Ericsson (NASDAQ: ERIC) hopes to prompt Europe's public sector to invest more in next-generation telecom technology, including 5G mobile broadband, by disclosing more information about the diminishing returns the company is seeing from R&D it conducts in the region.
The Swedish company contends that weak European public-sector investment in 5G and related technologies is hampering the telecom industry on the continent and opening the door for other regions to lead the way into next-generation telecom, according to an article in the Financial Times.
Ericsson CTO Ulf Ewaldsson was quoted as saying the company aims to "create a bigger agenda in Europe" by releasing information concerning the level of financial investment and returns it makes in the region.
"North America is driving LTE and new networks rather than Europe. We can do three to four years ahead, but the public sector needs a longer-term vision," he said.
Ewaldsson's comments were apparently made after the European Commission's May 21 announcement that it would try to boost economic growth by changing regulations under which member states can grant government aid to companies for R&D&I (research, development and innovation), with a goal of increasing such expenditures to 3 percent of Europe's gross domestic product.
Interestingly, the commission said R&D spending in Europe lags behind markets such as the United States and Japan, not because of insufficient levels of public-sector funding, but rather due to "lower levels of private investment."
Ericsson is deeply involved in a number of publicly and privately funded telecom R&D projects in Europe, including the METIS 2020 project. It is also one of six vendors working with NTT DoCoMo on planned "experimental trials" of 5G technologies, which are expected to enable ultra-high-speed data transmissions that exceed 10 Gbps, 1,000-fold the capacity of existing LTE networks and connectivity for massive numbers of devices.
According to the Financial Times, Ericsson invests about $5 billion per year on R&D, with about $3 billion of that being spent in Europe. But the region only accounts for a fifth of the vendor's global sales, down from more than a quarter--or 28 percent--five years ago.
U.S. operators have made massive investments in new technologies, thanks in part to a climate of looser regulation. Europe, on the other hand, has seen its politicians maintain artificially high numbers of wireless carriers in each country, benefiting consumers with low prices but negatively impacting network investment and preparations for future technological innovations that will be needed to satisfy customers.
Ewaldsson noted that 5G will be necessary to power the Internet of Things, which will entail billions of machine-to-machine (M2M) and machine-to-people connections. "5G can provide a low latency that is required, for example to ensure that signals being sent to cars are received," he said.
- see this Financial Times article (sub. req.)
- see this EC release
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