July 13 2009
By Jungmin Hong and Kevin Cho
Ericsson AB, the world’s largest maker of wireless networks, plans to spend $1.5 billion in South Korea over the next five years to develop a high-speed wireless Internet technology backed by AT&T Inc. and Verizon Wireless.
The Stockholm-based network-equipment maker will set up a facility in the Asian nation for research, development and testing of fourth-generation wireless services, South Korea’s presidential office said in a statement yesterday. The center will develop so-called long-term evolution, or LTE, technology, Minako Nakatsuma Olofzon, a spokeswoman at Ericsson, said.
The infrastructure market for LTE, which will compete against WiMax technology in the wireless Internet market, will reach $5 billion in 2013 after deployment begins in the second half of this year, researcher Infonetics Research said in April. Global sales of equipment and devices for WiMax, which is available commercially in markets including the U.S. and South Korea, will rise almost fivefold to $16.1 billion this year from 2008, according to ABI Research.
“Deployment of WiMax has been slower than expected while LTE’s expansion has been faster,” Kim Dong Joon, an analyst at Seoul-based Good Morning Shinhan Securities Co., said today. “It’s not favorable news for WiMax and it seems Ericsson wants to expand in Korea, which is leading the WiMax technology.”
South Korea’s Samsung Electronics Co. and LG Electronics Inc. are the world’s second- and third-largest mobile-phone makers behind Espoo, Finland-based Nokia Oyj.
Ericsson fell 0.4 percent to 73.3 kronor at 11:11 a.m. in Stockholm trading.
Supporters of LTE
Verizon Wireless, the biggest U.S. mobile-phone company, aims to begin offering a high-speed network in all U.S. regions by 2015 using LTE, which is scheduled to reach 30 markets by next year. Clearwire Corp., a U.S. provider of mobile WiMax services, plans to spend $1.5 billion to $1.9 billion in 2009 on expanding its network to reach as many as 120 million people across the country by the end of 2010.
Other supporters of LTE include Japan’s NTT DoCoMo Inc., which plans to introduce the service in 2010, Newbury, England- based Vodafone Group Plc, the world’s largest mobile-phone company, and Deutsche Telekom AG’s T-Mobile unit. The WiMax standard, which can transmit data to laptops and mobile phones up to five times faster than current technology, is backed by mobile carrier Sprint Nextel Corp., chipmaker Intel Corp., cable operator Comcast Corp. and Samsung Electronics.
To qualify as 4G, a wireless technology should be able to transfer data at 1-gigabit per second during low mobility or while stationary, and 100-megabits per second during high mobility, according to the International Telecommunication Union, which has yet to select a standard for 4G technology.
LTE and WiMax are based on a similar technology called orthogonal frequency division multiple access. LTE can be upgraded from the current wideband-code division multiple access, or WCDMA, technology, while WiMax, which is aimed mainly at portable devices, is based on the Institute of Electrical and Electronics Engineers 802.16 standard. Wireless Fidelity, or Wi- Fi, which has less coverage than WiMax, is based on the IEEE 802.11 standard.
Ericsson plans to increase the number of employees at its South Korean unit to 1,000 from 80, South Korea’s presidential office said in a statement yesterday.
“We believe that 4G technology is very important to Korea, which is a very advanced, impatient and fast-moving market,” Bjorn Allden, president of Ericsson Korea Ltd., said in a telephone interview today.
LG Electronics, Asia’s second-largest mobile-phone maker, said in December that it developed a faster wireless chip for use in handsets based on LTE technology. The LTE market will be bigger than that for rival WiMax products, Skott Ahn, president of LG’s mobile-phone business, said at the time.
Samsung said last month it expects to increase network- equipment sales as more operators begin deploying WiMax services.
The Suwon, South Korea-based company has a share of about 35 percent of the mobile WiMax-equipment market, Executive Vice President Kim Woon Sub, who heads Samsung’s network business, said in an interview last month.
To contact the reporters on this story: Jungmin Hong in Seoul at firstname.lastname@example.org; Kevin Cho in Seoul at email@example.com.