Ericsson has alleged that Samsung failed to negotiate in good faith in licensing patents in a lawsuit in the U.S. District Court for the Eastern District of Texas.
The case addresses breaches of the Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions obligations by Samsung and seeks to obtain a ruling by the court that Ericsson has complied with its own commitments.
The FRAND system is a fundamental building block of a rich ecosystem that has allowed global cellular connectivity to scale to more than 8 billion interoperable connections. It allows access to intellectual property, developed by contributors like Ericsson, under global mobile standards, on FRAND terms and conditions. It also rewards those contributors for their significant up-front investment in R&D in each mobile generation.
Several license renewal negotiations may delay the payment of IP royalties if they extend beyond the expiration of existing licenses into an unlicensed period. Once renewed, unpaid royalties are expected to be recovered and recognized as revenue at the time of renewal.
Current geopolitical conditions are impacting handset sales volumes as is the shift from 4G to 5G handsets. This, in combination with delayed royalty payments from unlicensed periods and potential costs of litigation, may impact Ericsson’s operating income. a quarter beginning in the first quarter 2021. The actual financial impact will depend on the timing and terms and conditions of new agreements.
The value of Ericsson’s IP portfolio extends to more than 54,000 granted patents and is strengthened by annual investment in R&D. The company plans to grow its IPR revenues long term, maximizing the value of the overall patent portfolio.
5G is gaining momentum globally and is starting to see interest from consumers, which is helping the company’s turnaround, Börje Ekholm, Ericsson president & CEO told the company’s second quarter 2019 earnings call.
“We see some operators realizing a price premium for their premium services that 5G can give,” Ekholm said. “We’re starting to see that the increased investments we have made in technology leadership coming to fruition in increased competitiveness as well as improved gross margin.”
Ericsson is providing equipment to two-thirds of all of the commercially launched networks. While initial 5G use will be consumer driven, Ekholm recognized that the long-term success of 5G depends on sales to enterprises. He projected annual sales growing organically by 7 percent, driven by networks in North America and Northeast Asia.
“It is also clear that the first use case for 5G will be enhanced mobile broadband,” he said “But the real potential over time will be enterprise driven use cases, where we the leverage the capabilities of 5G in terms of high speed, low latency, low batter consumption, multiple connections per service unit that will create all of those new use cases.
Ericsson continues to invest in its five-year portfolio, both in radio and in the cloud native core portfolio of digital services, as well as increasing its investments in R&D and managed services.
While it is still early in the process, Ericsson sees connectivity in the enterprise sector as becoming increasing important. Ekholm cited a recent sale to an automotive company in Germany as an example.
“So, the way we think about it is that we have a consumer business that’s the bread and butter, he said. “But on top of that, we are starting to see an enterprise segment emerging. But it’s still too early to talk about it as a big market. It’s just in its infancy.”
Networks will be built out initially to capture consumer business and then later to serve enterprises, Ekholm said, which will provide a long-term need for 5G technology.
Ericsson will build a 5G network in Municipality of Anchorage for GCI, Alaska’s largest telecommunications company.
Starting this summer, the partners will deploy Ericsson’s 3GPP standards-based 5G New Radio (NR) hardware and software to 82 macro cell sites across the Municipality of Anchorage from Girdwood to Eklutna, an area larger than the state of Rhode Island. GCI’s metro fiber network will provide backhaul services to these sites, which include both towers and building locations. The project will be completed in 2020 with initial 5G service coming online in the first half of the year.
GCI’s robust metro fiber network and cable plant already offers Gigabit cable modem service to 95 percent of Anchorage households. GCI controls more low- and mid-band mobile radio spectrum than any other wireless provider in Anchorage. And it has more macro cell sites in Anchorage than any other Alaska wireless provider.
GCI’s 5G deployment will support local government efforts to grow the nation’s northernmost smart city. The Municipality of Anchorage already uses a “light grid” to improve efficiency for municipal street lights and is exploring programs that rely on automated systems and connectivity to deliver services more efficiently to residents.
Ericsson has launched software and hardware solutions to expand 5G deployment options, which extend network capacity and coverage, enabling smooth network evolution and facilitating new consumer and industry use cases.
While already supporting service providers with commercial 5G using non-standalone 5G New Radio (NR), Ericsson’s new software is a standalone 5G NR. In addition to extending deployment possibilities, 5G standalone NR software makes for a new network architecture, delivering key benefits such as ultra-low latency and even better coverage.
Ericsson is also evolving its cloud solution with an offering optimized for edge computing to meet user demand. This will enable service providers to offer new consumer and enterprise 5G services such as augmented reality and content distribution at low cost, low latency, and high accuracy.
The standalone 5G NR software can be installed on existing Ericsson Radio System hardware. Coupled with Ericsson’s 5G dual-mode Cloud Core solutions, the new products are aimed at opening new business opportunities for service providers – especially having established an architecture that facilitates agility, provides advanced support for network slicing and enables the speedy creation of new services.
Most operators will start with NSA and once the 5G coverage has been established, also deploy standalone.
Low bands will play a key role in cost-efficiently extending the coverage provided by 5G deployments to date. Ericsson has also launched Inter-band NR Carrier Aggregation – a new software feature that extends the coverage and capacity of NR on mid- and high bands when combined with NR on low bands. This will improve speeds indoors and in areas with poor coverage.
Two new Massive MIMO radios have also been added to the Ericsson Radio System mid-band portfolio, allowing service providers to build 5G with precision: AIR 1636 for wider coverage which provides optimized performance on longer inter-site distances; and AIR 1623 for easy site build with minimal total cost of ownership.
Telstra has launched its first 5G device, a 5G smart hub for business and the home. As Telstra’s 5G network partner, Ericsson has worked closely with Telstra to make 5G a reality in Australia.
So far, Telstra together with Ericsson has rolled-out 5G in 10 cities around Australia and over the next 12 months or so will increase to reach at least 35 Australian cities.
In addition to the 5G smart hub launch, Telstra will also launch commercial 5G mobility on May 28 – with commercially available 5G smartphones.
Telstra sees the roll out of 5G as a game-changing moment. It is eight years since Telstra launched 4G in Australia and more than seven since its first 4G smartphone.
Ericsson currently has 18 publicly announced 5G contracts. The Telstra partnership means Ericsson is now supporting six live 5G networks globally, Telstra’s being the first in the southern hemisphere.