News
Speaking exclusively to Total Telecom at Ericsson’s MWC 2019 event, Ericsson’s senior vice president and head of market area for Europe and Latin America, Arun Bansal, discusses his company’s strategy for 5G in 2019
Ericsson began MWC 2019 in buoyant mood, claiming that 2019 would be the year in which the Swedish tech giant kicked off 5G rollouts around the world.
“We are truly switching on 5G around the world in 2019,” the company’s CEO, Börje Ekholm, told journalists at Ericsson’s welcoming address in Barcelona.
“Consumers and enterprises are waiting for 5G,” Ekholm said. “According to Ericsson ConsumerLab research, one-third of smartphone users globally will change either immediately or within six months to a service provider that switches on 5G,” he said.
Ericsson has won 10 commercial 5G rollout contracts across the world, particularly in the US and Asia, but it is the company’s home market of Europe that could hold a few surprises in the weeks and months ahead.
Total Telecom spoke to Ericsson’s head of market area for Europe and Latin America, Arun Bansal, to uncover the challenges and opportunities that 5G is presenting for Ericsson around the world.
5G in Europe
While Ericsson has performed particularly strongly in the US and Asia, Bansal believes that Europe presents a real opportunity for his company, particularly with the evolution of Industry 4.0 use cases and applications across the continent.
However, Europe’s 5G prospects are currently being hamstrung by overly bureaucratic regulatory frameworks and the lethargic pace of spectrum auctions, as Bansal explains.
“I think that the biggest obstacle is the regulatory framework. It’s not yet clear how operators will obtain their licences, it’s not clear at what price the licences will be auctioned at in many countries – of course, in some countries they have already started this process – I know that in Switzerland, for example, they held their auction just a couple of weeks ago, but in the majority of countries in Europe they have not yet done so.
“Our request to the regulator and the local authorities is always the same – make it easy to deploy critical infrastructure. In my mind, 5G is absolutely critical national infrastructure. It will significantly impact the competitiveness of the country in times to come. If you look at 3G and 4G, that was more consumer orientated. If you look at the country’s that did not deploy enough 4G infrastructure, you can see that their GDP suffers, their employment rate suffers. 5G is going to be another step further on than that because it is beyond consumer, with all the industrial applications and use cases. If you don’t have 5G infrastructure facilitating that level of connectivity for industries, then countries will lag behind in terms of competitiveness in the global marketplace,” he said.
Challenges in the UK and the B-word
The UK will be among the first nations in Europe to roll out commercial 5G mobile services to its citizens. However, the UK presents a number of unique challenges for Ericsson, particularly as the prospect of a no deal Brexit looms large on the horizon.
“Specifically in the UK, the biggest obstacles are a combination of the regulatory requirements and the deployment – obtaining site permits. This is probably one of the most complex challenges in all of Europe,” said Bansal.
“Brexit or no Brexit, 5G is going to be extremely important from a competitiveness point of view. Many countries are talking about the digital index of the country.
“Especially in Britain, where there is a lack of full fibre, FTTH connectivity, 5G will help to bridge that gap, so that people can get access to those [ultrafast] broadband services, at a reasonable price,” he said.
5G – A money spinner or financial blackhole for telcos and NEPs?
The rollout of 5G across the globe will require billions of dollars of investment in capital expenditure projects from telcos, government and private financers. With some operators still struggling to secure an adequate return on the investments they made in their 4G networks, it seems pertinent to ask: can the industry really afford 5G?
“Our prediction is this,” said Bansal. “We work as a percentage of the capex for the whole market. That capex is decided by the revenue growth of the operators. If you look at the traditional consumer revenue streams, we are not forecasting that they will increase significantly – leaving aside the enterprise segment for the time being. Hence, operators will not have the capability to invest more in their capex, than they have done traditionally. So if they are not able to invest more in capex, we will not be able to get more revenues for Ericsson.
“From the operators’ point of view, 5G is more about cost efficiency. They need more data because demand for data is increasing six or seven times over, while revenues are at best flat. So 5G deployment will help them to bridge that gap – they can address that additional demand for capacity while keeping their capex more or less flat. Hence, we don’t believe that 5G will be a significant money spinner for us in the short term. However, once the industrial use cases kick in and they help to generate additional revenue from an operator, that will determine how much additional capex the operators can afford to spend,” he explained.
What is Ericsson bringing to the 5G party?
With Ericsson, Nokia and Huawei all competing for a slice of Europe’s 5G pie, each network equipment provider is searching for ways to differentiate themselves from the competition. For Bansal, it will be Ericsson’s focus on cutting edge software that will separate it from the crowd.
“All of the equipment that we have sold into the industry since 2015 is software upgradable. The biggest cost for any operator in Europe, or anywhere in the Western world, is sending engineers to site. It’s really expensive to send someone out to a site to do a software upgrade. What we have delivered since 2015 is network equipment that is software upgradable to 5G. That is unique to us,” he said.
“The second thing is this: you can deploy 5G gradually because you can use elements of the same spectrum for 4G and 5G. Historically you had to allocate spectrum for a particular generation. Generation take up happens with terminal. Terminal penetration takes perhaps 18-24 months depending on the price and the attractiveness and everything. So you don’t have to allocate any spectrum for 5G. So as you continue to grow, you can allocate more and more spectrum and that’s unique to Ericsson.”
MWC – A catalyst for innovation
Barcelona’s Fira exhibition centre is expected to welcome around 110,000 people to MWC 2019 over the next four days. This obviously presents a huge opportunity for companies like Ericsson to get their products and services in front of a huge range of potential customers.
“MWC is a premium event where we would expect to get around 10,000 visitors to our stand. We would expect that around 6,000 of those 10,000 visitors will be existing customers.
“It’s the one place where we get to showcase our technology and innovation to all these people,” Bansal said.
In addition to this commercial benefit, Bansal says that MWC helps to focus the attention of Ericsson’s R&D teams, who use the event to showcase their latest innovations.
“MWC is very important for two reasons. Firstly, we get to hear feedback from our customers. Operator CEOs give us a lot of feedback on how we are performing compared to our competitors.
The second reason is that it acts as a real milestone for our R&D teams to deliver their projects. It’s a fixed date, it gives you that sort of tangible deadline. I used to run R&D myself, so I’m talking from personal experience. R&D teams around the world are completely focussed on making sure that their latest innovation is ready to be unveiled at MWC. Without the MWC event in Barcelona, you lose that sense of urgency. Projects might overrun by a couple of weeks. That’s a really significant benefit for a company like us, you put your flag in the ground and say "OK, we need to be ready by this date". If you miss that date, then you have to travel to 180 countries around the world to show off your latest innovation. At MWC the world comes to us,” he said.
Also in the news:
Europe lagging on 5G? Don’t be so sure, says Ericsson
Ericsson paves the way for 5G in India with LTE deployment for Vodafone Idea
