HELSINKI, 22 May 2000 - The deal Ericsson of Sweden struck with Vodafone AirTouch Plc, the world's largest mobile phone operator, earlier this week to build its third generation (3G) network in Britain, is a sign that it is pulling away from rivals.
Mobile phone operators are expected to spend heavily in the coming years to expand their networks to standards such as 3G to whet the appetite of cellphone users with services like non-stop Internet, video conferencing and other multimedia thrills.
This means that top producers of networks - which enable cellphones to connect with each other - will be racing to equip operators with the latest technology that give customers faster access to data and voice via their phones.
"Winning the Vodafone contract ... reaffirms Ericsson's position as the leading mobile infrastructure manufacturer," said Matthew Lewis, a telecoms analyst with Daiwa SBCM Europe Ltd in London.
Firmly beaten into third place in the handset sales stakes by Nokia and Motorola, Ericsson is emerging as the leading supplier of infrastructure helping to make mobile Net a reality.
Analysts say that Ericsson's ability to scoop up the Vodafone contract - which some say may be worth US$3 billion - was not only due to its promise to deliver advanced networks quickly, but its long-standing relationship with its customers.
"A lot is about relationships in this business," said Lewis.
The deal highlights the advantage manufacturers who have already provided equipment for operators, such as GSM networks, have in beating newcomers for new big and lucrative orders.
"Our long term relationships have been helpful to agreeing to this (Ericsson) contract," said Vodafone spokesman Mike Caldwell.
Ericsson has now been picked to supply equipment to all five 3G contracts that have so far been awarded, including Japan Telecom, NTT DoCoMo and Vodafone, Ericsson Networks spokesman James Borup said.
Nokia has also been picked to supply 3G equipment to the Finnish and Japanese operators, but analysts say its contracts are probably worth less than Ericsson's.
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