Ericsson bids for developing markets

Ericsson is seeking to tap into rapid subscriber growth in developing countries with the launch of a package of mobile solutions aimed at reducing network cost of ownership.

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By  Richard Agnew Published  February 15, 2004

Ericsson is seeking to tap into rapid subscriber growth in developing countries with the launch of a package of mobile solutions aimed at reducing network cost of ownership. The ‘Expander’ portfolio is primarily aimed at improving the efficiency of radio sites, but also includes a range of consulting, core, transmission and service layer solutions to help create viable business models for operators in areas where consumer spending is low. The main idea behind the solution is to increase the coverage of the vendor’s base stations and reduce the level of investment needed to expand mobile services into rural and remote areas. Ericsson says the solution could allow mobile operators to cover areas using between 25% and 30% fewer sites than before. With emerging markets expected to provide the main thrust behind an expected rise in worldwide mobile penetration from 1.34 billion to 2 billion between now and 2008, Ericsson and other equipment vendors are increasingly looking to tap into that growth. The launch of the Expander solution follows Nokia’s release of a low-cost mobile infrastructure and handset portfolio, Connect GSM, in October last year. “We believe that our solutions for emerging markets could increase this growth rate,” says Carl-Henric Svanberg, president and CEO of Ericsson. “Communication is a basic human need — we bring solutions that make it possible for people in areas previously not served, to communicate with the rest of the world,” he adds. According to Ericsson, it has doubled the output power of base stations in the portfolio through transmitter coherent combining (TCC), while a technology called 4 branch diversity has been added to improve stations’ listening capability. To avoid capacity problems arising from the coverage expansion, the vendor has also deployed a solution called Smart Range to allow operators to add capacity to radio cabinets when traffic needs increase. “The main thing that we have done is to look at how we can extend the coverage of larger base stations rather than [bringing out] smaller base stations,” says Johan Bergendahl, vice president of marketing at Ericsson. “We’ve looked at the total cost of building a network and the site costs are the most significant. By extending the coverage of base stations, we have been able to reduce the number of sites by around 25% to 30%,” he adds. Also contained within the portfolio is an entry-level radio base station, RBS 2112, which can be introduced by operators for low capacity areas or as a fill-in solution. And with pay-as-you-go users forming the bulk of subscribers in growth markets, Ericsson has developed a convergent charging solution to handle both pre- and post-paid customers and preserve operators’ previous investments. According to Bergendahl, the aim of Expander is to allow operators to run networks profitably in areas where marginal user spending is as low as US$3 a month. “We looked at how we can expand [mobile penetration] to beyond the 2 billion figure. We have looked at the available spend of people around the world, and to get to 3 billion users, we need to extend [coverage to where] there is an available spend of around US$3 to US$4 dollars per month,” he adds. But Ericsson also hopes that the new recruits will eventually be persuaded to spend more on mobile services beyond voice. “We are working with a number of handset providers in many developing countries to bring the price of handsets down to reasonable levels. We believe that we need a low cost per handset but we believe these customers will also be future data users,” says Bergendahl. According to Ericsson, solutions within the Expander portfolio are upgradeable to EDGE if this movement towards data services occurs. The vendor adds that although the Expander solution is only geared towards GSM operators, it will add CDMA 2000 products to the portfolio in early 2005.

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