Ericsson deals blow to unified 4G dream
Pulls out of WiMAX
But the fact remains that, before LTE is here, there is a large community of service providers that cannot adopt HSPA because they have unsuitable or insufficient spectrum and no cellular heritage, making the appeal of a true IP, modern network that is (almost) available now far higher. Ericsson, despite its activities in wireline IP convergence, seems to be writing off the potential of the new breed of wireless quad play operators.
Alcatel-Lucent is clearly the biggest competitor to Ericsson now, and while it has a clear WiMAX and LTE strategy, it has less strategic commitment than Motorola and Nortel. Alcatel will not see its decisions swayed too strongly by Ericsson, and indeed may step up its activities in WiMAX to fill gaps that the Swedish giant might otherwise have targeted, but despite its vast size, we see Alcatel-Lucent as a tactical market follower in terms of technology choices, rather than a market driver - certainly outside the CDMA market, where Lucent's position puts it in the strongest position to exploit UMB, should that system see the commercial light of day towards the end of the decade.
Ericsson's action represents something of a comeback against the powerful bid by the east Asian companies and governments to reduce their dependence on European wireless royalty payments. This has led Samsung, in particular, to fiercely support technologies like WiMAX in which Ericsson and Nokia (for this battle is not all about Qualcomm patents) have less IPR than in UMTS.
While LTE has not been fully specified, it is logical to suppose the Scandinavians will also use their market weight to gain a significant position in the IPR for that system too. Ericsson is now on the offensive against the Samsung-dominated WiMAX - oddly and non-deliberately making common cause with its antagonist Qualcomm - and may be helped by the current uncertainty of the Chinese majors about their approach to 4G.
In the short term, Huawei and ZTE see WiMAX as an important entry point to wireless infrastructure markets outside their traditional territories, but they are under pressure from their own government to support evolution of a homegrown Chinese 4G family of standards, rather than taking WiMAX or LTE forward.
Whether the threat comes from China or WiMAX, Ericsson acknowledges that the development of LTE needs to be speeded up. "We have to speed up LTE development," conceded Persson. This is something that cellco chiefs have been calling for increasingly loudly - Vodafone CEO Arun Sarin, most publicly, issued veiled threats at the 3GSM conference that, if LTE did not reach the market in good time, operators would have to consider alternatives.
Currently, that alternative does not exist - pre-certified 802.16e systems will come to market this year but many vendors will have to wait to release a second generation, supporting advanced smart antenna techniques, to be able to claim competitive mobility and performance to that of HSPA; and certainly to back up WiMAX' claims to be comparable with LTE, rather than the current generation of 3GPP technologies.
Some advanced solutions exist, such as Navini's RipWave MX, but large carriers need to see a choice of large vendors in the market before committing major dollars. The argument that WiMAX represents a leapfrog, and a headstart towards pre-4G - rather than a rival to HSPA, coming late to the market - is fundamental to 802.16 backers, and Ericsson's lack of conviction, for all its self-interest, will hit the argument hard and may undermine confidence among some interested operators.
And, of course, it will be operator confidence, and the investment decisions they make in 2007-2010 as they upgrade their cellular networks - or move into wireless for the first time - that will really decide the issue.
Copyright © 2007, Wireless Watch
Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.
Rethink Research is currently conducting a major survey of about 400 service providers worldwide, on their views on which pre-4G technologies to invest in, and this will take into account any impact on operator thinking of the Ericsson action. The results will be available in a research report, Operator Plans for 3.9G, to be published in May. Please email Caroline Gabriel for details.