Newsletter: Q2 2007

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Ericsson has reported continued solid performance for the second quarter of 2007. Net sales for the quarter were SEK47.6 billion, up 8 percent on a year earlier, while net income was SEK6.4 billion, up 12 percent year-on-year (Press release).

Sony Ericsson built on its positive start to the year with another strong quarter. Shipments reached 24.9 million phones - 59 per cent higher than the same period last year - generating both year-on-year and sequential market share gains. Sales for the second quarter were EUR3,112 million, 37 per cent higher than last year, while income before taxes was EUR327 million, 55 per cent higher than a year earlier. The company increased market share by around three percentage points year-on-year to well over 9 per cent (Press release).

China Mobile signed a GSM expansion framework agreement with Ericsson, valued at about USD1 billion, at a ceremony in Sweden attended by Chinese President Hu Jintao. The Chinese President was in Sweden on a state visit at the invitation of King Carl XVI Gustaf of Sweden (Press release).

Ericsson and Samsung renewed their worldwide patent cross license agreement for 2G and 3G subscriber and infrastructure equipment (Press release).

The upcoming World Radiocommunication Conference 2007 (WRC-07) in Geneva is an opportunity for the telecommunications industry to make important spectrum decisions that will determine the future of global 3G services. If the industry waits until the next such conference in 2011, it risks fragmented regional policies that could hinder the uptake of mobile broadband for years to come.

Right now, we are witnessing the biggest upswing in take-up of 3G services since their introduction. The reason? New levels of performance, enabled by high speed packet access (HSPA), and innovative pricing models from mobile operators that make mobile broadband an attractive complement - or alternative - to fixed broadband services.

More people are coming to appreciate the convenience of mobile broadband over 3G networks. With HSPA networks already offering 3.6Mbit/s or 7.2Mbit/s in the downlink, secure and convenient broadband is available everywhere there is coverage.

Experience from HSPA rollouts proves that when operators provide quality coverage, services and devices, mobile broadband takes off rapidly. For one operator that introduced HSPA in 2006, HSPA traffic grew to 40 percent of all packet data traffic in a mere six months. Another HSPA operator realized data traffic growth of 400 percent just 10 weeks after it introduced flat-rate pricing for its HSPA data cards.

HSPA performance continues to improve and soon will be able to deliver 42Mbit/s in the downlink. The next important technology evolution in mobile networks, long term evolution (LTE) will provide peak rates above 100Mbit/s and higher in the downlink when it becomes available commercially in 2009.

The UMTS/WCDMA 3G standard has surpassed 100 million subscribers. Some 117 operators in 58 countries have launched HSPA services, and HSPA-enabled devices such as laptops, PC cards and PDAs are already widely available. HSPA also is beginning to appear in such devices as music players, game consoles and cameras.

Ericsson expects 1.8 billion broadband subscribers by 2012; about two-thirds of these will be mobile subscribers, which will increase mobile broadband traffic by 3000 percent.

Although such growth is very welcome news for mobile operators, current spectrum allocations simply will not be able to meet those levels of demand.

New spectrum allocation is critical
It is essential that sufficient radio spectrum be allocated so that mobile broadband services continue their strong momentum.

Until around 2015, the only additional internationally agreed spectrum identified for IMT-2000 mobile broadband services is the 2.50-2.69GHz IMT-2000 Extension Band. This band offers internationally aligned frequency division duplex (FDD) spectrum arrangements agreed by CEPT in Europe and CITEL in the Americas. Although today's HSPA networks use a carrier bandwidth of 2 x 5MHz, LTE will deliver optimum performance using 2 x 20MHz carriers. New spectrum will be necessary to meet the expected growth of mobile broadband traffic these technologies serve globally.

The ITU estimates that 700-1,300 MHz of additional spectrum is necessary to handle public mobile broadband services until 2020; that means current levels insufficient by as much as two-thirds. Allocating this additional spectrum in sub-5GHz frequencies - harmonized globally to enable roaming and economies of scale in network equipment, devices and services - will enable true wide-area mobility cost effectively.

It is also crucial not to risk the global and local benefits from harmonized paired FDD spectrum by deviating from existing agreements or by allocating the same spectrum to non-compliant technologies. Interests in some countries or regions may want to allocate spectrum for such non-IMT-2000 technologies such as time division duplex (TDD) Mobile WiMAX. These cases can, however, be addressed easily outside the 2.50-2.69GHz band, including the 2.3GHz and 3.5GHz bands.

In short, we must seize the opportunity during WRC-07 to prevent a disjointed market with services that are less convenient and more expensive for people to use. By making sensible spectrum allocation decisions today, we can ensure that society benefits by making tomorrow's mobile networks able to deliver better coverage affordable to more people.

Opinions may differ on the best technology path for future mobile services, but today's mobile industry has one clear technology leader. GSM, first introduced in 1991, is the world's most widely used mobile system, serving more than 2.4 billion people in more than 100 countries on all continents. And it continues to grow apace: the number of GSM subscribers around the world is set to increase by 40 million per month during 2007 (source: GSM Association). More than 10 million of these are being added every month in India and China. In India alone, Ericsson is currently installing a new GSM base station every 15 minutes.

The success of GSM - in both high-growth and established markets - can be attributed to its cost-efficiencies, broad portfolio of devices, and track record of securing migration to 3G systems. It provides voice, packet switched data (GPRS/EDGE) and short message service (SMS).

Since delivering its first base station in 1991 to Mannesmann in Germany, Ericsson has maintained its market leadership in GSM technology. The continuing growth in demand for GSM services means that Ericsson will have delivered the same number of GSM base stations during the period 2004-2007 as during the period 1991-2003.

Ericsson achieved a significant milestone during the quarter, when it delivered its one-millionth GSM base station, to mobile operator MTN Nigeria (Press release).

Other operators turned to Ericsson to extend their GSM coverage and capacity during the quarter:

• Indian integrated telecom service provider Bharti Airtel signed one of the world's largest network expansion deals with Ericsson - worth an estimated USD2 billion - for the expansion of its GSM/EDGE network and the provision of capacity management. It is Ericsson's largest deal ever (Press release).
• Mobile operator Wataniya Telecom chose Ericsson's mobile softswitch solution for its nationwide GSM network in Algeria (Press release).
• Banglalink, the Bangladeshi subsidiary of Orascom Telecom Holdings, selected Ericsson to supply, install and commission network radio equipment for its GSM network in and around the capital city Dhaka, followed by other regions later this year (Press release).
• China Unicom chose Ericsson to upgrade its GSM network across six provinces and to enhance its data services (Press release).
• China Mobile Pakistan selected Ericsson for the rapid expansion of its GSM network throughout the south of Pakistan (Press release).

IP multimedia subsystem (IMS) is a vital part of operators' migration to all-IP operations with service and network convergence. It unlocks the significant benefits of a truly converged experience for fixed, VoIP and mobile services - both for operators and their customers.

Ericsson IMS provides operators with immediate revenue opportunities when evolving to all-IP operations. It enables seamless access to a wide range of new multimedia services, across both fixed and mobile networks. Ericsson's solution includes a converged IMS core infrastructure, as well as application servers and service enablers for common functions that can be reused by multiple fixed and mobile applications.

During the quarter, Ericsson built on its leadership in IMS:

• Vodafone Germany selected Ericsson as sole supplier of IMS. Ericsson will also supply a comprehensive range of professional services to ensure successful network implementation and integration (Press release).
• Vodafone Portugal chose Ericsson as core IMS sole supplier to deliver integrated fixed and mobile convergent services (Press release)
• Telenor selected Ericsson to build an IMS-based network in Sweden, including IMS-based IP Centrex - the country's first commercial converged IMS network for the enterprise market (Press release).

Malaysian mobile operator Maxis Communications Berhad (Maxis) selected Ericsson to expand and upgrade its WCDMA/HSPA network to provide wireless residential broadband services in major cities and towns on mainland Malaysia (Press release).

Indian mobile operator Idea Cellular, Ericsson and the GSM Association's Development Fund announced that four mobile base stations powered by locally produced biofuels have extended Idea's commercial mobile network in rural India (Press release).

Argentinean mobile operator Personal selected Ericsson to build an HSPA-enabled 3G network in Argentina, as well as to expand and modernize its existing network with the Ericsson mobile softswitch solution (Press release).

Vodafone Spain selected Ericsson to modernize and expand its existing WCDMA/HSPA radio access network throughout Spain (Press release).

Ericsson launched Network IQ, a technology-independent platform that enables operators to use a single solution to control all their network systems. The solution supports streamlined workflows and subsequent cost reductions for operators that run their network over a large number of systems (Press release).

Bulgarian mobile operator Mobiltel is deploying Ericsson's latest microwave transmission solution, MINI-LINK TN, to help it reduce both capital and operational expenditure. The solution will provide extra backhaul capacity in the existing transport network and make it easier to add extra capacity as needed through the use of 'soft keys' (Press release).

Philippine operator SMART selected Ericsson's mobile softswitch solution to enhance the switching capacity of its satellite-based telephony network, called SMART Link, giving consumers greater reach and access to data services (Press release).

Ericsson announced a voluntary public cash offer to acquire German billing and customer care software and services company LHS AG for EUR22.5 in cash per share, valuing the company at approximately EUR310 million. The acquisition of LHS will strengthen Ericsson's leading offering in revenue management with a fully integrated convergent charging and billing solution and expand its customer base (Press release). The offer period relating to the acquisition has now started and will expire on September 17, 2007, unless extended (Press release).

Síminn, Iceland's largest operator, selected Ericsson to provide its mobile TV solution to provide consumers with easy access to mobile TV content and services (Press release).

Ericsson has signed an agreement to acquire 100 per cent of the shares of Drutt Corporation, a leading provider of service delivery platform (SDP) solutions (Press release).

Ericsson is to collaborate with Sun to develop an open source Java-based multimedia application server, together with a supporting program, for developers. Ericsson will contribute parts of its server development to the open source project, GlassFish, while the supporting program includes a variety of tools and expertise to support developers, including the ability to test applications on a live IMS-based network (Press release).

Cypriot operator CYTA selected Ericsson to provide a fiber-to-the-home (FTTH) network based on its Gigabit passive optical network (GPON) solution. The contract includes EDA1200 and EDA1500 central office optical equipment and devices for the homes, as well as passive infrastructure including fiber systems and cables (Press release).

Broad Band Telecom Services Ltd (BBTS), a leading Internet service provider in Chittagong, Bangladesh, chose Ericsson's EDA 1200 solution to deliver high-bandwidth, high-quality broadband services (Press release).

Ericsson upgraded its EDA1500 high-performance Gigabit passive optical network (GPON) system to be capable of switching bandwidth up to 320Gbit/s for commercial and residential next-generation multimedia services, such as IPTV (Press release).

Redback Networks, an Ericsson company, introduced the SmartEdge® 1200 multi-service edge router, the first million-subscriber rack for triple-play services such as HDTV, HD video-on-demand (VoD) and broadband mobility (Press release). Since its acquisition by Ericsson in March 2007, Redback Networks has won a series of new deals around the world, including Brazil, China, Hungary, Lebanon, Romania, Spain, Turkey and the United Kingdom (Press release).

AT&T Inc. selected Ericsson to provide equipment for the planned deployment of Gigabit passive optical network (GPON) in 'new build' areas of AT&T affiliates' local service territories, as part of the overall U-verse network strategy (AT&T press release).

Telecom operators around the world are turning to optical transport technology to boost capacity in their networks and maximize revenues through new services such as high-speed data, storage, video and voice transmission. Dense wavelength division multiplexing (DWDM) technology enables operators to build future-proof optical networks that meet the rapidly growing demand for broadband capacity needed for such services.

Ericsson DWDM solutions are designed to provide flexibility, high performance and operational synergies for efficient and evolved metro and core networking. Features like automatic network control and operation enable operators to simplify the way they run their transport networks, and ensure the best possible bandwidth utilization and quality of service.

Ericsson made a number of optical networking-related announcements during the quarter:

• Telefónica Deutschland selected Ericsson to support the operator in building and operating a nationwide DWDM network that will provide broader optical transmission capacity across Germany (Press release).
• Australian operator Telstra and Ericsson successfully completed the world's first live network trial of next-generation 40Gbit/s optical transmission technology. The trial showed that Telstra's existing 10Gbit/s DWDM transmission technology can be increased to 40Gbit/s without major changes (Press release).
• Italian Internet provider Wind selected Ericsson for metro and core optical transport technology and systems integration to support its fixed IP broadband access (Press release).
• Telecom Egypt, the largest fixed operator in the Middle East and Africa, chose an optical broadband solution from Ericsson to expand its transport network in the Nile delta area (Press release).

Telecommunications services are Ericsson's fastest growing area of business, achieving more than 30 percent growth during 2006 and more than 10 percent market share. Today, Ericsson manages networks covering 100 million subscribers and provides round-the-clock technical support to operators with more than 1 billion subscribers.

Indian mobile operator Bharat Sanchar Nigam Ltd (BSNL) awarded Ericsson hosting contracts covering mobile content download and ringback tone services (Press release).

Indian mobile operator Spice Telecom selected Ericsson's hosted enterprise solution to provide users with push e-mail and personal information management (PIM) services, over a wide variety of mobile devices (Press release).

Switzerland's largest mobile operator Swisscom Mobile signed Napster Mobile as its exclusive mobile music service provider. The Ericsson-hosted service will give Swisscom Mobile subscribers access to the easy-to-use mobile music service (Press release).

Dutch operator KPN signed a five-year managed services contract with Ericsson for access network field maintenance in the Netherlands. Ericsson assumes responsibility for all field maintenance activities and specific employees of KPN's multi-vendor mobile access, Traxys and Semafonie networks across the Netherlands (Press release).

Ericsson has established a new global service delivery center in Bucharest, Romania, which will initially employ about 200 people and will serve regional and global customers (Press release).

Cellular One's 1.6 million customers now have access to the world's largest mobile music catalog, following a new partnership deal between the mobile operator, Ericsson and Napster (Press release).

Ericsson will collaborate with Stanford University to explore the use of mobile technologies in distance e-learning. Through Stanford University's International Outreach Program, the partnership will bring distance learning to countries in Africa (Press release).

Ericsson has extended its cooperation with the United Nations to aid and improve emergency response by leveraging technological progress in telecommunications. Ericsson will provide a complete mobile telecommunications solution that can be rapidly deployed to selected humanitarian operations and that will be installed, operated and maintained by Ericsson employees (Press release).

How to achieve energy-efficient, sustainable mobile communications through network optimization, site optimization and alternative energy sources (White paper).

The metro network plays a key role in enabling residential, business and mobile users to access any broadband service anywhere, while delivering flexibility and efficiency for the network operator (White paper).

Building on existing HSPA networks is the best way to ensure a global mass market for mobile broadband that can deliver broadband for all and everywhere (White paper).


For the latest Ericsson white papers, please click here

The latest issue of Ericsson Business Review, Ericsson's thought-leading magazine on business strategies in telecoms, takes a look at ways operators in high-growth markets like China, India and countries in Africa - once viewed as tough, unprofitable markets - are not only turning in a profit, but also improving people's daily lives and prosperity and leading the way in service creativity. There are also articles on the role of communications in connecting communities in new ways, bridging the digital divide with mobile broadband, the leadership challenge of dealing with dilemmas, and the true meaning of convergence, as well as a profile of African operator MTN's CMO Santie Botha, and a thought-provoking interview with mobile industry guru Bengt Nordström, who urges operators to rethink their role in Internet world. To view the latest issue and to subscribe, please click here.

August 21-24
Connecting Rural Communities Africa Forum
The Grand Regency Hotel, Nairobi, Kenya
http://www.events.cto.int/default.aspx?event=crcafrica07

August 23
What are the Government and Regulatory impediments to rural coverage?
Nicholas Williams, Director, Regulatory Affairs - Sub-Saharan Africa, Ericsson
Ericsson is a gold sponsor and Ulf Pehrsson, Vice President Government & Industry Relations, will be chairman for one half day.

August 28-30
IMS Australasia 2007
Amora Jamison, Sydney, Australia
http://www.terrapinn.com/2007/ims%5Fau/

August 28
The role and impact of IMS
Speaker: Anders Norrga, IMS Product & Marketing Director, Ericsson

August 28
Panel: Business models in the new communications ecosystem
 Panelist: Anders Norrga, IMS Product & Marketing Director, Ericsson

August 29
 Panel: Transformation and collaboration - driving revenue through next-generation services
Panelist: Patrick Carson, Vice President of Multimedia Solutions and System Integration, Ericsson

September 2-3
GSM-3G Middle East and Gulf
Dubai, United Arab Emirates
http://www.iir-global.com/corporate/external/goto.htm?url=http://www.informatm.com

September 2
HSDPA trial results and feedback
Ericsson speaker to be announced

September 3-7
African telecoms billing and revenue management forum
Cape Town Convention Centre, Cape Town, South Africa
http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=1082

Date TBC
Using revenue management to maximize network usage on high-growth markets
Speaker: Niclas Melin, Marketing Director, Revenue Management, Ericsson

September 7-11
IBC2007 Conference
RAI Congress Centre, Amsterdam, The Netherlands

September 16-20
ECOC - European conference on optical communications
International Congress Centre, Berlin, Germany
http://www.vde.com/Conferences_en/ecoc+2007/

September 17
BAT Symposium
Co-chairman: Alfredo Viglienzoni, Ericsson Communications

September 17
Deep fiber broadband access using GPON and FTTx
Speaker: Martin Hatas, Ericsson

September 18
Highly Spectral Efficient Multi-User Optical Network Architecture using 1Gbit/s 16QAM
Subcarrier Multiplexing
Speakers include: Pierpaolo Ghiggino (Ericsson)

September 19
Impact of router bypass using optical transport on control load during failure recovery
Speakers include: Stefan Bodamer (Ericsson); Jan Späth (Ericsson)

September 19
RWA for Mitigating Power Excursion Effects in EDFA-based all-Optical Metro Networks
Speakers include: Rodolfo Di Muro (Ericsson); Bimal Nayar (Ericsson)

September 20
Mitigation of XGM and Add/Drop Induced Penalties in SOA-based Metro WDM Ring Networks
Speakers include: Rodolfo Di Muro (Ericsson); Bimal Nayar (Ericsson)

September 20
Workshop: Control Plane
Chairman: Jan Späth, Broadband Systems, Ericsson

September 18-20
SDP Global Summit
Radisson SAS Hotel, Frankfurt, Germany
http://www.vde.com/Conferences_en/ecoc+2007/ 

September 18
Understanding the role of the service delivery platform as a catalyst for multimedia services
Speaker: Ida La Spisa, Head of Service Delivery Platforms Solution Area, Ericsson

September 18
Case Study: From business concepts to SDP deployment
Speaker: Laurent Mayaux, Senior Solution Architect, Ericsson

September 19
Chairman: Patrik Hedlund, Strategic Product Manager SDP, Ericsson

September 24-28
Carrier Ethernet World Congress
Intercontinental Hotel, Geneva, Switzerland
http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=1034
Ericsson will be an exhibitor at this event

September 24-27
Prepaid World
Corinthia Grand Hotel Royal, Budapest, Hungary
http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=1072

September 26
Prepaid/post paid convergence: examining the rationale for implementing convergence and the means for achieving it
Speaker: Mattias Johansson, Strategic Product Manager Revenue Management, Ericsson

October 2-3
Light Reading Optical Expo
Sheraton Grand Hotel, Dallas, Texas, United States of America
http://www.lightreading.com/live/event_information.asp?survey_id=322 

 October 2
Options for Extending Fiber to the Home
Panel discussion with Ericsson speaker

October 3
Keynote speaker: Alfredo Viglienzoni, Head of Product Line Optical Networks, Ericsson

Building Dynamic Optical Networks
Panel discussion with Ericsson speaker

October 8-11
Location-based services
Melia Avenida America Hotel, Madrid, Spain
http://www.iir-events.com/IIR-Conf/Page.aspx?nrid=3624&id=7188

October 8-11
Broadband World Forum Europe
Estrel Convention Centre, Berlin, Germany
http://www.iec.org/events/2007/bbwf/conference/schedule.html

October 8
Mobile TV and interactive advertising
Chairman: Kurt Sillén, Vice President, Business Unit Networks, Ericsson

October 10
Mobile TV and interactive advertising
Chairman: Kurt Sillén, Vice President, Business Unit Networks, Ericsson

October 10
Driving broadband uptake beyond early adopters and copper lines
Chairman: Peter Linder, Director, Network Strategies, Business Unit Networks, Ericsson

October 9
Mobile Marketing Forum
Venue to be announced
http://www.mobilemarketingforum.com/?q=node/188

October 22-25
IIR Revenue Management and Billing
The Excelsior, Hong Kong
http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=1209

October 24-25
Next Generation Mobile Networks
London, United Kingdom
http://www.iir-global.com/corporate/external/goto.htm?url=http://www.informatm.com 

October 28 - November 1
Fall VON
Boston, Massachusetts, United States of America

October 30-31
GSM-3G North Africa
Cairo, Egypt
http://www.iir-global.com/corporate/external/goto.htm?url=http://www.informatm.com

October 30
The Role of HSDPA in Boosting 3G Deployment
Ericsson speaker to be announced

November 4
IIR Revenue Management and Billing
Megna, Dubai

November 5
IMS Internetdagama
Stockholm, Sweden

November 6-8
IMS MMD
Dallas, Texas, United States of America
http://www.informatm.com/newt/l/imsvision/mmd/

November 7
Analyzing the impact of IMS on the telecoms ecosystem: openness and the new service paradigm
Speaker: Todd Ashton, Director IMS Program, Ericsson

November 7
Achieving standardization between third-party application developers and handset operating systems
Speaker: Stefan Svedberg, Director IMS Program, Ericsson Mobile Platforms

November 8
Chairman: Marc LeClerc, manager, Global IMS Developer Support Expert Centre, Ericsson

November 13-17
Transport Network Strategies
Hotel Princess Sofia, Barcelona, Spain
http://www.iir-events.com/IIR-Conf/Telecoms/EventView.aspx?EventID=1187
Ericsson is gold sponsor of this event. Programme details to be announced.

November 21-22
GSM-3G AfricaCom
Cape Town, South Africa
http://www.iir-global.com/corporate/external/goto.htm?url=http://www.informatm.com

November 26-29
Next Generation Billing & Mobile Payments
Geneva, Switzerland

December 3-7
IMS Global Congress
Hilton Hotel, Amsterdam, The Netherlands

Ericsson events

September 11: Strategy and Technical summit, London, United Kingdom

October 25: Q3 2007 results

November 20: Management Briefing, New York, United States of America 

For further information about industry analyst activities, please contact industry.analysts@ericsson.com or refer to our website.


Telebriefings

July 23: Data retention - a new regulation that will affect all operators within the European Union. All countries within the European Union are now adopting their legislation to comply with EU Directive 2006/24/EC, which requires operators to build solutions for storing certain traffic and administrative data (no content) generated from public telecommunication and Internet services up to 24 months. Click here for invitation and details.

Please note: these topics were correct at the time of sending this newsletter. Please check here regularly for an updated list of scheduled telebriefings.

If you missed a telebriefing or would like further information, check out the archive where you can listen to the telebriefing, and access the presentation and script here.

To sign up for the industry analyst telebriefings and technology updates, please send an e-mail to industry.analysts@ericsson.com or refer to our website.

The next newsletter will be issued following the quarterly report October 25 2007. For further details regarding the quarterly reports, please check here.

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Don't forget to check out the industry analyst web site http://www.ericsson.com/ericsson/industryanalysts