Telecommunications
eWorld - Interview
‘Let market decide India’s choice’
www.bsnlnewsbyashokhindocha.blogspot.com
Ericsson on the 3G vs WiMAX debate and the wireless technology that might suit India best..
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Numbers is just one dimension to look at. On a holistic note, there are several other strengths that we have, including our cutting-edge R&D, our employees and most important of all, our customer relationships that have stood the test of time.
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Kamal Narang
Carl-Henric Svanberg
Thomas K Thomas
The $25-billion Indian telecom equipment market is the hot spot for most global vendors. Swedish manufacturer Ericsson is a key player in this industry with some multi-billion contracts from Bharti Airtel and BSNL.
Ericsson is also spearheading the global development of mobile technologies, some of which will be introduced in India shortly.
eWorld caught up with Ericsson’s global CEO, Carl-Henric Svanberg, during his recent visit to India to know his views on a wide range of issues. Excerpts from the chat:
What are your views on the 3G scenario for India?
Technology can be a major vehicle for social and economic empowerment and help India bridge the rural-urban divide.
Ericsson’s Gramjyoti project demonstrated that the rural masses experienced benefits by having access to mobile broadband. With over 700 million people in need of primary healthcare, millions more in need of education, 3G rollout can bring about much needed people participation in a manner that has never before been witnessed or imagined in India.
Similar experiences in the Millennium Villages have proved to us that 3G/HSPA or wireless broadband has the potential to catalyse and bring about radical socio-economic development in communities and society.
3G vs WiMAX is hotly debated in India. Which, in your perspective, is better suited for India?
First of all, it’s important to understand that WiMAX is a 3G technology just like Wideband CDMA or HSPA. HSPA is an advanced version of WCDMA but basically, HSPA, which is the dominant technology in the world, is the same thing as WiMAX.
The difference is whether you do Time Division or Frequency Division. I think there are people leaving WiMAX.
LTE is a 4G technology. That’s another generation, and today’s WiMAX is not competing in that sense with LTE. That part of the WiMAX generation still remains to be developed.
When we took a decision not to do WiMAX, it’s just that since the HSPA technology will be the dominant technology — and it would have been a little bit odd for us to not be spending a lot of money developing one technology that makes up a bigger part of the world vs spend the same amount of money to just develop a similar technology once again that has no difference for any user.
So, for us, it was just a business rationale not to be involved in WiMAX. It will be best if we leave it to the market forces to dictate the choice of technology for India.
Huawei and ZTE have made huge inroads into the telecom equipment market. Does Ericsson feel threatened by these Chinese vendors?
The shape of the global industry has changed over the last few years and while numerous players have vanished from the market, certain others have come in.
Ericsson, however, has been a leading player through all that change and has been evolving and constantly adapting to the changing environment around it. Numbers is just one dimension to look at.
On a holistic note, there are several other strengths that we have, including our cutting-edge R&D, our employees and most important of all, our customer relationships that have stood the test of time.
I think it will be interesting to watch how the next generation market place evolves.
How is Ericsson coping with the global recession?
This year we are doing a cost-reduction programme of $2 billion, so that’s pretty significant.
The background for the cost reductions is that in the transit to IP technology we can work much more efficiently. We can use the same hardware for several products, more so than before. We can use the same software platforms for developing software solutions for different products, so we can work much more efficiently.
So the $2 billion of savings that were expected to come over the next four-five years anyway, we are accelerating that in view of the crisis because we want to make sure that we are well prepared.
Is some part of the cost reduction being implemented in India also?
No, India is far too busy.
Do you think outsourcing is hurting the European and US markets?
What do you make of recent comments by US President Obama against companies who outsource to countries like India?
I think outsourcing is a trend that will just continue. Different parts of a process get outsourced to lower-cost countries or more cost-efficient countries.
One has to understand politicians also, in tough times when major layoffs are being made, and unemployment is dramatically rising, it is logical that politicians in these countries express concerns to quit outsourcing because that adds to the local problem.
If you continue to rationalise and find more efficient ways of working to getting outsourcing, you tend to become a stronger company and that leads to actually expanding in new areas.
We have outsourced our manufacturing to a large extent. Then Bharti and others outsource their operations to us.
Do you plan to invest more in India?
Absolutely, no doubt. We are investing here. This is a very good place to be for us. This has been the home country — if you like — for managed services and outsourcing. It is where this concept started and here we receive a lot of tasks that can be done cross-border.
What kind of global activities could come to India or be headquartered out of this place? And also, how many networks are you serving?
We are serving well over 100 networks in total and these networks hold a total of 275 million subscribers. So we are huge in that way.
But it doesn’t work that way, that the whole network is run from a place. Some activity may be run from another place. It may be optimisation work or it may be networking operations that could be outsourced here but it is seldom the whole thing.
The network operations centre that we have here roughly has about 11 customers, some of the activities of which are being handled from India.
In other countries are customers using 3G services?
If you take AT&T, they were clear in their Q3 report last year that they made more money on mobile broadband than they made on consumer Internet (fixed). So actually it’s a very good business. It depends on their (operator’s) revenue model.
We have to agree that we are still at the beginning. A couple of years ago, there were discussions on whether there is a business. I think we are far beyond that now, because the consumer wants it. It’s more on how operators set up their business model. We are still early on the learning curve but we are clear that mobile broadband is here to stay. We are heading to a quite interesting time in telecom. We are on our way to mobile Internet.
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