5G Tech Progresses; Ericsson Struggles

July 21, 2016

By J. Sharpe Smith

Senior Editor
AGL eDigest

July 21, 2016 — More progress is being made on 5G by both giant companies and small ones. But for Ericsson 5G deployment can’t come soon enough.

Telecom behemoths — SK Telecom, Deutsche Telekom and Ericsson — announced their plans to cooperate in the development of the 5G core network. Their transcontinental trial across Germany and Korea emphasizes the global nature of telecom standards.

Working with Nokia last week, U.S.-based regional carrier C Spire was one of first companies to demonstrate a fixed 5G-type solution. The test delivered 4k video, with speeds up to 2.2 Gbps and latency below 1.4 milliseconds over the 5G wireless link.

As a regional carrier, C Spire might seem like an unlikely candidate to break ground on the next generation of broadband wireless, but along with LTE wireless, the company has deployed consumer fiber-to-the-home services over 4,000 miles of fiber. Additionally it has a $23 million, Tier III+ Data Center that offers colocation, cloud-based computing, storage and enterprise solutions. C Spire Fiber will provide 100 times faster Gigabit Internet access, digital HD television and home phone and automation services in 10 Mississippi cities in its initial phase.

But for one large company, the gap between 4G and 5G is turning into a rough patch. Ericsson plans to cut costs and lay off workers after suffering a 24 percent drop in second-quarter net profit, according to the Wall Street Journal. Forbes said the OEM could save $1 billion by cutting 2,200 workers. One of the costs on the chopping block is research and development at a time when 5G R&D at most OEMs is in high gear.

Hans Vestberg, president and CEO of Ericsson, said that the “negative industry trends from the first quarter have intensified impacting demand for mobile broadband, especially in markets with a weak macro-economic environment.” Ericsson was already reducing costs, but in light of the Q2 losses, he said further cuts were needed.

It is a complex time for wireless manufacturers. The China slowdown is sending ripples across the globe. Most of the carriers around the world have deployed 4G and a 5G standard is still four years away. In the quarterly earnings fishbowl, that must feel like a millennium. With shareholders looking to oust him, one has to wonder if Vestberg will be there to see it.