Newsletter: Q4 2005

Sony Ericsson has reported a record shipments, sales and profits for 2005, following a very strong performance in the second half of the year. The company shipped 16.1 million units during the fourth quarter  of 2005 - up 28 per cent year-on-year - and generated sales of 2,310 million euros, up 15 per cent year-on-year. Shipments for the full year were 51.2 million units, compared with 42.3 million in 2004, while net income before taxes was 514 million euros, up from 486 million euros a year earlier (Press release).

Broadband is officially the fastest-growing telecoms service ever and with arrival of mobile broadband networks, growth looks set to continue. Meeting this new demand will require much higher capacity networks - in the access, metro and core domains - not only to deliver additional bandwidth, but also to enable the delivery of a greater variety of services, offered with well managed quality, reliability and availability. Ericsson's recent acquisition of the bulk of Marconi's telecoms equipment business is a strategic move that will help the company strengthen its position as a leading provider of end-to-end transport and transmission solutions for high-performance broadband.

Broadband access has developed into a mass-market service at an astonishing pace: between 1998 and 2005, broadband subscriptions grew at a compound annual rate of 94 per cent. This is even faster than the previously record-breaking adoption of mobile telephony, which has grown at a compound rate of 32 per cent since its introduction in the mid-1980s. This breakneck growth in broadband adoption among business and private customers has been driven by healthy competition between broadband service providers, lower prices, increased geographic availability and the ever-rising popularity of the Internet.

Today, Ericsson estimates that there are over 200 million broadband access subscribers, and that figure is predicted to rise to nearly 400 million by 2009. What's more, a greater variety of devices are being connected to these broadband links. According to The Diffusion Group, a digital home research consultancy, global home network adoption is expected to grow from 35 million in 2004 to more than 162 million in 2010, with the number of network-connected devices growing from 108 million in 2004 to just under one billion by 2010.

For broadband service providers, the market is evolving from relatively small - if highly competitive - playing field into an Olympic-sized stadium complex. And broadband access isn't only based on copper Digital Subscriber Lines (DSL) and cable connections: there is significant interest and growth in public wireless networks (WiFi and WiMAX, for example), mobile broadband (high-speed packet access for both down- and uplink, HSDPA and HSUPA/EUL) services and fiber access, which has seen something of a revival recently.

Broad-based differentiation
Broadband operators need to differentiate themselves beyond price, and develop value-added, bundled service offerings that go beyond straightforward telephony and high-speed Internet access. They need to offer a mix of richer communications, media and content services, in areas such as Voice-over-IP, IP-TV, High-Definition TV, video telephony, interactive/on-demand video, as well as corporate data services. These will need to be delivered with certain quality guarantees, especially for real-time voice and video services.

To do this, operators will need to implement multiple strategies to keep existing broadband customers, expand broadband coverage, and increase penetration in already-covered areas. This will require more capable and cost-efficient networks than those deployed today.
While the first wave of broadband networks has been designed for Internet access at moderate speeds as the main service offering, a significant price-performance boost is now required. New high-performance broadband networks must deliver cost-efficiency, multi-megabit throughput and multi-service delivery mechanisms.

One of the main triggers for moving to higher-capacity, more flexible and more cost-efficient broadband infrastructure is IP-TV. But any new infrastructure deployment needs to be made with the requirements of other new services in mind. These might include Metro Ethernet services for enterprise customers, aggregation of 3G mobile traffic, and consolidation of legacy data, telephony and 2G mobile traffic.

The transition to networks that are capable of delivering multi-channel Standard Definition TV (SDTV) and/or High-Definition TV (HDTV) requires substantially higher capacity (25-50 times) than is available in legacy broadband networks. It is also vital for wireline operators to have new capabilities that enable them to offer differentiated services with their own specific characteristics.

Meeting these substantial capacity improvements cost-efficiently requires a transition to new access technologies. In the first mile (closest to subscribers), ADSL2plus, VDSL2 and Fiber Ethernet are being adopted to deliver peak speeds in excess of 20Mbit/s per user. In the second mile (the aggregation zone between access nodes and the core network), Gigabit Ethernet, Dense and Coarse Wavelength Division Multiplexing (DWDM and CWDM) and microwave radio technologies are needed for efficient backhaul of broadband traffic to the nearest core network node.

The operator's choice of technology will depend on the existing architecture, if any, the local geography and subscriber density, the types of services planned to be offered, and market expectations. Operators are likely to deploy a range of technologies to meet a variety of needs across their service areas.
This means that as the broadband market develops, operators will look for suppliers who can meet their transport and transmission fully, from an end-to-end, business-focused perspective.

With the acquisition of strategic parts of Marconi's telecoms business, Ericsson has strengthened and complemented its transmission portfolio, especially in the areas of broadband access and optical transport. Integration of the two companies' product lines is already well under way. The new product range gives Ericsson the most complete portfolio of transmission and transport solutions that will provide operators with a strong platform for broadband growth - all from a single source.

To listen to the telebriefing on Ericsson's acquisition of Marconi assets - Strengthening Ericsson product portfolio that took place on February first, please refer to http://www.ericsson.com/ericsson/industryanalysts/

If you need to get access, please contact industry.analysts@ericsson.com

During the quarter Ericsson further strengthened its position in the WCDMA handset market: today, more than 15 million of the world's WCDMA handsets are based on technology from Ericsson Mobile Platforms.

In addition, Ericsson Mobile Platforms was the first company to successfully verify seamless handover between EDGE and WCDMA in live commercial networks - demonstrating key 3G capabilities of both packet data and voice calls.

Ericsson has taken an industry lead in the roll-out of mobile broadband around the world, delivering the network technologies operators need to offer these new capabilities quickly, cost-efficiently and with high levels of service quality.

Mobile broadband will offer anywhere access to e-mail, online music and video, Internet services and mobile TV. Making it a commercial success demands high-performance solutions in all parts of the mobile network - from access, through 'second-mile' aggregation and transmission, metro/core switching and routing, to the application and service layer.

In partnership with its customers, Ericsson is currently exploring the mobile broadband possibilities of a number of new technologies, in preparation for fast commercial launches later this year. One example is HSDPA, the next step in the evolution of WCDMA, where Ericsson now have 21 installed networks with HSDPA capabilities in 17 countries around the world, spearheading the development of mobile broadband.

Ericsson made a number of significant announcements relating to mobile broadband technology during the fourth quarter:

• a contract with BITE Group for the supply of GSM/EDGE and WCDMA mobile systems infrastructure in Lithuania and Latvia (Press release )
• the introduction of new capabilities for its MINI-LINK TN microwave transmission family, so that it now offers a complete, end-to-end transmission solution optimized for cost-effective roll-out of mobile broadband (Press release )
• a contract with Taiwanese 3G operator VIBO Telecom for the deployment of an AXX optical metro network to enhance coverage and capacity and provide a cost-efficient, future-proof multi-service transport platform for advanced 3G services and IP traffic (Press release )
• in partnership with MTN South Africa, the first demonstration of how 3G networks using WCDMA technology enable new mobile broadband services as well as a cost-efficient fixed broadband alternative, when combining HSDPA and Fixed Wireless Terminals (Press release )
• its selection by Australian operator Telstra to provide a national 3G network based on WCDMA 850MHz technology, which will connect all the operator's mobile customers to one national network offering improved coverage and choice of §services (Press release )
• the successful upgrade of Vodafone KK's commercial network in central parts of Tokyo to support HSDPA, in order to perform live tests of the technology (Press release )
• an extension of its 3G network contract with Danish operator TDC Mobil for the supply of WCDMA solutions and related coverage (Press release )
• its selection as sole supplier of 3G/WCDMA network technology by T-Mobile Slovensko, which will enable the operator to offer its Slovakian customers new, advanced mobile multimedia services (Press release ) 
• the launch by Estonian mobile operator EMT of its commercial 3G network, based on Ericsson 3G core and radio technology. Ericsson is also providing EMT with hosted multimedia services, including personalized music and video, using its Service Delivery Platform-Media solution (Press release )
• a trial by Rogers Communications Inc. of 3G/HSDPA mobile services and applications, as well as converged IMS (Press release )
• the signing of an agreement with Polska Telefonia Cyfrowa to supply the operator's 3G radio network, upgrading its existing GSM coverage in major Polish cities to WCDMA (Press release).
  

The flip-side of building out new network capabilities for mobile broadband is to identify and develop new revenue-generating services for mobile operators which they can offer their subscribers. Key among these is mobile TV, which mobile operators and media companies all over the world are starting to introduce - in the form of schedule-based TV channels as well as on-demand TV programs.

During the fourth quarter, Ericsson made two significant announcements relating to mobile TV:

• the world's first live trial of interactive mobile TV in partnership with the Norwegian Broadcasting Corporation (NRK), which will enable mobile phone users to vote, chat and communicate with TV presenters while watching TV on their mobile phones (Press release)
• the enhancement of Ericsson's mobile TV offering with a new channel selector for mobile handsets that enables the quickest channel switching on the market (Press release).
  

Many mobile operators around the world are now starting to deliver the promise of all-IP based convergence. Ultimately, convergence will give subscribers access to a comprehensive package of services from the devices of their choice, over the most convenient access - as well as providing significant long-term cost savings for operators. One important step in this process is the convergence of mobile circuit-switched and packet-switched systems into a single architecture.

Ericsson's Mobile Softswitch, IP Multimedia Subsystem (IMS) and Unlicensed Mobile Access (UMA) solutions are key elements of such converged mobile networks, and Ericsson announced several contracts for these solutions during the quarter:

• the choice by US mobile operator SunCom Wireless of Ericsson's Mobile Softswitch solution for the operator's next-generation core network throughout its coverage area in the south-eastern USA. In addition, the two companies will conduct trials of IMS and UMA to prepare SunCom's network for next-generation capabilities (Press release)
• a joint trial with Scandinavian operator TeliaSonera of Ericsson's Mobile@Home solution for UMA, which enables a single handset to be used for both mobile and fixed telephony (Press release)
• the selection by Serbian mobile operator Mobtel of Ericsson as sole supplier of a mobile softswitch solution to modernize its network and enable rapid and cost-efficient growth (Press release)
• an agreement with Vodafone Fiji to enhance its mobile network with Ericsson's Mobile Softswitch and WCDMA radio technology (Press release).
  

While the media headlines may focus on what are perceived to be more exciting developments in other wireless technologies, GSM continues to develop and grow - both in terms of subscriber capacity and new service capabilities.
Ericsson expects that by 2007 as much as four-fifths of all mobile subscribers will be served by the GSM/EDGE/WCDMA family, in which Ericsson holds the leading position with a 35 per cent market share.
Throughout the fourth quarter, Ericsson made succession of announcements relating to the continued growth and development of GSM around the world:

• an agreement with international mobile service provider Investcom LLc to expand and upgrade its GSM networks in three West African countries: Benin, Ghana and Guinea (Press release)
• two new contracts from the Caribbean's fastest-growing mobile operator Digicel Group to provide GSM/EDGE networks in Haiti and Trinidad & Tobago (Press release)
• a US$200 million turnkey deal with Russian mobile operator VimpelCom to supply a GSM/GPRS/EDGE network in Ukraine (Press release)
• its selection by mobile operator Movistar Uruguay, part of the Telefónica Móviles group, as sole supplier of its GSM network, including EDGE-ready GSM/GPRS radio access and core networks and a microwave transmission solution (Press release)
• a contract with Ukrainian mobile operator Astelit to expand its GSM network to offer greater geographic coverage and network capacity (Press release)
• contracts valued at US$290 million with Chinese operators Guangdong Mobile and Guangxi Mobile to expand their GSM networks (Press release)
• an agreement with mobile operator Movistar Argentina, part of the Telefónica Móviles group, to expand its GSM network, including EDGE-ready GSM/GPRS 850MHz and 1900MHz radio access and core networks and a microwave transmission solution (Press release)
• the addition of GSM 450 to the Ericsson GSM portfolio, enabling cost-efficient 450MHz coverage in markets not already served by GSM (Press release).
  

Operators looking to extend the capacity and reach of their broadband service offerings are increasingly turning to Ethernet's capabilities as a cost-effective and capable transmission technology.

Ericsson was one of the first telecoms vendors to identify and act on the trend towards Ethernet technology, and today has the only complete IP/Ethernet access node portfolio on the market for Digital Subscriber Line (DSL), fiber and radio access.

Ericsson's Ethernet DSL Access (EDA) solution is the most widely installed IP-DSLAM (DSL Access Multiplexer), with over 70 networks deployed globally. It uses the latest ADSL2+ access technology with Gigabit Ethernet uplinks, Ethernet aggregation switches and Broadband Remote Access Servers (BRAS).

The fourth quarter of 2005 saw several more operators opting for Ericsson IP/Ethernet access technology:

• North Queensland-based ISP Regional Internet Australia chose Ericsson's EDA solution to build the region's fastest broadband network, offering customers speeds up to ten times faster than existing services (up to 24Mbit/s) (Press release)
• Vietnamese operator Saigon Postel selected the EDA solution for its network upgrade to ADSL2+ for high-performance broadband services (Press release)
• Malaysian operator TIME dotCom appointed Ericsson as the sole supplier to upgrade its network using EDA to provide high-performance broadband services to its customers in selected commercial and business districts (Press release)
• Tele2 chose EDA to open the door to triple-play services in Norway and Sweden (Press release).
  

As operators move towards a layered all-IP network and service architecture, it is important that the quality of service that subscribers are used to from their traditional telephony services is maintained. Ericsson's Telephony Softswitch is a commercially proven system designed to maintain and extend operator revenues. It provides a low-risk evolution of existing circuit-switched networks to an all-IP multi-service platform.  The solution is capable of carrying large, and growing, volumes of voice and data traffic, and enables traditional telephony and IP-based broadband traffic to run on a single network - providing significant long-term cost savings.

More than 55 fixed and mobile operators worldwide have launched commercial services based on Ericsson's softswitch solution.

Several new contracts for the Ericsson Telephony Softswitch were announced during the fourth quarter:

• Korea's largest operator KT successfully introduced Ericsson's Telephony Softswitch solution into its network, to provide a single platform for the launch of its commercial Voice-over-IP services as well as to support its traditional Time Division Multiplexed (TDM) traffic (Press release)
• Telecom Egypt chose Ericsson, in cooperation with Cisco Systems, as one of the suppliers to upgrade its fixed network to a carrier-class, IP-based next-generation network capable of carrying both classic telephony and new multimedia services (Press release)
• International operator REACH selected Ericsson's Telephony Softswitch to upgrade its international wireline network in Hong Kong, the UK and the USA (Press release).
  

Telesur, the incumbent operator in Surinam, has chosen Ericsson to provide and deploy an IP next-generation network solution, in alliance with Cisco Systems. With this new infrastructure, Telesur will be able to deliver value-added IP/Ethernet services such as conference calling, presence, videoconferencing, instant messaging and multimedia capabilities over its installed base (Press release).

Mobile operator 3 has entered into an exclusive, seven-year managed services partnership with Ericsson, in which Ericsson will be responsible for the management of the operator's 3G mobile network and IT operations in the UK. This is the largest contract for managed services and infrastructure signed by Ericsson to date, and one of the largest ever signed in the industry. Under the terms of the agreement, 3 will retain ownership of and responsibility for strategic direction of the network and IT infrastructure. Ericsson will also provide 3G infrastructure and related services for future expansion of 3's network, which currently comprises non-Ericsson equipment (Press release).

Global network operator TeliaSonera International Carrier has expanded its managed services contract with Ericsson to include new areas such as management of site activities, ducts and fibers, facilities and subcontractors. Ericsson is now managing a major part of field operations for the operator in Europe and North America (Press release).

Operators are increasingly turning to the expertise of external providers to host and manage new services as a way of reducing costs and tapping into specialist expertise. Ericsson has officially announced 64 managed services contracts since 2002, of which 34 are hosting contracts.

Service hosting is growing in popularity - especially for 'new media' services - as three key announcements made during the fourth quarter demonstrate:

• Swiss operator sunrise and Ericsson agreed a managed services contract to launch mobile TV services, including video-on-demand, in Switzerland (Press release)
• Scandinavia's largest CD compilation company Absolute Music/EVA Records chose Ericsson's hosted personalized music service to make its music available for mobile phones (Press release)
• mobile operator 3 Italy signed a five-year agreement with Ericsson for its hosted ringback tones service, based on Ericsson's Personalized Greeting Service (Press release).

Ericsson also won several operator hosting contracts for enterprise push e-mail services, as outlined in the next section 'Enterprise communications'.

Venezuelan mobile operator Telecomunicaciones Movilnet has selected Ericsson as provider of its nationwide ringback tone solution, including end-to-end systems integration. With Ericsson's Personalized Greeting service, Movilnet becomes one of the first operators in Latin America to make personalization services available to its customers (Press release ).

Ericsson Mobile Organizer (EMO), Ericsson's push e-mail solution, has found favor with enterprises and mobile operators alike. It has been selected by 35 mobile operators around the world, with a market reach of over 150 million people, as well as by several large enterprises and system integration partners, who appreciate its true platform- and device-independence and rich functionality.

The latest version of EMO offers smartphone users secure 'push' access to all their Personal Information Management (PIM) applications - e-mail, calendar and meeting requests - without any need for proprietary hardware, special devices or operator tie-ins.

During the last quarter of 2005, several operators opted to take on EMO as a hosted service from Ericsson:

• Philippine mobile operator Sun Cellular has extended its managed service partnership with Ericsson to include the EMO-based hosted push e-mail service (Press release)
• Jordanian mobile operator MobileCom has signed a three-year contract with Ericsson for hosted push e-mail services based on EMO (Press release)
  " Brazil's first GSM operator Telemar/Oi is to become the country's first operator to introduce Ericsson's EMO-based hosted push e-mail solution as part of its services for enterprises and consumers (Press release).
  

Ericsson has acquired Australian systems integration specialist TUSC to further strengthen and develop its telecommunications services business (Press release).

Ericsson has announced a partnership with the United Nations Development Programme (UNDP)'s Growing Sustainable Business initiative to help realize the vision of Communication for All and the Millennium Development Goals (Press release).

13-16 February 2006
3GSM World Congress, Barcelona
Website: http://www.3gsmworldcongress.com/ 

           Monday, 13 February, 10:00am
           Location: World Trade Center
           Topics: Press briefing for media and analysts
           Hosted by: Carl-Eric Svanberg, President and Chief Executive Officer
           Live webcast: http://www.ericsson.com/press & http://www.ericsson.com/investors

           Tuesday, 14 February
           Location: La Fira
           Topic: Technical symposium - standardization briefing
           Speaker: Magnus Olsson, Standardization Manager

           Thursday, 16 February, 9:40am
           Location: La Fira
           Topic: Keynote address: The evolution of 3G - where do we go next?
           Speaker: Carl-Henric Svanberg, President and Chief Executive Officer

We will be able to facilitate one-on-one interviews on selected topics upon your request with senior spokespersons. We can offer the following topics:

• the mobile channel - TV in the mobile
• music to your handset
• services - hosting, content aggregation, Fast Service Launch, managed services
• mobile broadband - HSDPA is happening now
• efficient evolution to all-IP, including IMS
• competing and complementing technologies - how do they fit together and what is the right technology way going forward?
• demo tours.
  

Ericsson will be present in Hall 8, Stand A11 in the congress hall. We will also accommodate for one-one briefings in our consultancy lounge, also located in Hall 8
The demonstrations will mainly take place in the Ericsson pavilion, outside the main entrance to La Fira, where you will have the chance to experience some very exciting hands on demos such as mobile TV, interactive mobile TV, the channel selector, music, HSDPA as the enabler, WeShare applications and IMS demo systems and much more. We can accommodate one-one meetings with a specific demo tour if of interest.

For further information about industry analyst activities at 3GSM World Congress, please contact Pia Sörensen, mobile +46 70 593 1958 or industry.analysts@ericsson.com

Globalcomm India 2006, New Delhi

Website: www.globalcomm-india.com

     Monday, 20 February, 11.00am-12.30pm
     Inauguration ceremony
     Ericsson address:  Mats Granryd, Managing Director, Ericsson India PVT Ltd
    
     Monday, 20 February, 4.00-6.00pm
     Wireless Sessions
     Topic: Where do we go beyond 3G? The path forward for 3GPP 
     Ericsson speaker: Dr Asok Chatterjee, Vice President -

     Strategic Standardization,Ericsson, USA

     Wednesday, 22 February, 4.30-6.00pm
     Valedictory plenary session
     Topic: ICT for rural development
     Ericsson speaker: P Balaji, Vice President - Marketing & Technical Solutions, Ericsson India

     PVT Ltd

For further information about industry analyst activities at Globalcomm India, please contact Pia Långström, mobile: +46 70 267 1905.

IMS Forum

Topic: FMC and beyond; technology and strategy for North America

TMIA Annual Meeting and Exhibition

MVNO Strategies and Markets, San José, California

Website:http://shop.telecoms.com/marlin/30000000861/MARKT_EFFORT/marketingid/20001304017

Topic: Can MVNEs facilitate the carrier negotiation process and the launch of a MVNO?
Speaker: Eric Anderson, VP MVNO Business Development, Ericsson Inc.

MVNO Strategies and Markets

Website:

VoiceCon 2006 Spring

Website: http://www.voicecon.com

CeBIT, Hannover

Website: http://www.cebit.de

For further information about industry analyst activities at CeBIT, please contact Rob Elston or industry.analysts@ericsson.com

21st Century Communications World Forum, London

  
   Monday, 27 March
   Topic: The Right Timing of Implementing IMS in a Fixed, Mobile Environment
   Host: Magnus Furustam, Vice President, IMS Program Ericsson AB
  
   Monday, 27 March, 4:00pm 
   Topic: Overview session: Fixed-Mobile Network Convergence: Implications and Challenges
   including: Håkan Eriksson, Senior Vice President and General Manager, Research and

   Development, and Chief Technology Officer

   Tuesday, 28 March 8:15am
   Breakfast meeting hosted by Ericsson. Details to be announced
  
   Tuesday, 28 March, 2:00pm
   Topic: Delivery of traditional and new services on a 21C access network
   including Peter Linder, Technical Director, Wireless Network Business Unit Systems
  
   Tuesday, 28 March, 3:45pm
   Topic: Telephony simulation versus emulation
   Host: Ragnar Erkander, Head of IP Softswitch and Networks

For further information about industry analyst activities at 21st Century Communications World Forum, please contact Pia Sörensen or industry.analysts@ericsson.com

Website: http://www.ibc-asia.com/MLSAP2006.htm

Topic: Taking you forward with MLS - Key finding from an Ericsson global customer survey
Speaker: Bertil Udd, Sales Director, Location Based Services

Bell South Classic

Website: http://www.bellsouthclassic.com

VON Canada

Website:

CTIA Wireless 2006, Las Vegas

Website: www.ctiawireless.com/

For further information about industry analyst activities at CTIA Wireless, please contact Eva Sparr, Rob Elston or industry.analysts@ericsson.com

1 March: High Performance Broad Band

29 March: Ericsson WCDMA Leadership, 3G Long Term Evolution and CDMA evolution alternatives

26 April: TV solutions: IPTV and Mobile TV

24 May: Convergence and Efficient evolution to all-IP

16 or 23 August: Implications of IMS and revenue management: convergent charging and billing solutions

13, 20 or 27 September: Mobile gaming and Media Platform Solutions

25 October: Prime integrator

22 November: Competing and complementing technologies

20 December: Richer communication services

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 on 21 April, 2006. For further details regarding the quarterly reports, please check here.

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

If you would like further information about any of the stories above or would like to arrange a briefing, please send an e-mail to industry.analysts@ericsson.com or contact Eva Sparr, Rob Elston for North America, or Pia Långström for Asia Pacific or Pia Sörensen for Europe and the Middle East.