Third-generation (3G) services will be available through out most of North America within five years, and carriers will offer roaming between their 3G networks, says Mark Henderson general manager of Ericsson Canada.
Henderson, a former executive at Novatel Wireless, predicts the wireless services
market will experience “”phenomenal growth”” in the near future because many people around the world still do not have a communications device.
Ericsson Canada has about 2,000 employees, 1,600 of whom work at a major research centre in Montreal.
Henderson recently shared his views on the wireless services industry with CN.
CN: Generally speaking, when can we expect the carriers to deliver 3G services and what steps they have to take in the meantime in terms of developing their infrastructure?
MH: I think the carriers in general are pretty well completing the activity where they are overlaying data capability on their existing networks. When you talk about UMTS or 3G-capable speeds, at 384 Kbps — depending on which technology you are using — there are some markets in North America where there are spectral challenges. But there are technologies such as EDGE for the GSM operators, where they can implement that on the network today to give them close to those types of speeds, so you’ll start to see some of this on the networks here in North American within the next year and a half, depending on the technology of the carrier and the availability of spectrum.
CN: Are there any changes some of the carriers will have to make to their business model in order to make the 2.5G and 3G services profitable?
MH: When you look at Europe and the growth of SMS and the revenues it provides for those operators, the carriers here in North America will try to replicate some of that. I think that since there’s been technology implemented in the networks that allows SMS traffic to travel between technologies — for instance between CDMA networks and GSM networks — there has been a spike in growth in SMS. But I think the challenge for the carriers is determining what people will pay for and what they find useful, and I think they’re still struggling with that.
CN: Do you have any concerns, being an equipment manufacturer, that the carriers may run out of money and may not be able to buy more equipment from companies like Ericsson?
MH: Certainly capital expenditures have dropped in North American market and the European market. The results for Ericsson particularly in the North American market has still been relatively strong. The market is still growing, so with the capacity of some of these networks, you see the quality dropping. There actually will be a need to invest capital in the networks.
CN: What’s your perspective on some of the differences between the approach to wireless services in Europe versus North America?
MH: On the data side, the pickup has been quicker in Europe. Services like SMS in Europe represent a good piece of the revenue that the operators — and everyone — are looking at that. Wireless service in Europe in general — there’s probably many reasons why the growth and the penetration rate and the adaptability of services is ahead of the curve. There’s one ubiquitous standard in Europe, so when you have data services, the applications are pretty ubiquitous no matter where you are. The second big area is probably the value proposition of the phone itself. In Europe, unlike North America, local telephony is metered. If you make a local call for an hour in Paris, it’s going to cost you more than it would for 10 minutes. I think the third area really is really calling party pays. If you call a mobile in Europe, you pay.
CN: if you think back about 10-15 years, are there any developments in the wireless services industry that have surprised you?
MH: One of the surprises is the model in the wireless industry, where the carriers are distributing product under the subsidy model, is what an impact that has had on the business. The industry has had such a phenomenal growth, and will continue to have phenomenal growth because 17 per cent of the people in the world basically don’t have a communication device in their hand. The fact that it’s been difficult for the carriers with that kind of growth, with that kind of market, with this type of technology — to really be successful when it comes to generating cash — that’s a bit of a surprise.
CN: Do you have any predictions as to what services will look like five or ten years down the road?
MH: I think when you look four or five years into the future, I think we’ll have third-generation services rolling out pretty well across all the continent. That kind of technology with those kinds of speeds with those applications will be available to people. The carriers will probably have discovered the sweet spot when it comes to what they can offer and what customers will pay for. I think you’ll have fairly seamless roaming between technologies worldwide. I think the plethora of devices that will be on the market will be extremely rich.
