Ericsson warns over lack of next-generation network investment

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Ericsson will provide greater disclosure about the diminishing returns on the high level of research and development it made in Europe, to highlight how a lack of government investment in next generation networks is hampering the industry on the continent.

The Swedish telecoms equipment maker is warning that Europe is at risk of falling behind other regions in the development of next generation telecoms technology, including the standards around so-called “5G” that will offer ubiquitous mobile broadband services.

Ulf Ewaldsson, chief technology officer at Ericsson, said the company would disclose more information in Europe such as the level of financial investment and returns it makes in the region.

“We want to create a bigger agenda in Europe,” said Mr Ewaldsson, who added that the public sector needed to match private sector expenditure to ensure the future health of the technology and telecoms industry.

“North America is driving LTE (4G) and new networks rather than Europe. We can do three to four years ahead but the public sector needs a longer term vision,” he said.

Some €2.2bn of the €3.7bn spent by Ericsson on R&D is made in Europe, while the region accounts for about a fifth of global sales. The share of sales has decreased from 28 per cent five years ago.

Ericsson is adding its voice to widespread worries about European competitiveness relative to stronger telecoms groups in countries such as the US, where lower level of competition and looser regulations have led to increased investment by the larger operators, which benefits equipment makers such as Ericsson.

Telecoms executives have long complained to European politicians that regulations have artificially maintained too many rivals in each country, which has resulted in low prices for consumers but has hamstrung the industry in terms of investment.

Ericsson is particularly worried about the development of the next generation of mobile technology, dubbed “5G”. Unlike 4G technology, which is being rolled out around Europe at present, 5G will not just aim to offer higher speeds for individual devices but is hoped to provide an “always on” service to link up the growing market for connected machines and appliances.

Ericsson is already working with rival groups to set standards around 5G. Mr Ewaldsson said that 4G was never built for the machine-to-machine market – the so-called “internet of things” – but instead to provide a fast link to multiple screens for consuming data on tablets and smartphones. “5G can provide a low latency that is required, for example to ensure that signals being sent to cars are received,” he said.

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