Telecom equipment maker Ericsson has been in India for several decades, but the stress in the telecom sector has impacted its business. In 2018, India was the company’s second-biggest market; today, however, it does not figure in Ericsson’s top five markets. But Nunzio Mirtillo, Senior Vice-President and Head of Market Area South East Asia, Oceania & India, Ericsson, is confident that the opportunity in 4G and 5G will change things for the Swedish equipment maker. In an interview with BusinessLine , Mirtillo discussed the country’s potential in the telecom sector, including the potential opportunities provided by 5G. Excerpts
Despite all the big uptake of data we are seeing, India did not even make it to the top five markets for Ericsson last quarter. Why?
India will be back in the top five again because the fundamental characteristics of the market are unchanged. We are more convinced now than we were two years ago that we should invest in this country. AGR (adjusted gross revenue) is in discussions, but it will not change the characteristics of the market, it is a temporary thing.
If you read between the lines, ARPU (average revenue per user) is going up. Jio is doing well, Bharti is doing well and Vodafone Idea is struggling a bit. Its future is very much dependent on the decision that the stakeholders will take. In the mid to long term, all three players can do well in India. India is a market where you get unmatched volumes. You need to be super cost-competitive, and you need to be the best in the technology to do well in India.
Do you see any change in the way contracts with operators are being done?
There is always change. They are moving much more towards that customer experience. They have evolved from the old classical service-level agreement based on some KPI (key performance indicator) like the phone or number of radio that is available to the totality of experience.
Some operators are looking to deploy open-source radio access equipment. Is that a concern for you? Will this work ?
We are also working on open-source platform with our partnership with Nvidia. But we are also doing R&D at full speed so that we can prepare in terms of performance on open-source platform versus a full-stack solution, so we know exactly when you can apply one and when you can apply the other.
How soon do you think should the government launch 5G in India?
From an operator’s point of view, they are ready. It will be more convenient to invest in 5G when you have the spectrum because you will reduce the production cost. The problem is the cost of the spectrum, and that is something that the government has to decide on. For India, 5G will boom after 2022, although 4G will be the most used technology still in 2025 because most of the subscribers will stay on 4G. I think 5G in 2025 will be about 20 per cent.
Will upgrading network to 5G be an expensive proposition and can telcos take on this burden now?
There will be some upgrade needed. When it comes to the technology that has been delivered lately, it is already 5G-ready. When you’re hearing market demand, you have to move. This move will call for a modernisation cost.
What’s your opinion on the government’s decision related to BSNL and the ‘Make in India’ initiative in general? Do you think Indian vendors are equipped to get into such technologies and scale up globally?
We understand ‘Make in India’ and we support those initiatives. But if you close it (BSNL deal) in a way that BSNL will not be able to deploy the best possible technology, you are delaying their services. You need to balance so that you don’t block the technology or create damage.
It is easy to develop one product. The problem is that you have to work continuously. To scale and change, it’s a different story. It requires a lot of muscle and long-term investment.
What kind of work is happening out of the India accelerator centre in Bengaluru?
We believe that going forward, we cannot do things the same way we were doing yesterday. From operating the network to learning the network, which has been largely done by humans, it cannot stay the case because it’s not manageable. So we have to introduce AI or machine learning use cases so they can be done in an automated way. So this is what the Indian team is doing.
Will the way the world is reacting to Chinese equipment suppliers will cause some disruption? What does it mean for Ericsson?
We invest in our supply chain so that we are independent of geopolitical decisions. We don’t believe that we can make business because others cannot take it. We can only make business if we keep our technology super-advanced, leading to the lowest cost possible. That’s why we increased investment in R&D three years ago and we are doing it now.
What are the security challenges faced by companies like Ericsson? How can telcos address these challenges?
When it comes to security, the best is always to have the latest possible software release because that soft release includes fixing of the security problems coming from the rest of the world. In terms of data security, big data, in my view, will help you. The more you are aware of the existence of that data, the more they are centralised, the easier it is to have control while you are using it.