Ericsson intent on holding pole position
By Wen Dao (China Daily)
Updated: 2004-09-24 08:48

The world's leading mobile telecommunications equipment firm, Ericsson, said it intends to maintain its lead position in the mobile network business.

"We have the most comprehensive product line and are the only company to support all major mobile standards in the world, so whatever decision that the Chinese Government makes, we can handle it," said Carl-Henric Svanberg, president and chief executive officer of the Swedish firm. His remarks were made on the sideline of its strategy and technology summit held on Wednesday.

Investment in China's third generation (3G) mobile telecommunications will be drastically lower than expected. The licences for 3G are expected to be released around the middle of next year.

Svanberg said the potential of the second-generation global system for mobile communications (GSM) was underestimated and only one third of the current GSM networks will migrate to the 3G platform. Therefore, he said, the GSM market will remain large.

Ericsson accounts for more than 35 per cent of the GSM equipment market in China.

It is the only global vendor supporting both 2G standards GSM and CDMA, popular in China and South Korea.

Ericsson has a 15 per cent market share of the CDMA system, run by the country's second largest mobile carrier China Unicom.

Despite its lead position in the 2G market and the potential of the GSM market, Ericsson has already begun to deliver or prepare for systems of the future.

The company will supply equipment to the 2.75-generation EDGE system, which has a faster data transmission speed with only slight expansion of the current GSM network.

The country's dominant wireless carrier China Mobile is expected to launch the EDGE system in Guangzhou, Shenzhen, and Dongguan in South China's Guangdong Province next month. The system is expected to compete with China Unicom's CDMA 2000 1X system on data services.

Ericsson's deal with China Mobile's subsidiary in Chongqing Municipality in August also included terms relating to the upgrade of the current network to 2.75G.

Mats Olsson, president of Ericsson (China), said his company will open an application centre in Guangzhou to develop data solutions on the EDGE and 3G networks.

"This is a major research and development activity for us," he said.

The centre is expected to begin construction in October and be up and running by the end of the year. It will employee 65 engineers.

Olsson predicted that the annual capital expenditure of Chinese telecom operators will remain at a level of around 200 billion yuan (US$24 billion) in the next few years and then possibly decline slightly.

Spending on operating costs by the telecom operators much larger than the cost of building networks will increase steadily, resulting in opportunities for the giant.

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