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Ericsson ready for new development
By Liu Baijia (China Daily)
Updated: 2004-03-29 09:39

China's decision to bridge the gap between urban and rural areas, the deployment of the third generation (3G) mobile communications systems, and telecom services will become the three biggest driving forces for Ericsson's development in the world's biggest telecommunications market.

"Our task is to try to understand the implications of China's sustainable development policy on the telecommunications sector and what we can do in that," said Ericsson Chairman Michael Treschow.

He said in an interview during his visit to Beijing on Tuesday that Ericsson has been developing some low-cost telecommunications solutions for rural markets, where low costs and large coverage are keys to success.

While the mobile phone penetration rate in big Chinese cities like Beijing has already exceeded 70 per cent, the country's rate was only 20 per cent by the end of last year and there is huge potential in rural areas.

Ericsson believed there were 1.34 billion mobile subscribers in the world now, but it will grow to 2 billion in 2008 and the growth will mainly come from emerging markets and rural areas.

Ericsson China President Jan Malm said his company has delivered some components for Ericsson's low-cost wireless Expander Solutions to Chinese telecom operators, and the products have also aroused some interest from the Ministry of Information Industry, which encourages operators to offer universal telecom services to rural regions.

Malm said the Expander Solutions, based on both the global system for mobile communications (GSM) and code division multiple access (CDMA) mobile standards, only needs  half of the base stations used currently to cover the same geographic space and costs.

The solutions are even cheaper than the personal handy-phone system, a means of wireless communications which is based on fixed telecom networks and famous for low prices.

At the same time, Ericsson will also make preparations for the possible release of 3G licences in China this year to expand its advantage in the high-end market.

The Swedish telecom giant already has some engineers in China working on the development of 3G base stations and solutions, especially low-cost solutions suitable for local demands.

Ericsson got contracts from 10 of the 14 commercially launched 3G networks, and has about 40 per cent of the 3G market in the world.

It predicted there will be 30 to 40 commercial launches of 3G networks in the world this year.

Research and development (R&D) will remain a priority area for Ericsson's investment in China in terms of subscribers.

The company promised last year to invest US$500 million in R&D in China, and has 600 hardware and software developers locally.

Malm expected Ericsson's local research team and R&D investment will grow around 20 to 25 per cent this year.

It will set up a subsidiary in Chengdu, capital of Southwest China's Sichuan Province, to be engaged in research and development this year.

Treschow also said that he believed the telecom depression since 2000 is over and his company would not make any major restructuring moves this year.

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