New dynamics

When he took over as Ericsson’s CEO, Svanberg set a five-year goal of an increase in invoicing by 12 percent annually, reaching the figure of SEK 208 billion by 2008. This is exactly what happened. Ericsson grew between 2003 and 2008 at an average annual rate of precisely 12 percent and turnover reached the target that Svanberg set.

“And now I believe there is more business than ever: mobile broadband, LTE, the shift to IP, managed services. More opportunities have turned up than ever before; there are new dynamics and a new competitive situation.”

The fundamental change still involves IP and the internet. “In the 1990s, customers were still saying: ‘We trust you people at Ericsson to have good ideas’. Then we came up with things like WAP, which from a consumer perspective was a disaster. We still have a lot to learn when it comes to the relationship between the internet and telephony.

“It is easy to feel that we know the internet. But how can we incorporate it into the way we live? Do we understand how the internet is altering the boundaries between private and public, and with them our way of life?

“Before 1920, most people in Sweden lived in close proximity to each other. Families were large and they did not have a lot of room. You had no private life. And with the internet we are there again. Constant availability, a lack of boundaries, and intimate forms of address are remodeling our personalities. If we cannot understand how the internet generation thinks, we will not build the right functions into our solutions.”


The frequencies for the 3G networks were determined in Europe in 1992, nine years before the first actually opened in 2001. The politicians were applying pressure and the issue was given high priority. The ensuing crash burned the fingers of those advocating 3G auctions. The policy that followed has “technological neutrality” as its watchword – no earmarking in advance for specified services or technological standards.

Bertil Thorngren observes: “It turned out to be too restrictive to go on allocating a fixed set of services to a specific frequency band year in year out. And what 3G services really meant was far too vague as well – in practice they turned out to be more or less the same as for 2G, but with somewhat quicker transfer rates. Sonera’s bitter experiences in Germany helped to create this feeling. The EUR 5 billion it paid for the German license turned out to be a total waste of money.”

Norway and Sweden were the first countries in Europe to allocate the spectrum for 4G, using auctions in Novem¬ber 2007 in Sweden and April–May 2008 in Norway for the 2.6 GHz band (more precisely 2500–2690 MHz). The licenses are technology-neutral but the idea is that they are used for 4G. During the spring of 2008, Sweden, Nor¬way, Denmark and Finland signed an agreement about coordinating the use of this band.

Tele2, TeliaSonera and Telenor each acquired two frequency bands of 20 MHz FDD at auction, while Hi3G got one of 10 MHz. In addition, a fifth contender in Sweden, Intel, acquired 50 MHz TDD and announced its intention of building a mobile WiMAX network.

One extremely interesting question deals with what will happen with the 790–862 MHz band, which will be freed up by the shift to digital TV across Europe.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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