As Chief Executive Officer of Ericsson, Hans Vestberg is perhaps in the best position to know how telecom networks will shape up in the future. After all, the Swedish telecom equipment maker manages telecom networks in more than 180 countries, with over 2.5 billion mobile users. India is one of the key hubs for Ericsson — the company has reported a 56 per cent increase in revenues, making it the highest growing region for the company worldwide. Accounting for 4 per cent of Ericsson’s global revenue, India now ranks No. 4, behind the US, China, and Japan. BusinessLine spoke with Vestberg to discuss key trends in the telecom space. Edited excerpts:

India is No.4 in terms of sales for Ericsson. With big 3G and 4G contracts coming up, do you think it could become your No. 3 or No. 2 market?

I can’t speculate but I will say that broadband will have an impact on India. 3G and 4G are coming and a lot of local innovation and services will come with it. These trends will play a big role for Ericsson’s growth, but whether India will become No. 3 or 2 it is difficult to say because other regions are also growing.

Ericsson has said the investment climate in India is improving. What does this mean for your operations here?

India as a market is very important for us and it is also the place where we have the most employees. There was a time of uncertainty when we saw less infrastructure investment but during that time we were stable on our service business. Now, we are seeing investment in infrastructure as well. We have positioned ourselves to have won important service contracts in the last 12 to 24 months.

What’s your game plan to reach connectivity to the next billion, where affordability is the key factor?

Technologies that we have now are more efficient, driving down cost per user. The best way to achieve scale and efficiencies is to standardise technologies. During the 2G era, there were five technologies; in 3G there are four technologies and in 4G there is one. The fewer the number of technologies the lower will be the price of equipment and more importantly the price of handsets will go down. In the next few years, 92 per cent of the population will have mobile coverage. Only 8 per cent will be left in rural areas. We are working with different partners and projects such as the internet.org initiative by Facebook to find cost-effective solutions for connecting the last 8 per cent.

Google and Facebook are experimenting with the balloon project and solar powered drones to enable cheaper connectivity. Do you see these initiatives as complimentary or disruptive?

If you start with a new technology, it is going to increase costs because the scale is low. With new technologies, it is hard to bring down price. Yes, innovations like solar panels will reduce dependency on diesel for rural costs. You need to find those types of solutions. But you need to remember that this is the only industry where there are no barriers between countries. You can take your phone anywhere in the world and stay connected. And that’s why we should drive efficiencies. I don’t have any problem with innovation as long as we use standard technologies as a base and then deal with driving efficiency in coverage or energy costs

Some telecom companies have started moving into applications and services, directly competing with over-the-top players. Do you see this as a trend?

We are going into a world where mobility, cloud and broadband can be offered to any industry, not just consumers. This means that operators have the option to do different things. Some will compete with over-the-top players; for example, music streaming services. Others may find use in healthcare, education and connected cars. There are industries where there is no broadband today but huge potential in the future. Ericsson will make itself relevant in enabling that transformation.

One of the challenges that has emerged with the proliferation of the Internet is the issue of privacy and trust. How do you deal with this?

The important thing is that broadband growth will continue and more and more people will get connected. Yes, there are some challenges. Security and privacy is one. We need to be transparent as much as possible.

Users must be aware. While the telecom world is an extremely regulated world, Internet is far less regulated. These two worlds are coming together and we need to discuss the issues that arise from it. Regulators need to think about how to deal with this.

What headwinds do you foresee?

I always look back and learn from history. In 2G, there were 15 vendors, in 3G there were 6-7 and in 4G there 5-6 players. You need to learn that a technology revolution is happening and so we need to move in order to stay relevant. New players are coming from other areas. How we can transform ourselves and keep ourselves relevant is what keeps me awake.

The new Government has announced a 100 smart cities project and ‘Make In India’ scheme. Will Ericsson participate?

We believe we can play a vital role in the smart cities project. In India, we have a manufacturing facility, we have Research & Development, we have managed services … we have the full breadth of Ericsson in India. If more investments are needed, we are prepared to do that.

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