Ericsson Expects Mass LTE Deployment in 2012

Just when the average consumer was learning to take advantage of the 3G network (while perhaps noticing the limits of the 2.5G Edge network on the iPhone), it’s time to prep for 4G. Verizon and Vodafone are already testing 4G equipment that relies on the Long-Term Evolution standard.

Arun Bhikshesvaran, VP of business strategy and CTO for Ericsson North America, said the equipment maker has launched a trial of its LTE baseband equipment with an unnamed carrier. He expects it will be completed toward the end of the year.

He expects 2008 and 2009 to be the trial and test years for the standard and anticipates 2012 will see widespread deployment. Bhikshesvaran further expects the U.S. and Japanese markets to lead the way, with Europe to follow. Although China Mobile announced an LTE test at Mobile World Congress last week, Bhikshesvaran is uncertain if the Chinese market will skip 3G deployment entirely. India chose not to.

The staggered generations of network will only help Ericsson, which faces a smaller end-user market in the U.S. thanks to carrier consolidation and new competitors from the Chinese. The company’s finances have suffered while waiting for the injection of capital spending that a network upgrade cycle brings, although Bhikshesvaran downplayed the affects of stagnant U.S. growth on the company. “We’ve sold more GSM base stations in the last year than we did in the first three,” he noted.

When it comes to competition, Bhikshesvaran said Ericsson has an advantage from having already spent a lot of time and effort working with the standards boards, but acknowledges that formidable competitors could arise in China.

“We can’t underestimate the skill of the Chinese vendors, and to use the American car industry as an example, we could see something like a Toyota or a Honda arise,” Bhikshesvaran said. “The challenge is how do we want to play in that market? We aren’t sure if we want to be a BMW or a Mercedes-Benz, but not something like Chrysler.”

Bhikshesvaran didn’t give details about how Ericsson would avoid the fate besetting American auto companies, but he said the company would be prudent in the Chinese market. As for the rest of the competition, Bhikshesvaran expects Ericsson’s global customer base to offset a slowdown of 3G equipment sales in many markets and the lag between testing and the sale of 4G equipment.

In addition to the network transitions, Bhikshesvaran is pushing for more data traffic on the cellular network — from navigation devices to multimedia downloads — to drive revenue in saturated markets such as the U.S. However, driving more traffic to data networks might require the carriers to give a little on price, as well as to offer compelling services and content on a mobile handset. I’m not sure that by 2012 they’ll have it right.