In the early 1970s, the telecom industry anticipated a technological revolution. It was clear that new electronic and digital technology would eventually replace the older electromechanical switches in telephone stations. But developing new and more digital products, using unproven and often still emerging technology, was expensive and risky. Best then to share both costs and expertise, so Ericsson linked up with the Swedish PTT, Televerket, and established a joint development company called Ellemtel. Ellemtel’s first and foremost assignment was to develop a digital switching system, which would become the AXE.
A key structural aspect of the AXE project was that it should build on independent program modules, built to communicate with each other in a standardized manner. The modules should not be able to exchange signals or change each other’s behavior. If a module had been made bug-free, it was safe.
Another aspect of its modular design was that AXE would use standardized building blocks, even from a mechanical standpoint. This allowed the building blocks to be tested where they were manufactured, and not when they were assembled with other modules. It also made it possible to replace faulty modules with new ones, without having to replace the full system.
Customers could then add new functions to an AXE switch at a later date, by exchanging a module, and not the full system. Today, most hardware and software projects, in all industries, follow similar modular approaches. At the time, though, it was an industry novelty.
One such function, that customers ultimately would add by switching out just select modules, was – mobile telephony. It came as a surprise even for the AXE system’s creators, but eventually laid the foundation for Ericsson’s success in mobile telephony area.
With AXE, Ericsson had the market’s most advanced and flexible switching system. It doubled the company’s market share and facilitated its entry into the important US market. Perhaps the most important result was that this extremely flexible switching system, again, made Ericsson a major player in mobile telephony at an early stage. By 1992, Ericsson had received orders for nearly 400 AXE switching stations for mobile telephony, corresponding to 40 percent of the global market.
Bonus: AXE-N
In 1987 Ellemtel initiated a new project, AXE-N, where N stands for ”network”. AXE-N was intended to use ATM (Asynchronous Transfer Mode) technology to construct national and international digital information highways for the communication of speech, data and various broadband services in packet-switched form and expressed an engineering dream “about one single, universal system for all telecommunications”.
The AXE-N venture was to be one of the most expensive industrial project in Sweden. One calculation estimates that it cost Ericsson SEK 10 billion. But the project turned out to be a total failure and was abandoned in 1995.
More bonus reading: Diavox
Another output from Ellemtel was Sweden's first mass-produced touch-tone telephone. With a design by industrial designers Carl-Arne Breger and Richard Lindahl, the phone was launched in 1978 after three years of development. A key feature of the phone was that its keypad could handle both tone or pulse dialing. The first shipment went to Saudi Arabia for use in a new telephone network being built with AXE technology. The Diavox was also the starting point for more advanced models including a multi-line phone and a speakerphone. Production ran for little over a decade before the phone was discontinued in 1989.
One last bonus: NMT
As mobile telephony entered the phone industry, the need for industry standards, that even competitors could agree on, grew. One such endeavor was the NMT (Nordic Mobile Telephony) Group, which held its first meeting in January 1970. The group’s mission was to explore “the possibilities of future extension of compatible Nordic public mobile-telephone systems, preferably in the form of a joint system”.
Its first task was to develop a frequency plan for a joint Nordic system. It should allow subscribers to travel widely in the Nordics, including across national borders, with a limited number of channels in the mobile equipment. Two fundamental problems had to be overcome: the system had to be able to locate the subscriber’s position; and an ongoing call had to be transferred automatically from one base station to the next.
The group’s work proved successful and the NMT was officially adopted as a Nordic standard at the 1975 Nordic Telecommunications Conference. It became the first mobile phone network to feature international roaming.
The Swedish premiere for NMT was on 1 October 1981, with an event at Swedish PTT Televerket’s exchange at Hammarby in Stockholm. But Televerket was actually not the first to use NMT. A month earlier, on 1 September 1981, the first NMT network had started operating in Saudi Arabia with equipment from Ericsson. NMT became the talk of the telephone world and was eventually adopted by many more countries than just the Nordics.
Today, when the industry talks about mobile telephony generations such as 4G and 5G, NMT is considered to be the very first generation, the 1G.
Epilogue: The success of mobile phones seems evident in hindsight. But it was never a clearcut case that mobile telephony would be a hit. In 1983, the McKinsey consultancy forecasted that the global market for mobile telephones would not amount to more than 1 million subscribers by 2000. The actual number ended up being 760 million mobile phone subscribers though.