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Ericsson, Telstra JV to Drive Telecommunication Innovation - Analyst Blog

Communications technology and services giant Ericsson ERIC recently announced a joint venture with Telstra Corporation Ltd. TLSYY , a leading Australian mobile broadband operator, for developing 5G standards and technologies. The two companies have decided to work on 5G radio access and core network innovation in order to strengthen 5G trials. The collaboration is expected to commence in the second quarter of 2015.

Industry standards of telecommunication industry have been evolving rapidly and Ericsson, with its 5G solutions, is well equipped to supplement the needs of mobile operators. 5G lab evaluations and field trials remain the core focus of the latest collaboration between Ericsson and Telstra. Ericsson’s management believes that the tie-up will allow it to obtain a deeper insight on the key 5G attributes and Machine Type Communications that can transform multiple industries ranging from agriculture to logistics.

Ericsson and Telstra will join forces in five key areas: tracking and evolving 3GPP Standards, testing and analyzing 5G Radio Test Beds fostering innovation, running 5G field trials in Australia, running Proof of Concept (PoC) with industry partners of Telstra and evolution of core mobile network for effective realization of 5G. The symbiotic partnership allows Ericsson to test new concepts and architectures using Telstra’s platforms, and on the other hand, aids Telstra in successful transformation of networks from 4G to 5G.   

Ericsson and Telstra have recently ruled headlines with their attempts at driving innovation in communication services. Telstra has used Ericsson’s LTE (?) Broadcast end-to-end solution on its 4GX network, marking yet another improvement in broadcasting technology. Multiple successful LTE Broadcast trial runs in 2014 have pointed out the presence of four video channels that can be streamed in addition to data channels.

Initial trial runs have shown that only 10% of the 20 MHz carrier has been used, implying room for improvement in network efficiency. A major milestone of this collaboration was the deployment of High-Efficiency Video Coding compression techniques to deliver good quality videos using much lesser bandwidth than the currently used MPEG-4 AVC (?) coding.

The two companies have also created Center of Excellence for Programmable Networks (CoE) in a bid to effectively deploy Software Defined Networking (“SDN”) and Network Function Virtualization (“NFV”). The Center will help in the development of PoCs and trial executions for applications running on programmable networks.

Ericsson's virtual Evolved Packet Core (“EPC”) will aid Telstra’s Mobile network to leverage the competence of NFV-like network flexibility, and operability. Telstra expects to improve its network agility, cost efficiency and delivery speed to better serve customers. The trial will likely be over by Sep 2015.

These recent developments reflect Ericsson’s commitments toward creating a networked society. The company’s profound experience and technological expertise will provide customized solutions for a heavily competitive market environment. It marks the beginning of an industrial transformation coming on the back of technology innovation.

Ericsson presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include InterDigital, Inc. IDCC and Juniper Networks, Inc. JNPR, both carrying a Zacks Rank #1 (Strong Buy).


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