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Ericsson Pushes On

Light Reading
LR Mobile News Analysis
Light Reading
3/31/2004

LONDON, U.K. -- PTT European Summit -- Swedish vendor LM Ericsson (Nasdaq: ERICY) is attempting to allay fears over the long-term revenue potential of push-to-talk (PTT) services in Europe, following recent concern over technology standards and user demand.

PTT-type technology allows people to use their handsets as walkie-talkies, merely pushing a button to talk to another user or group of users.

Such a service has already experienced significant success in the U.S., with Nextel Communications Inc. (Nasdaq: NXTL) claiming to generate around 20 percent of its revenue from the technology (see Nextel's Nationwide Walkie-Talkie). Last August Verizon Wireless launched a similar offering (see Verizon Pushes-to-Talk, Finally ).

This lone success story has seen the technology touted as the wireless industry’s revenue savior, with European carriers preparing to roll out PTT-type services later this year (see Orange Pushes Startup, MMO2 Joins PTT Gang, and Europe Catches PTT Bug).

Despite the hype, the technology has been hit by a series of setbacks. Nokia Corp.'s (NYSE: NOK) decision to renege on an industry standard partnership with Ericsson has added to fears that interoperability issues will strangle market growth (see Nokia Pushes Off and Poll: PTT Problems Ahoy!).

Meanwhile the demise of Dolphin Telecommunications Ltd. -- a U.K. carrier offering mobile workforces a public radio technology similar to Nextel’s successful iDEN PTT functionality -- has led analysts to question European market demand for such services (see Dolphin Gets Canned and IDC Plays Down PTT).

Ericsson is eager to play down the long-term effect of either event on the market, claiming that company research into trial adoption in Sweden, the U.K., and Italy justifies carrier interest in the technology.

Niclas Medman, senior marketing manager at the vendor’s business unit systems division, argues that European PTT services are unlikely to face the same fate as those suffered by Dolphin, due to differences in target markets.

“One major takeaway from our research was that this is of particular consumer interest, rather than business, as in the U.S,” he comments. “The results of the trials showed a high level of consumer interest in the technology.”

As for the Nokia incident, Medman is confident that initial efforts to jointly develop a PTT-over-cellular (POC) specification will not be wasted. “Of course, we would rather see just one spec in place, but this sort of thing is not atypical with new services. What is reassuring is that everyone seems to agree that in the end they will join the POC track. Having a single vendor approach will not benefit the industry.”

Ericsson itself is still attempting to make its mark on the PTT carrier market following a less than successful Unstrung demo last year (see Ericsson: Pain-to-Talk?). “We haven’t announced any specific customers but we do have trials with major operators,” claims Madman. “We have a lot of trials.”

Sigh. Don’t we all?

— Justin Springham, Senior Editor, Europe, Unstrung

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