Ericsson's two cents on 3G

Swedish telecommunication equipment giant Ericsson believes even the largest individual markets cannot support more than four third-generation (3G) license holders, Thorbjoern Nilsson, head of marketing and strategy, was quoted on Sept. 10 as telling The Financial Times.

"We believe that in the larger markets there will be four operators, and in the smaller ones there will be fewer," he said.

Debts, losses and the need for economies of scale will all drive consolidation among license holders of the next-generation wireless technology, the newspaper said.

Nilsson suggested consolidation would take place more quickly in the United States than in Europe, mainly because new U.S. rules support consolidation while in Europe it would need the backing of national authorities, The Financial Times reported.

Any operator with less than 10 percent of its home market would have difficulty surviving, he said.

Countries with five license holders include Britain, Canada, Germany, Italy, the Netherlands and Taiwan.

Nilsson noted that regulators and governments, not market economics, had shaped the 3G landscape in Europe. Telecom operators accumulated billions of dollars of debt in vying for licenses to operate the next wave of mobile telephony.

"Regulators decided they wanted more competition without understanding the business consequences and there was a desire to maximize auction money. This has to be corrected and regulators have to help in the process," he said.

Ericsson, the world's leading supplier of telecommunication network equipment, does not expect a mass market in 3G to develop before 2005.