The Hague intermezzo led to a decision by L.M. Ericsson’s board that mobile telephony should be given the position of a business unit in its own right. At the end of 1981, SRA was given complete commercial responsibility for the development and sales of mobile telephone systems. From now on, it was the vendors, not the buyers, who would take on the task of integrating systems.
Given the rapid pace of developments, the most obvious course for SRA was to buy in expertise and access to new markets. One important purchase in January 1978 was the acquisition of Sonab AB with its head office in Gävle, Sweden. Sonab had, in its turn, acquired the Gävle factory by buying AGA Mobilradio in 1974. Now operations in Gävle could be directed towards the production of mobile phones and components for base stations.
Another important step was L.M. Ericsson’s purchase of Marconi’s shares in SRA. The wholly owned company was then renamed Ericsson Radio Systems AB (ERA) – a designation that applied from the beginning of 1983.
One reason for the purchase was that SRA and L.M. Ericsson’s radar company, Ericsson Microwave Systems in Mölndal, sometimes found themselves competing with each other in military procurements, often with Marconi as one of the subcontractors.
THE POTENTIAL
Björn Svedberg recalls: “But as SRA’s main owners we were beginning to be able to see the potential in the mobile phone business and wondered how much Marconi was going be able to contribute as things were. I quickly brought the matter up with the CEO of Marconi, Bob Telford, and the purchase was concluded pretty quickly. At that time Marconi had probably not yet noticed what was going on in NMT. On the other hand Åke was not at all pleased; he would probably have preferred to maintain the hands-off relationship he had when there were two owners.”
Later that same year, L.M. Ericsson acquired Magnetic, the Swedish company that had developed the first base stations.
There was the additional question of which exchange SRA was to use in its mobile system. AXE was not self-evident and there were many who wanted SRA to develop its own exchange. One proposal was that SRA could use an exchange developed for a radio system that had been supplied to Iraq. There were discussions with EIS on adapting its digital PABX. An exchange produced by SRA itself was even described in a contemporary catalog of products.
Persson recounts: “These discussions were very largely the result of continual disputes between SRA and X-division about the need for different versions of the exchange rather than any belief in SRA’s own ability to develop a better exchange concept… The discussion, which because of my background in X-division seemed incomprehensible to me, did in fact take place, and when I announced our decision to continue to use AXE, Åke Lundqvist’s comment was ‘That exchange has really become damn important!’”
UNQUESTIONABLE CHOICE
The decision on the exchange was made in practice by Persson and Jöran Hoff of SRA. “I do not remember the occasion – we had no major meetings on the issue: Jöran and I thought the choice was unquestionable. There is no doubt that AXE was a very important factor in the success of mobile telephony,” Persson says.
Describing the situation at SRA from 1982, Hoff says: “There was an NMT exchange. But SRA only had rudimentary understanding of cellular systems. We supplied base stations to Saudi Arabia from Radiosystem, which took complete responsibility for the functioning of the radio system. SRA’s contribution to this deal consisted of the control unit in the base stations.”
Starting from there, he says, it was a question of developing the expertise to build base stations and cut production costs quickly, getting world-class cell-planning expertise, acquiring understanding of the technology of cellular systems and creating a quality organization with telecommunication standards.
Author: Svenolof Karlsson & Anders Lugn
