Ericsson to Soon Sell Group-Calling Cellular Equipment in U.S.
Bloomberg News
November 27, 1998, 2:16 p.m. ET
Ericsson to Soon Sell Group-Calling Cellular Equipment in U.S.
New York, Nov. 27 (Bloomberg) -- Ericsson AB said it will
soon start selling equipment in the U.S. that enables wireless
phone users to call several parties simultaneously.
AT&T Corp. and SBC Communications Inc., two of the largest
U.S. cellular phone companies, will be among the first customers
for the equipment, people familiar with the companies' plans
said. The equipment, which also will include walkie-talkie
features, will put pressure on Motorola Inc. and Nextel
Communications Inc., analysts said. Motorola is one of the
largest suppliers of such wireless equipment in the U.S., while
Nextel is the largest provider of the services.
Nextel has grown rapidly because of its walkie-talkie-type
service that allows groups of people, such as construction
workers, to instantly communicate while at different locations.
AT&T and SBC want to offer similar services since they attract
valuable business customers who spend more each month and stay
with the service longer than most consumers.
''It's a product that is clearly trying to capture and share
in the success that Nextel has been able to generate,'' said
Bradley Williams, an analyst at Legg Mason Wood Walker, who has a
''buy'' rating on Nextel.
Ericsson declined to name customers or be more specific.
AT&T and SBC also declined to comment.
''We will be doing a major product launch and advertising
campaign shortly,'' said Walter Deal, total solutions manager at
Ericsson Inc., the U.S. unit of Ericsson AB. ''We are in talks
right now with a couple of customers for joint advertising.''
Ericsson's Deal said tests of the equipment in Chicago have
been successful.
Tests are expected to begin in other markets in the next
few months, and the service could be available soon thereafter,
the people familiar said.
Ericsson is expected to introduce the equipment before the
Cellular Telecommunications Industry Association trade show in
early February.
Nextel and Motorola declined to comment.
Existing Networks
The equipment will work on any wireless network, not just on
networks with Ericsson-made wares, as well as with existing
wireless phones, Deal said. It also will work on wireless
networks that use different technologies such as time-division or
code-division multiple access. TDMA and CDMA are among the
world's leading digital standards.
Ericsson also will introduce new wireless phones in the
middle of next year that have the group-calling features.
Nextel added 375,300 customers in the third quarter,
bringing its total to 2.42 million. That outpaced the increase at
AT&T, which added 325,000 customers, for a total to 6.8 million.
In the third quarter, Motorola's land mobile products
sector, which includes sales to Nextel, had a 3 percent rise in
sales. Orders, however, rose 20 percent at the unit. Motorola
said orders for its radio dispatch equipment known as iDEN was
''significantly higher'' than that, the company said.
Callers using Stockholm-based Ericsson's new equipment will
dial a code to activate the service, which calls multiple people
at different locations. The hardware will be sold to phone
companies and located within switches that direct traffic on
phone networks.
Still, some believe the Ericsson equipment won't be as
robust as Motorola's. While Nextel's service with Motorola offers
instant group calling, some say Ericsson's equipment will take
several seconds to set up.
''It falls short of being any sort of serious threat'' to
Nextel, said Jeffrey Hines, an analyst at BT Alex Brown, who has
a ''strong buy'' on Nextel.
--Colleen McElroy and Andrew Brooks in the Princeton newsroom |
