Canadian equipment vendor Nortel Networks watched its shares soar 13 per cent on Wednesday, after the company announced plans to shift its 4G focus to LTE, rather than WiMAX.

Nortel will offload its WiMAX initiative into a strategic agreement with WiMAX kit vendor Alvarion, supplying core network solutions, backhaul, applications, and global services, to be supported by Alvarion’s radio access technology.

The Canadian firm said the move will allow it to achieve faster time to market with WiMAX at a lower cost. At the same time the company will be able to accelerate its LTE development to meet a demand, which it claims is emerging faster than the industry originally predicted.

“Nortel is targeting its 4G portfolio to capitalise on the rapidly growing market opportunities associated with wireless broadband – and to help operators meet these needs quickly,” said Richard Lowe, president of carrier networks at Nortel. “WiMAX will provide fast, cost-effective coverage and mobile broadband capabilities for early movers in the wireless broadband market. LTE will provide the high-speed, high-capacity mobile broadband network evolution sought by many established network operators, allowing them to offer not only faster connections but also an enriched user experience that includes real-time services such as mobile TV, web services, mobile advertising, and carrier-hosted services for businesses.”

Lowe’s words echo those of Nokia Siemens Network’s chief technical officer, Stefan Scholz, who recently told that the next big hurdle the industry faces is an anticipated 100 fold increase in traffic in the next eight years, which has to be delivered at the lowest total cost of ownership. In the developed world, “HDTV and STBs are all delivering lots of traffic as are new, smarter devices and flat rate subscriptions,” says Scholz, “the problem facing the industry is how to grow revenue as traffic grows – we need to optimise cost despite high capacity and low ARPU.”

Phil Marshall, vice president at industry analyst Yankee Group, said that the increasing demand for mobile data is driving traffic far faster than operators had anticipated. “Operators have realized that they need to get to 4G faster than originally anticipated. Major players such as China Mobile, NTT DoCoMo and Verizon have announced aggressive plans to roll out LTE, which we believe is the tip of the iceberg. The WiMAX market also continues to be very dynamic, with the underserved broadband markets and disruptive wireless operators in mature markets rapidly emerging as key market segments for that technology.”