UPDATE: Ericsson Supports GSM Track With New High-Speed Platform
STOCKHOLM -(Dow Jones)- Ericsson, the world's largest wireless equipment maker, Monday further cemented its commitment to third generation, or 3G, technology, saying it is ready with infrastructure and device platforms for high-speed mobile broadband at the 2.6 Gigahertz frequency.
Mikael Halen, Ericsson's Director of Government and Industry Relations, told Dow Jones Newswires Monday that with governments around Europe auctioning off such high frequencies over the next year, Monday's announcement gives operators another option to rival technologies such as WiMAX.
"The tremendous growth we are seeing in the mobile markets will lead to capacity shortages in the existing spectrum bands in the future," said Halen. "The advantage of the GSM track is its current scale." In the world of competing mobile standards, WiMAX is a high-speed wireless broadband technology offering access to both fixed and mobile devices over a wide area. It typically operates at higher frequencies than other mobile networks, in the 2.5GHz and 3.5GHz bands.
In offering a high-frequency 2.6GHz platform based on GSM, Ericsson is providing an upgrade to the dominant global mobile phone standard. The key feature of GSM devices is the SIM card that allows users to switch phones by simply moving the thumbnail-size storage device from one phone to another.
At 1340 GMT Ericsson traded -1.7% at SEK26.26, underperforming a broadly lower Stockholm market.
Network operators are increasingly targeting value-added mobile broadband services to generate additional revenue as fixed-line revenues fall off. These include faster web browsing, music downloads, and other multimedia applications - all of which are bandwidth-hungry and are causing a boom in the level of mobile traffic.
Halen said by 2012, close to 90% of the mobile market will be based on the GSM track with more than one billion High Speed Packet Access, or HSPA, devices being sold over the next four years. HSPA is sometimes described as a 3.5G standard that doubles network capacity and is targeted to achieve mobile download speeds of up to 3.6 megabits per second or more.
"We think mobile WiMAX will have a market, we are not suggesting otherwise, but it makes much more sense for us to focus on the GSM track than the WiMAX track."
"Today's news increases the possibility of existing operators to offer low-cost, flat-fee, high-speed services to customers. It also offers the possibility for more competition and other devices for consumers," Halen said.
"It was an expected move for Ericsson, but the news shows the company is sticking to GSM," said Glitnir analyst Anders Elgemyr. He reiterated his buy rating.
While GSM has the vast majority of the market globally, the U.S is more evenly split between GSM and code division multiple access, or CDMA, networks.
Competitors are dabbling with WiMAX. Intel recently said it is joining with Nokia and Nokia Siemens Networks, a joint venture between it and Siemens, to test different mobile WiMAX wireless products for compatibility. USA operator Sprint Nextell said in August that it plans to spend some $5 billion through 2010 on its WiMAX network.
-By Adam Ewing, Dow Jones Newswires; +46 8 545 130 95; adam.ewing@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 8th October 2007
