INTERVIEW-UPDATE 1-Nokia Siemens: traffic growth to lift demand

* operator data traffic grew 4.7 times on average in 2008

* says less customer financing

* unveils first mass market software radio product

HELSINKI, Feb 5 (Reuters) - Telecom gear maker Nokia Siemens Networks [NSN.UL] said on Thursday it sees surging data traffic boosting demand for new network equipment at a time when the general market is set to fall in 2009.

Data traffic on mobile operators’ networks rose on average 4.7 times last year, with some operators seeing traffic surge more than 10 times, boosted by uptake of wireless datacards in laptops, a senior Nokia Siemens official told Reuters.

The company said the estimate is based on data from dozens of operators.

“Because of the high traffic there is need for hardware,” Marc Rouanne, head of Radio Access unit at Nokia Siemens, told Reuters in an interview.

Nokia Siemens, and its rivals Ericsson ERICb.ST and Alcatel-Lucent ALUA.PA, have suffered over the last few years as Asian rivals like Huawei [HWT.UL] have entered the market with aggressive pricing. The first major victim, Nortel Networks NT.TONRTLQ.PK, filed for bankruptcy protection last month.

“Nobody sells for free, everybody is making their business,” Rouanne said. “I am not saying sometimes you don’t see people doing things where it is very cheap, sometimes we just decide not to participate, but most of our business is a normal business.”

Rouanne said in general the scale of customer financing in the industry has decreased.

“We see less of it than what we used to see a few years ago ... but there are some. If that’s the one thing to make the difference we won’t get the business,” he said.

Equipment vendors are seen suffering this year as companies and consumers cut spending on broadband and wireless technology, but strong companies with ample cash are likely to get stronger, leading to a more polarised industry. [nN14483026] To counter the trend Nokia Siemens unveiled on Thursday a new base station, combining three different radio technologies -- GSM, WCDMA and LTE -- into one, enabling network operators to cut investments and maintenance costs of different networks. Rouanne said the upcoming Long-Term Evolution (LTE) technology, an upgrade to current WCDMA networks, was a key trigger in the market.

“LTE is making this opportunity because everybody wants to have LTE-capable equipment, just in case.” Rouanne said the product would take software defined radios to the mass-market. In software-defined radios, some hardware components are replaced by software, allowing manufacturers to save on space and costs.

(Reporting by Tarmo Virki; Editing by David Cowell)

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