NEW YORK-Sweden’s L.M. Ericsson has majored on the infrastructure side of provisioning to wireless carriers within the United States while playing a comparatively minor role as a wireline network supplier.
However, that soon could change if company executives succeed in executing a strategy outlined last week about the company’s plans for next-generation telecommunications networks.
“We see a huge opportunity to come into the United States to serve the big operators with an international strategy on both the wireless and wireline side,” said Torbjorn Nilsson, senior vice president of marketing and strategic business development.
Telecommunications is undergoing many kinds of transformations as it enters the new generation, he said. In its organizational structure, the industry is moving away from the vertical integration that has characterized it to date. In this model, a host of differences, including regulatory regimes and corporate cultures, divide cellular, public switched telephone networks/integrated services digital networks, data/Internet Protocol and cable television.
“Telecommunications is moving gradually toward a layered network structure with client-server relations between the layers-copper (wire), [radio frequency], fiber or coaxial cable,” Nilsson said.
“The next-generation networks will need to be carrier class, multiple service, open applications oriented with mobility as the basic service and fixed as a simple case of mobile.”
By early 2003, Ericsson projects 1 billion mobile wireless customers worldwide, a total that will not be reached on the wireline side until 2004. Also in 2004, Ericsson projects that the number of mobile handsets sold worldwide will be in the range of 800 million to 900 million.
Within telecommunications, there are three segments. The two traditional segments are location-based and serve home and business enterprises. The emerging segment provides mobile access to people and devices.
“In the enterprise, people will become much more mobile in their way of working and this will require the build-up of intranets and high-speed access to the enterprises,” Nilsson said.
“The home of the future will be one of the few fixed places people will be, and (telecommunications here) probably will be driven by entertainment. We must solve the dimension of television/video delivery.”
While the rising number of mobile subscribers is good news for telecommunications network suppliers, even more important to them is the growing number of minutes of use. Ericsson expects mobile wireless minutes of use to reach parity with those on the wireline side in the foreseeable future.
“There is no reason why people shouldn’t call as much, probably more, on their mobile phones. Traffic is rising in Europe, Asia and the United States,” Nilsson said.
“Increasing MOUs are more important than increasing numbers of subscribers because they mean more need for us as an infrastructure provider.”
Mobile data, including Internet access and short message service, also is driving minutes of use, Nilsson added.
“Some mobile data networks are seeing increases in the last year greater than all of the years before,” he said.
“In October, there were 2 billion SMS (messages), representing a 50-percent annual growth. Let’s be honest, SMS is probably the most inconvenient way to send messages, and that is why we introduced the Chat Board-to attach to the mobile phone to simplify SMS.”
End users also are changing their view of the utility of mobile phones, coming to view them as transaction tools, Nilsson added. Attributing a quote to Nigel Harris, chief executive officer of CapOne, he said, “a wireless handset is just a credit card with an antenna.”
To address the crucial issues involved in backbone networks and network access, Ericsson established its Boston-based Ericsson Datacom Inc. unit in mid-1998.
“It is not our intention to get the next best router out there but to provide a multiservice, end-to-end solution,” said Michael Thurk, Datacom president.
“We are involved in the transformation of fixed and mobile voice and data into the new world of packet technology.”
Datacom has significant investments in the United States, the United Kingdom, Sweden, China and Australia, Thurk said.
“We are in trials all over the world, a lot of them dependent on [operations support systems],” he said.
“We are focused on the core areas of how to migrate OSS networks, which is very important, and how to improve the performance quality of enterprise networks, which are not carrier class. They need five nines (99.999 percent) reliability, but they don’t have it today.”
In the contest between asynchronous transfer mode and Internet protocol technologies, Thurk said he does not believe IP will supplant ATM, at least within the next decade.
“Our clients want both, many times for different reasons,” he said.
ATM, the more mature technology, is better suited for high performance voice switching, while IP today works best for data-only networks, Thurk noted.
