A new Nordic competitor

A study of L.M. Ericsson by Professor Christer Danielsson at the Swedish School of Economics in Helsinki in 1981 clearly expresses the faith that then prevailed in the idea of convergence. The trend was for electronics to replace electromechanical applications. Equipment was becoming increasingly complicated. The programs for the new types of medium-sized exchanges comprised more than a quarter of a million separate instructions. Danielsson’s description of the major possibilities offered by advanced technology is somewhat euphoric.

He points out that L.M. Ericsson – “once almost written off as a competitor by the other manufacturers” – was, thanks to its development initiatives, once again a force to be reckoned with and had won major contracts. Now he viewed “system subscribers” as the growing market: customers who wanted not only telephony but computer, text, image, sound and alarm applications and a paperless office. Not one word in Danielsson’s study is devoted, however, to mobile telephony.

Kari Kairamo, CEO of Nokia, was almost definitely one of the readers of Danielsson’s study. Nokia, established in 1865, was even older than L.M. Ericsson, but it only entered the telephone sector a century later when it took over Kabelfabriken, a company which, as its Swedish name suggests, manufactured cables; it also had an electronics department that was manufacturing equipment for the Finnish radio telephone system.


In the 1960s and 1970s, many Finnish enterprises were developing small communications systems for their own needs, among them the rescue services, the police force, coast guard and national railways. One of them, the state-owned telecom manufacturer Televa, wanted to develop new, modern exchanges to avoid Finnish companies having to depend on foreign vendors such as L.M. Ericsson and Siemens. One young engineer given this assignment in 1969 was Keijo Olkkola, who maintained that the new exchange should be digital; the management decided, however, to construct an analog exchange.

Nevertheless, Olkkola was able to present his case convincingly and received permission to work with a few of his colleagues on a digital solution alongside the analog one. “Digital technology should obviously have been used. Unfortunately I was the only one with that conviction,” Olkkola said in a later interview.

Every year the Televa board removed Olkkola’s funding from the budget; each time he managed to persuade the CEO to give him one more year. Then he gained more time when it was rumored that L.M. Ericsson and Siemens were also working on digital exchanges.

In the end, Olkkola and his colleagues were successful. The exchange, the DX 200, turned out to be flexible and easy to use when put through its final tests. It was later developed in several different versions and sold all over the world through Telenokia, a company owned jointly by Nokia and the Finnish government, from 1981. In the 1980s, Telenokia was the only Western company that could sell digital exchanges to the Soviet Union in any quantities. Its profit margin was so high that it was never made public.

Soon the DX 200 was a strong candidate for the NMT system.



Author: Svenolof Karlsson & Anders Lugn


Together after many years at the Helsinki Museum of Technology. From left, Heikki Ahava, Kaj Lindén, Lauri Melamies and Keijo Olkkola.

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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