Thursday, November 16, 2006

Ericsson highlights importance of HSPA, multimedia

Vendor looks to mobile data evolution, multimedia reach, and possible new venture with Sony.
Swedish telecoms equipment vendor Ericsson on Tuesday stressed the importance of HSPA as data traffic is set to grow, and underlined the growth of its new multimedia unit as the company moves beyond its traditional core business.

The company also announced a new 3G/HSPA solution, enabling speeds of up to 14 Mbps in the home on all enabled devices.

Ericsson is shifting its position in the market away from its traditional of networks to multimedia services, following a recent internal restructuring.

Speaking at the company's strategy and technology Summit in Tokyo, Carl-Henric Svanberg, CEO and president of Ericsson, said the company would not hesitate to make "bolt-on" acquisitions in the multimedia or IP space. However, the likelihood of "doing something dramatic is small", he added.

The shift in focus will also affect the company's current partnerships, in particular its most famous joint venture with the Japanese electronics manufacturer, Sony.

"We will expand our partnership with Sony beyond handsets," said Svanberg. Joint developments will be realised in the home equipment and networking space. "Projects like IPTV are obvious areas for co-operation," said Svanberg, "areas where we naturally interface."

The CEO refused to comment on talks currently taking place, however.

Ericsson now comprises three core units: networks, services and multimedia. "We see moderate growth in networks … in services, growth is stronger. In multimedia, there is even stronger growth," said Svanberg.

"But whatever we do in multimedia will drive networks and services; they are all going to interact and stimulate each other," he added.

In the mobile network market, the increase in data services will be a large factor in future growth revenues for operators, said Svanberg.

"The development of data will have a big impact on the future," said Svanberg. Operators must be able to provide any broadband service to any user, he added.

According to the Swedish vendor, data usage is 50 times higher with 3G compared with 2G. Services such as the Internet, mobile TV and multimedia services are driving demand.

Two thirds of all data services relate to messaging, said Torbjorn Nilsson, senior vice president and CSO of group strategy and product management at Ericsson. There is also growth from music, and IMS or presence type services, he added.

"But it is a flat-rate tariff that has a strong importance in a growing market," he added. This can be seen from markets such as Japan and the U.S. However, it remains fragmented in Europe. Operators also need to solve issues such as roaming charges for data services.

In terms of HSPA upgrades, 73 out of the 130 WCDMA networks have been upgraded. Out of these networks, 38 have been supplied by Ericsson.

The Global mobile Suppliers Association (GSA) reported last week that there was a 50% increase in the deployment of HSDPA networks in the past three months.

The simple upgrade evolution means HSPA technology is the easiest way to offer mobile broadband to the mass market, said Ericsson.

"The same advantages that made GSM the catalyst for mobile telephony achieving mass market also apply to HSPA," said Svanberg.

Ericsson's new product, a 3G/HSPA indoor access point for the home, will enable local indoor coverage of up to 14 Mbps downlink and 5.8 Mbps uplink with the ADSL2+ as backhaul.

The new offering particularly targets converged operators that are looking to use their fixed-line infrastructure to gain advantages in the wireless space.

"They will be able to use bundling to make to more difficult to churn," Mikael Back, vice president of WCDMA radio networks at Ericsson, told Total Telecom.

An investor, who did not wish to be named, argued that Ericsson's focus on mobile broadband solutions is limited, in comparison with other large vendors such as Cisco.

The three main places where people consume mobile data are at home, on the move, and in the office, the investor commented. Ericsson's product focus does not effectively address the home and office market, with broadband cheaper than a mobile network and soon the launch of WiFi in many cities, the investor claimed.

However, a London-based financial analyst disagreed with this viewpoint. He added that people who have never had a particular service generally do not see how they can use it, citing examples related to broadband access in the 1990s when it was a new technology.

Ericsson's Back added that the prices for mobile data will be the same as for DSL offerings.

"[Operators] are targeting the same flat rates," he said.

He added that in many emerging markets, there is no DSL or legacy infrastructure. A further argument for the technology is that in areas outside major urban conurbations, users cannot get DSL speeds. "A radio offering could be better in this case," he added.

IMS is also at the heart of Ericsson's future growth strategy.