On The Line: A History of Ericsson

ERICSSON
ON THE LINE



'COMMUNICATION IS A BASIC HUMAN NEED': THAT WAS THE SIMPLE
VISION OF LARS MAGNUS ERICSSON WHEN HE STARTED HIS TELEGRAPH
REPAIR SHOP BACK IN 1876.

THIS IS THE STORY OF HOW THAT VISION HAS BEEN REALISED,
TRANSFORMING HOW WE COMMUNICATE TODAY.

It was the new world and you needed new skills, new technologies.
Åke Persson
It was the first mobile systems that were deployed in the world and we were in the
beginning of something very, very big.

IT IS A STORY TOLD BY THE PEOPLE WHO WERE THERE, WHO OVERCAME
ENORMOUS CHALLENGES TO DELIVER REVOLUTIONARY NEW
TECHNOLOGY TO THE WORLD.

It was very complicated technology. We needed fantastically good people
to do it.

It was an amazing environment to work in.
10:00:45:18 Marie Westrin
Every day we built something.

This is for everybody. This is a freedom tool like a car.

TECHNOLOGY THAT NOW HAS THE ABILITY TO CONNECT EVERYONE AND
EVERYTHING ON THE PLANET AND TRANSFORM HOW WE LIVE.

Giving people the opportunity to communicate in the poorest villages.
Håkan Eriksson
Everything that can benefit from being connected will be connected.

Åke Persson
I found this wireless email strategy in the attic of my summer home that I wrote in
'91. It tries to lay out how you use a wireless network to communicate with
email! And, of course, it's very rudimentary. How naïve we were.
But on the other hand, had we not done that, had we not, you know, tried it, had
we not pursued it, I mean we might have been somewhere else today! That's how
you gotta look at it, I think.
Åke Persson
It dawns on me sometimes that I have been part of this. You bring back memories
of the early days and wow, it's unbelievable the way we have come.

It's a little surprise I have for you, Mary. It's a telephone.

A telephone?
Lars Trägårdh
This is a time really when we are moving from the pre-modern to the modern. We
see the railroads, we're starting to see the automobiles, we're seeing the light,
we're seeing this novel, new way of communication, namely the telephone.

Is it just a toy?
Lars Trägårdh
In 1876, Bell is already manufacturing and selling telephones, and this is very
quickly making big news in Stockholm, Sweden; a country which is already
fascinated by modernity and engineering. We see, you know, the birth of a totally
different spirit of a time, where people feel suddenly that anything and everything
is possible.

AND INTO THIS COMES LARS MAGNUS ERICSSON, A GIFTED ENGINEER.
WITH HIS WIFE HILDA AND BUSINESS PARTNER CARL JOHAN
ANDERSSON, HE SETS UP A SMALL WORKSHOP. INITIALLY, HE REPAIRS
AND MANUFACTURES TELEGRAPH EQUIPMENT. BUT WHEN CUSTOMERS
COME TO ERICSSON WITH TELEPHONES TO REPAIR, HE SEES A TERRIFIC
OPPORTUNITY. HERE IS AN INVENTION THAT FASCINATES HIM. HE IS
SOON MANUFACTURING TELEPHONES OF HIS OWN DESIGN.
NARRATOR
HERE'S AN ENGINEER WITH A VISION. HIS NEW DESIGNS CAPTURE THE
PUBLIC'S IMAGINATION.

AND IN 1883, HE FORMS A PARTNERSHIP THAT WILL BE THE MAKING OF
HIS COMPANY.

HENRIK THORE CEDERGREN IS AN ENTREPRENEUR WHO, LIKE
LARS MAGNUS, SEES THE POTENTIAL OF THE TELEPHONE.

THE PARTNERSHIP'S AIM IS TO PROVIDE TELEPHONE LINES IN EVERY
BUILDING AND FOR ALL THE TENANTS IN THEM AT A LOWER PRICE. THEY
CONSTRUCT A 1,200 LINE GANTRY ON THE ROOF OF THE CENTRAL
EXCHANGE ABLE TO COPE WITH OVER 3,000 SUBSCRIBERS.
Lars Trägårdh
So the result of this is that by 1885, Stockholm has more telephone subscribers
than any other place in the world. The telephone is now becoming essential to
life, not just for businesses but also for populations separated by large expanses
of water and forests.

WITH GLOBAL DEMAND INCREASING AT A RAPID RATE, ERICSSON'S
OPERATIONS EXPAND AROUND THE WORLD. IN RUSSIA, CHINA, MEXICO,
CABLES STRETCH OUT ACROSS THE COUNTRIES AND IN CITIES THE
SKIES BECOME BLACK WITH CABLES.
Hans Vestberg
I think what is really standing out in history is the globalisation so early, the
internationalisations, and the people, the sales people, in the early 1900s that
went out on a boat and came home two years later and had sold one product!
And you think about the perseverance and the way they really internationalised
Ericsson in the very early stage where aircraft or communication didn't
exist over borders.
NARRATOR
IN 1903, BY THE TIME ERICSSON RETIRES, IT IS ONE OF THE FOREMOST
PROVIDERS OF WORLD-CLASS TELEPHONES AND TELEPHONE
EXCHANGES IN THE WORLD PRESENT IN OVER 100 COUNTRIES.

THIS GLOBAL SCALE WOULD PROVE TO BE A DEFINING ASSET IN
REALISING THE VISION OF CONNECTING PEOPLE RIGHT THROUGH TO
THE PRESENT DAY.
Man Sitting at Desk (Archive)
Irwin Baker, please.
Lars Trägårdh
In the 1950s and '60s on into the early 1970s, we have a period of great optimism,
tremendous economic growth, right, opening up of new markets, connections
between new markets. This is the backdrop for new increasing pressures on the
systems of communication.

WITHIN GROWING CITY NETWORKS, ONE CONVERSATION OVER
ONE COPPER CABLE HAD REACHED CAPACITY. WITH INTRODUCTION OF
DIGITAL TECHNOLOGY, SPEECH WAS NOW DIGITISED INTO ZEROES AND
ONES, WHICH MEANT A NUMBER OF CONVERSATIONS COULD BE SENT
OVER ONE CABLE. NOW THE ATTENTION WAS TURNED TO THE OLD
ANALOGUE TELEPHONE EXCHANGES, WHICH WERE BEGINNING TO SHOW
THEIR LIMITATIONS THROUGH SPEECH AND CONNECTION DELAYS. THEY
WERE BECOMING OUTMODED AND NEAR TO BREAKING POINT.

I can't take any calls now.

ERICSSON WAS UNDER PRESSURE TO BRING THE ZEROES AND ONES
INTO THE EXCHANGES.

The old mechanical switches were running out of capacity, so development of the
digital switch was the ultimate goal. The Swedish operator Televerket and
Ericsson realised that the cost was too heavy, and they combined their resources,
they combined their development engineers, with the ultimate goal to develop the
digital switch.

The great idea for going from analogue switches to digital switches, how much
more capacity can get, how much more people that can actually be using
telecommunication.

Instead of having an entire building, you could decrease both the switch element
and the computers into small racks.

It was capable of handling scale, which was, of course, enormous benefit later,
but also had, for that time, a very high computing power and also a modular
software base that could be adapted also from the fixed to the mobile.

That's the great success of AXE. That really conquered the world after 1976.

The telephone was now established as a mechanism for connection people
across many large distances. However, the new challenge becomes can the
telephone itself become mobile?

It was obvious to me if there was a way that you didn't have any longer to be
tied to the wall why you were speaking on the 'phone, that technology would
develop and be immensely important. I thought this was a fabulous opportunity,
new technology, new frontiers, and I just couldn't resist it.

IN THE LATE '60S, A GROUP OF COUNTRIES WITH THEIR RESPECTIVE
ENGINEERS GOT TOGETHER TO CREATE A NEW TELEPHONE SYSTEM THAT
WOULD BE A SIGNIFICANT STEP TOWARD CHANGING MOBILE
TELECOMMUNICATIONS. IN 1969, THE NORDIC MOBILE TELEPHONE
GROUP, NMT, WAS ESTABLISHED TO CREATE THE FIRST FULLY-
AUTOMATIC, TRANSNATIONAL, CELLULAR 'PHONE SYSTEM THAT WOULD
LINK UP THE NORDIC COUNTRIES OF DENMARK, NORWAY
... AND SWEDEN.

The Nordic countries had really already established a common zone for free
trade, for crossing borders without having to use a passport, so there was an
ideal kind of experimental ground, right, for developing this new technology with
the least amount of resistance and the maximum amount of interest and
openness.

Ericsson was part of the work and so was one of Ericsson's small subsidiaries
called SRA.

There was a radio arm of Ericsson.
10:09:06:02 Flemming Ørneholm
We worked with a lot of things within radio: taxi radio, paging, land mobile radio
for police.

They were a pretty small, pretty insignificant part of Ericsson. Probably less than
five percent of revenue.

And this company was led by Åke Lundqvist. He was the CEO of this company.
And he had great visions and his vision was really to be the number one company
in the world when it comes to mobile communication.

That little company became extremely important for the success we have today.

It had the vision to grab the new thing that was happening in telecom: the merger
of telephony and radio.

Then suddenly something happened: Ericsson had, together with Philips, won the
largest contract for landline telephony in Saudi Arabia. A little bit of that contract
were a mobile telephone system. So Ericsson came to SRA and say, "What can
we do?" And Åke Lundqvist said, "We have the 'phones, you have the switch, we
need a base station." And he staggered some one channel radio links and
cobbled them and ... there's more to it than that, (laughs) but that became a base
station anyhow, and we went to Saudi and said, "Okay, we can supply you with
a full, modern, cellular mobile telephone system." We got the order. The order
were written on a A5 piece of paper, handwritten, 'I hereby order a mobile
telephone system to cover Riyadh, Jeddah and Medina, plus 8,000 mobile
telephones.' That was really the world's first contract for a mobile telephone
system.

We knew we had a lot of things to do. I mean, the 'phones we had shown the
Saudis, they were wooden models. We didn't have a base station ready. We did
not have the interface switch. We didn't have cell planning in place. There were a
lot of work to be done.

We had people that were dedicated. They would not go home in the evening.
Some of them would even sleep in the offices. There were many problems. The
heat was tremendous to work in. We had to erect radio towers. We had to install
the mobiles in cars. And the first time we tried to drill through the wing of a
car to install an antenna the drill broke because it was an armoured car. We had
tested the equipment at home, especially the keyboards, at a hundred degrees.
When they came into the cars in Saudi Arabia they melted! So, there were
problems, but we delivered one month ahead of schedule.

This all describes a very entrepreneurial spirit.

It was an amazing environment to work in.

It was the new world and you needed new skills, new technologies.

We had an enthusiastic team of people, fearless people, passionate people, that
were willing to go anywhere to develop a new business.

Suddenly we were supplying a system from A to Z. We were coming in with a
switch with interface to the base station's radio towers, the cell planning. It was a
complete package.

Are you sure we didn't forget something? We did mention, didn't we, that all our
components come from LM Ericsson?

Now the defining moment occurred in Holland, when the Dutch telecom operator
had requested to get supply for an NMT network, and they asked Ericsson to
supply the switch and Motorola to supply the base station. Motorola was the
big lion; they were the world's largest supplier of radio communication equipment.
SRA was basically nothing in comparison to them.

We had to convince them that Ericsson was also a good radio supplier. We
wanted to prove to the PDT and to the world that we, in fact, could do it! And
that was a very frustrating time.

Then Åke Lundqvist stepped in and participated in the negotiation and demanded
that Ericsson should supply the entire network and without Motorola, and if they
didn't accept it no AXE switch.

He was there negotiating and eventually just threw his fist on the table and said,
"You've got to listen to me!" Obviously that had some impact.

That decision from Ericsson to back Åke Lundqvist and say, "No switches for
radio unless you buy the whole thing from us," that was a strategic decision that
was going to turn the whole future for Ericsson. Dutch telecom, they bended and
they bought the system.

That was the starting point for Ericsson to become a complete cellular network
provider and without that Ericsson would have been nothing today.

It was the first mobile systems that were deployed in the world and we were in the
beginning of something very, very big. Ericsson was the leading switching
supplier. We were present in 135 countries around the world. You could go from
country to country, which we did. If you wanted to go to Thailand because you
wanted to sell them a mobile system, there was an Ericsson office there.

We got systems contract all over the world, in Far East, in UK, and Åke Lundqvist
decided also that we should enter the US.

He saw there was an opportunity there and he wanted to definitely pursue it. He
thought he could do it! He got himself into the game! He wanted to win the
game!

I think Åke Lundqvist's leadership style had a very important role in how this
company moved.

He changed the culture in that company over the coming years into a dynamic,
young organisation.

We were allowed to do almost anything, we were allowed to a vision, and that
kind of spirit does not exist in every company.

When I took over the mobile laboratory in Lund in 1985, our vision was clearly to
make small mobile 'phones for everybody, we wanted to make pocket 'phones.
I mean, the 'phone was a box like this in the trunk; they were car 'phones. And so
one of my first jobs was to take the circuit diagram, a huge circuit diagram,
and start deleting components and making rings saying, "We have to integrate
this, we have shrink this and we have to take away all of that." People didn't
have the vision of what it could do. Newspapers and magazines, they were
discussing sort of whether ten percent or five percent or three percent of the
population really needed this funny device, a telephone that can move around.
They didn't see what could happen. The good thing for us, we saw it, we knew
where we were heading. And the first thing we decided was that this is for
everybody, this is a freedom tool like a car, was the leading star of what we were
doing. We were doing a product for our self, for our kids, for our wives, for our
mothers. You're building freedom for everybody. There was nothing more
wonderful for an engineering group to do mobile 'phones.

As mobile telephony evolved during the '80s and became more popular, it was
still, of course, highly fragmented. If you were travelling to UK, or France or
Germany, roaming just didn't work; you didn't have the device that worked there.
And in the US, even if it was the same standard across the continent, still roaming
was not there at all in a universal way. GSM, I think, came out of the positives we
saw in the early days of NMT.

GSM was the world's first digital mobile system and it was intended for everyone
in Europe. The European community was very much backing this.

GSM here then becomes a crucial component, right, for European integration,
and also to symbolise itself co-operation between the European countries at a
very important moment in the growth of the European community itself.

I mean, it was a lot of hard work, among others by the operators in Europe and by
a lot of vendors in Europe as well, to set up the standard of GSM. And it took
a lot of years just to define the standard: how would different machines in the
network talk to each other?

It was really super-daring to do a radio system of that complexity, fully digital.
There was nothing more high-tech in the world, not even in the military side. It
was an absolute super-challenge.

It was very complicated technology; we needed fantastically good people to do it.
Radio propagation is very complicated, it's a lot of reflections and things going
on, and to cope with that requires things that no one had really solved.

We did enormous amount of measurements of transmission properties all
over the world within cities and so-called urban canyons where it bounces
between all the skyscrapers of big cities. And it was clear from the beginning
that it needed advanced digital signal processing, brought down on super-
small microchips consuming no power at all, even though the computations were
incredibly complicated.

Just to give you one example of how technology is challenging it was the GSM,
especially back in 1986, was that when we sent these bits out from the base
station to the mobile some of the bits would bounce of a mountain and come
that way to the mobile and some would go straight to the mobile. This takes
time. And you don't think it's a long time but the bits become old. And, in fact,
you cannot just combine them again, you have to [resolve] the echo from the
mountain. And that you do by building a model of the mountains inside the
'phone, several time per second.

July 1st, 1991, the first GSM call was set up. And I know so many years
afterwards exactly what I was doing that day and it was so good.

Of course, the critical thing was to get handsets to customers. And in Cannes,
one of the first GSM conferences, George Schmitt [UNSURE OF WORDS] said,
"GSM stands for God Send Mobiles." And I think that says a lot about it and it
was a challenge for the coming year or so.

There was no technology to do small mobile 'phones, it all had to be invented.
It was a major gamble betting the whole system on it. So at the day when we
were sort of getting our first microchips back and hoping that, well, pray it works
because we will be totally ruined if it doesn't work. We did it, but we almost
thought it would (laughing) never work, it was that complex.

There were companies that didn't believe it would be possible to do it and they
basically missed the whole GSM race because of it.

It was a great system. It had all the good things about roaming. The 'phones
were becoming smaller and smaller. They were coming down in price after
number of years because this was digital! That's the difference between digital
and analogue, once you get the digital right you can get the cost down!

We very quickly made this plan of, 'This is the 'phone, next generation 'phone
is smaller, next generation 'phone is even smaller, next generation is...,' so we
knew where we were heading. We based our whole strategy on something called
Moore's Law. Moore's Law is something that means microchips are constantly
becoming smaller. And all the technologies that were not following Moore's Law
we had to force them to follow Moore's Law. But then there are a lot of
components that are not microchips, like batteries and displays and keyboards
and stuff, and some of them are the size of our fingers and they cannot really
shrink as much. But everything that can shrink was forced to shrink.

It spread all over the world.

You could see it in poor countries and rich countries. It was really important
for us.

Because it became so adopted worldwide rather quickly it also became
inexpensive and accessible for people who did not have a lot of money. And it
tells you a lot about the role of GSM, right, in democratising the world from
the point of view of communication, making it accessible in countries that had, in
fact, no functioning landline system whatsoever.

GSM is a digital system for voice which means that voice is basically transferred
as data. So towards the end of the '90s, we started evolving GSM to also allow
data transfer over the same mobile system.

The data services was offered on top from the start pretty much and especially
SMS. Very few people used it in the start, but fairly soon the low charge for SMS
gave a huge amount of the population an easy and cheap way to communicate.
10:22:43:03 News Reporter VO
Tonight, on the streets of Manila there's widespread relief that weeks of political
turmoil have ended without serious violence.
10:22:49:19 Lars Trägårdh
In the Philippines, for example, it was the basis for what became known as
'people power' in the overthrow of the regime of Estrada. It was a form of
networking that was much more powerful than just merely speaking over the
telephone to one person; you could send messages to hundreds of people in this
way. So it became an enormous force, right, for democratic exchange.

And, I mean, the rest is history. SMS today is the most widely used data
communication around.

Then there was this thing called internet that came around in those days in the
early '90s.
10:23:26:06 TV Presenter- Man (Archive)
And what is internet anyway? What do you write to it like mail?
10:23:29:20 Woman in Pink & Black Outfit (Archive)
No, a lot of people use it and communicate. I guess they can communicate with
NBC writers and producers. Alison, can you explain what internet is?

And then we started to realise, 'That's gonna be a big thing!'

The idea was to combine internet and mobile making internet mobile. But then
we realised that working with the GSM the data speeds were not really enough.

It could only deliver like 30, 40, 50 kilobits per second, that's why we really
started the work on 3G. And then we had received like ten times faster than GSM
and still it didn't really fly!

So then we had to do something more. We had to innovate new technology and
we then invented something called HSPA, which gave another factor of ten, so
we had then achieved hundred times faster than GSM. We were up to three, four
megabits per second. At that point, 3G really happened.

And, of course, then it started with dongles for laptops, then came the
smartphone. So with the smartphone, iPhones and Androids, it just exploded.

When you look at how mobile 'phones and mobile devices now are used,
especially for TV and video, you need all the capacity you can get.

In every step of the data [UNSURE OF WORD] evolution we have been the first
ones to show new technology to the market. We were first to show LTE and we
were also first to show LTE Advanced one gigabit per second.

The LTE is the next step in the evolution in delivering higher speeds at a
competitive cost.

We have built these networks all around the world. We have more than six billion
mobile subscriptions in the world. We have a billion people having mobile
broadband. It will not stop there.

People are expecting to be connected everywhere. And that is on a global scale
now, so we can see examples from rural Africa people are expecting connectivity
and also, with the connectivity, they become a part of the global village more or
less.

Everything that can benefit from being connected will be connected and a thing
that is not connected will be seen as a very stupid thing.

There's got to be some 50 billion connected devices on the networks that we're
deploying. And compared to what we thought from the beginning where this was
only one service, that was the voice, you call each other, and we even thought,
'Why do we need to walk around when we have a 'phone?'

We contribute today with our technology giving people the opportunity to
communicate in the poorest villages in Africa. I mean, that's exciting stuff.

What those clever guys have done, that's amazing!

You have to be very innovative to become 136-years-old. You have to keep on re-
innovating and challenge your own best profitable products before a competitor
does it to you.

Only your own imagination can put a limit to what really will happen.

Well, you've gotta try things out!

How far can you go? I think that's where imagination brings you.

It has been a fantastic voyage.

On the North Shore of Borneo, I saw one of those big, [ancient] mobile 'phones
standing on a sack of rice. That was local telephone booth. You could 'phone
from there to the rest of the world. That was one of the moments where I was
proud of being an Ericsson man.