Ericsson sees mobile future for office communication

By PETER GRIFFIN

New telephone switching technology is about to revolutionise the way businesses are charged for their telecoms use, according to Swedish telecoms equipment vendor Ericsson.

But the key is changing the attitudes of incumbent operators who separate mobile and fixed line charges and are desperate to maintain their market power.

In New Zealand to meet customers such as the police, the president of Ericsson's enterprise business, Lars Svensson, pointed to the shift under way in Sweden. Employees of major corporates now call each other via mobile phone without paying per-minute charges.

They access all the same telephone features they would if sitting at the desk in their office through more sophisticated telephone switches that can be hosted with either the network operator or the business itself.

Technology and a gradual mind change among Europe's incumbent telcos was driving the "mobile extension" approach to corporate telecom, he said.

Business mobile users were the most lucrative customers for many operators, which gave those customers leverage in negotiating better company-wide deals.

"Enterprise customers today, with mobile, pay five to six times what a consumer will pay. You can then sit down with an operator and start to do a deal," Svensson said.

Vodafone has a similar strategy, seeking to undermine the revenues of fixed-line incumbent operators by replacing customer's office phones and PBXs with mobiles.

"In four to five years I expect to see the basic fixed-line, voice-centric phone disappear from offices. It's obsolete," Vodafone's director of business, Russell Stanners, has said.

Svensson is not advocating the death of the company switch - after all he has a large PBX business to protect.

But he says it is just a matter of time before the mobile extension move that has taken off in Northern Europe is adopted locally.

Last September Vodafone introduced mobile extension services in Sweden.

The local incumbent, which Svensson did not name but is most likely the operator Telia, was opposed to changing its tariffs.

"They said 'don't touch my mobile enterprise business, it's the most profitable part of the business'. Three months later we had so many leads the incumbent was running to us. A year later every major company in Sweden is using it."

Swensson said greenfields operators such as Vodafone were driving the change in Europe. Incumbent operators had to come up with new tariff schemes, something that was done reluctantly but was driven by challenger operators.

As far as 3G mobile networks were concerned, Svensson said demand would be driven by business customers. He saw little of interest for consumers at this stage.

"Is it worth a dollar to see a 15-second clip of a goal being scored which you already saw on the TV that morning?"

And he was dismissive of the supposed 3G "killer app" videophones.

However, he said high-speed data allowed business users to access software stored on company networks and large files to be transferred via the mobile network.

"When you get 384kbps in your hand, the flexibility is fantastic."

Svensson said Ericsson, in loss-making mode since the end of 2000, was determined to finish the year in the black.

"We intend to keep that promise."

Ericsson, which earlier said it expected the market for mobile equipment to dip 10 per cent this year, will report its third-quarter result at the end of the month.