An interesting story from Bloomberg says that Ericsson is contemplating owning a wireless network infrastructure. Ericsson is already one of the top 5 mobile network operators worldwide, but it doesn’t own any of the networks it manages – it is simply a supplier of outsourced network management services.
The idea here is that Ericsson will own and manage its own network, and wholesale the services on it to MVNOs. If this plan goes through, and if Ericsson is able to stick to the wholesale model and not try to deliver services direct to consumers, it will be huge for wireless network neutrality. It is a truly disruptive development, in that it could lower barriers to entry for mobile service providers, and open up the wireless market to innovation at the service level.
[update] Upon reflection, I think this interpretation of Ericsson’s intent is over-enthusiastic. The problem is spectrum. Ericsson can’t market this to MVNOs without spectrum. So a more likely interpretation of Ericsson’s proposal is that it will pay for infrastructure, then sell capacity and network management services to spectrum-owning mobile network operators. Not a dumb pipes play at all. It is extremely unlikely that Ericsson will buy spectrum for this, though there are precedents for equipment manufacturers buying spectrum – Qualcomm and Intel have both done so.
[update 2] With the advent of white spaces, Ericsson would not need to own spectrum to offer a wholesale service from its wireless infrastructure. The incremental cost of provisioning white spaces on a cellular base station would be relatively modest.
One Reply to “Dumb mobile pipes”
The incremental costs added through ownership of the network would be likely to distort the priorities and services of the existing business. Ericsson would be moving deeper into the phone business as the original Bell Telephone Company did: develop the endpoints, facilitate their connection in limited and opportunistic environments, then move toward ownership of a consolidated network connecting them.