, and in the long run this is not good for movements like the Arab Spring,” he said. “Second, experience shows that building in back doors invites exploits.”
A Microsoft spokesman said the company would not comment on the technology.