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January 28, 1987

NO SWITCHING: ERICSSON, SIEMENS CONFINE CELLULAR VENTURE TO DIGITAL RADIO

By CBR Staff Writer

The announcement of a joint development agreement between Ericsson and Siemens for a new generation mobile telephone system set alarm bells ringing in the minds of those who follow the international telecommunications market closely: did it mean that Ericsson was taking the first steps to defend itself against the new Alcatel NV conglomerate by planting itself in the Siemens camp? The smaller exchange manufacturers will find it increasingly difficult to meet the costs of continual equipment upgrades and there is no doubt that the companies still in the running will have to join forces or get out of the market. But Ericsson firmly quashes any suggestion that the cellular agreement is taking it into a broad alliance with the West German. The joint development project between Ericsson and Siemens will not cover any switching technology, according to Ericsson’s European marketing manager for mobile radio systems Jan Edhill. What the companies do aim to design is a digital radio subsystem, which will work with both Ericsson’s AXE and Siemens EWSD exchanges. The developement costs for the project are UKP50m to UKP100m over four years and the companies are hoping their work will be accepted as standard throughout Europe. Technical minutiae of the subsystem are not yet specified and nor are the functions it will incorporate to make it possible for mobile users to move from country to country without having to change handsets and systems. Jan Edhill does however mention areas such as scrambling, which are possible today, but which will be made considerably easier with the new, digital, system. Another example of things to come given is data transmission between mobiles; it is currently only possible with modems but Ericsson and Siemens aim to offer the service without the need for modems. The Ericsson/Siemens team is strong – Ericsson on technical resources and Siemens for its access to cash. One of the advantages of joining forces is that we are the strongest in the field and we can have a commercial system in service by 1991, says Mr Edhall. Ericsson claims to have a 45% share of the world cellular telephone equipment market. Scandinavia has an installed base of 370,000 subscribers and while the West German market is less developed, Siemens estimates that there could be 1m subscribers by 1990.

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