Although Ellemtel was only partially owned by Ericsson, it was nonetheless one of the company’s most important units. This company developed Ericsson’s successful AXE electronic switching system and thereby enabled the company to continue to compete successfully as a telecom manufacturer. At the same time, the product allowed Ericsson to take the next step in mobile telephony.
When Ericsson and Televerket, Sweden’s state-owned PTT, signed an agreement in April 1970 to establish a joint research and development company called Ellemtel Utvecklings AB, this was a result of Ericsson’s long-term development partnership with Televerket. Since the mid-1950s, the two parties had been collaborating in the development of electronic switches. Since the early 1960s, Ericsson had been working to develop a commercial electronic switching system called AKE, while Televerket conducted work in parallel on its own electronic switch.
By the end of the 1960s, it had become clear that this new development effort would be of a completely different magnitude than the previous generation of electro-mechanical switches had required. Ericsson had also begun to realize that the AKE system did not appear to be viable for large switching stations – it was too slow and expensive – at the same time as it appeared that the company’s international competitors had made considerable progress in their electronic switch projects.
Ericsson’s position as an independent Swedish switch supplier was thus threatened. Developing a new generation of switching equipment was a question of survival for the company. In late 1969, after Ericsson had lost a large AKE order to its competitor ITT, management at Ericsson and Televerket concluded that it would be most effective to combine resources and jointly develop an electronic telephone switching system.
The Ellemtel agreement regarding “certain development and production cooperation in the area of telecommunications” between Ericsson and Televerket was signed in April 1970 and approved by the Swedish Parliament and Ericsson’s Board of Directors in May. There had been some reluctance, primarily among Ericsson managers, to turn over such a strategically important project to an external company half-owned by the state, and many long negotiations were required before an agreement could be reached. The new company was owned equally by Ericsson and Televerket, which was also reflected in the name in which the first part represented L M (Ericsson) and the second Tel(everket).
Ellemtel was purely a development company without its own production. Production would instead be the responsibility of the company’s two owners using their respective production facilities. The company’s primary task was to develop on its owners’ behalf an electronic and automated telephone switching system for telephone stations that would become the AXE system.
Ellemtel recruited personnel from both owners and could thus bring together expertise from both the manufacturer and the users of telephone stations. The company’s organization was such that ideas and influences from Ericsson and Televerket impacted development work at all important levels, from the boardroom down to the engineers’ drawing boards.
In addition to the AXE system, Ellemtel worked with other strategic assignments for its principals consisting of technical development for smaller electronic PBXes, equipment for data networks and digital transmission systems and the development of the Diavox telephone.
Ellemtel’s work on the development of the AXE system began in 1970 and achieved its decisive breakthrough in 1972, when Ericsson decided not to continue with the development of its AKE system but instead to concentrate its resources on AXE. Ellemtel’s first project manager for the AXE system was engineer Bengt-Gunnar Magnusson. The company’s assignment included everything from developing the AXE system’s modular system design to developing hardware and software consisting of the computer programs and processors that would control the AXE stations.
By 1976, Ellemtel’s development work had progressed to the point where it was possible to put the first practical AXE system into operation at Televerket’s station in Södertälje. When the AXE started to become working technology, Ellemtel also began handing over the technology and transferring its expertise to its owners Ericsson and Televerket. By 1978, Ellemtel’s task of developing the AXE system was complete.
With the commercialization of the AXE system and the transfer of most development work on Ellemtel’s products to Ericsson, many of Ellemtel’s employees left the company to take jobs at Ericsson. Ellemtel continued its operations thereafter as a partially owned strategic development company up until October 1995, when Televerket sold its remaining Ellemtel shares to Ericsson. Ellemtel was thus integrated into Ericsson’s organization.
Author: Mats Fridlund