Ericsson Official Calls ‘Holistic Regulation’ Needed As Industries Converge

“Holistic regulation” is needed for the telecom, media and Internet industries, Nilsson said. Convergence means “business models are changing dramatically,” but the FCC is “regulating like five years ago,” he said. “The telecom business and the media business are heavily regulated, and the Internet is not regulated at all, basically. Here you have three industries converging but you have silo regulation. That is a big problem every day for those working in this area.”

European regulators are also ignoring convergence, and China and India may take advantage, Nilsson said. “What I'm very afraid of is that both China and India… have realized this,” he said: “It’s not rocket science to guess how it’s going to go, and that’s exactly what these countries have understood and they will go for it.” If U.S. and Europe don’t adapt, China and India “will take the lead globally,” he said. Ericsson sells infrastructure services in both countries, Nilsson said, but “it is a bit strange for us that all of the innovations and all the new technologies for the future should come out of China and India, and there is nothing coming out of the U.S. or Europe.”

Change will take “leadership,” but Nilsson said he doesn’t find hope in the presidential election. No candidate is addressing the issue, he said: “I don’t think that’s on their minds.”

Meanwhile, philosophical challenges could arise for companies as the communications and IT industries converge, Nilsson told the conference. “The communications industry is much more used to working with open standards” and cross- licensing patents “because we are depending on each other to be able to create networks,” he said. Microsoft, Intel and others in the IT industry are more individualistic, using patents to block competition, he said.

“It’s great that the U.S. is starting to allocate 700 MHz,” Nilsson said. Globally, moving spectrum from media to communications industries “is a big, big question mark right now,” he said. “If you go to Europe, if you go to Asia, there’s a big fight between the TV and the telecom business.” But the shift is needed, he said. TV is an “inefficient” use of 400 to 800 MHz spectrum, and those frequencies are better used for mobile applications, he said.

The FCC “has not been foresighted enough because the allocation is not for mobile broadband,” he said. “It’s two small chunks. And they actually allocated it more towards more cellular voice-based services. If they wanted to allocate it to the future and mobile broadband they should have allocated at least two times 20 MHz allocations, because that’s where Long Term Evolution [LTE] is going. That’s what WiMAX is doing.”

Regardless, Ericsson will be “very active” once the 700 MHz auction ends, Nilsson said. The company will push for two standards: High Speed Packet Access (HSPA) and LTE. Rural companies bidding in the auction also present opportunities for Ericsson, he said. “We will see the rural companies be very active in this auction,” he said. “It’s not going to be a huge business… but we will definitely support them.”

HSPA could be a DSL and Wi-Fi replacement, but “AT&T has been a little bit slow” using it in the U.S., Nilsson said. And “they haven’t deployed the right type of speed,” he said, noting faster options are available in Europe: “AT&T is promoting HSPA more now,” but it “could have been much more aggressive moving in that direction.”

Ericsson is working with AT&T and Verizon on LTE. It has no WiMAX plans. That’s because WiMAX isn’t a rival to LTE, he said: “They're too late… We don’t see any technical advantages at all.” The LTE standard will harmonize CDMA and GSM, he said. With LTE, Qualcomm and others in the CDMA camp will move onto the same track as GSM makers like Ericsson, he said. LTE also covers more frequency bands in the world than WiMAX, which has “a number of restrictions,” he said. WiMAX could serve well for “pure, wireline replacement services,” he said, but Ericsson cannot justify the business case” to do WiMAX in addition to HSPA and LTE.

It won’t be surprising if Sprint Nextel drops WiMAX for LTE, Nilsson said. “Verizon is the CDMA driver of the U.S.” Given the Bell’s move to LTE, he said, “I find it difficult to see Sprint going their own way.”

Ericsson has a hand in both the Wi-Fi and the femtocell sides of fixed wireless convergence, but prefers femtocell, Nilsson said. “We do not want to be a player in Wi-Fi.” Nilsson can’t “justify the business case” because operators can’t control Wi-Fi’s unlicensed spectrum, he said. T- Mobile’s Wi-Fi hotspot network doesn’t justify a Wi-Fi-based product like HotSpot@Home, he said: “I have seen very little numbers on the success of these Wi-Fi networks. It seems that the operator is not that very happy about telling about the business cases.” Nilsson acknowledged he didn’t have T- Mobile USA’s numbers, but noted that globally, “most operators have difficult business cases with Wi-Fi networks.”

The Apple iPhone is influencing mobile device design by combining complicated technologies in a user-friendly way, Nilsson said. “That is something all others should learn as well.” Ericsson and “most other vendors do not think enough about user-friendliness of mobile products.” Apple also has excited cellphone users about touch screens. “Ericsson has had new touch screen phones all the time, and no one has been excited,” he said. The fervor will be a “revolution” to Nokia, which has historically shied from touch screens, he said.

Ericsson is following Google’s open-source Android operating system “very closely, he said. “If that becomes something, we will probably be there as well.” Ericsson has been “very active in looking into Linux-based solutions” like Android, he said. It will be Sony Ericsson’s choice whether to use it, but it sounds good from an infrastructure company’s perspective, Nilsson said. “We're just happy there will be more terminals, because that will mean more usage.”

The technology shown at this week’s Consumer Electronics Show that “amazed” Nilsson most wasn’t a phone but the “extreme-small” OLED TV screens, he said. “I want one of those.”