3 Scandinavia Taps Ericsson for 84-Mbps HSPA Nordic Networks

3 Scandinavia has awarded a contract to Ericsson to upgrade its mobile networks in Denmark and Sweden which it hopes will boost data download speeds up to a maximum rate of 84 Mbps—making it the fastest 3G network in the world. The agreement will see Ericsson supply its HSPA Evolution solution, plus a new WCDMA/HSPA radio access network in Sweden on the 900MHz frequency band, the first of its kind in the country. In addition, world number-one vendor Ericsson is providing IP-based optical and microwave backhaul, and support services.

The three-year contract will involve a nationwide roll-out of the HSPA upgrade in Denmark, and four major cities in Sweden. Roll-out is expected to start in the first quarter of 2010, while financial details of the deal were not disclosed. 3 Scandinavia, operating in Sweden and Denmark, is a joint venture between Hong Kong mobile giant Hutchison Whampoa, which holds a 60% share of the operator, and Swedish Investor AB, holding 40%.

Outlook and Implications

• Super-High-Speed 3G for 3 Scandinavia: CEO at 3 Scandinavia Peder Ramel has stated the network upgrade is necessary to cope with increasing demands for mobile broadband, as its customers' mobile use becomes more and more sophisticated, allowing them to enjoy social networking, online gaming, and videoconferencing on the move. 3 Scandinavia launched its HSPA 21Mbps network a year ago, claiming the launch as the fastest in the world at the time (see Sweden: 8 December 2008: Ericsson Brings 21-Mbps Mobile Broadband to 3 Scandinavia), and it says the current upgrade will give it the fastest network on 3G once again. The operator is also the first to launch HSPA in Sweden on the 900-MHz frequency band, tranches of which were awarded to all the major operators in the country nearly a year ago to cope with the demand for broadband services (see Sweden: 18 March 2009: 900-Mhz Spectrum Awarded to Hi3G and Existing GSM Operators). However, the operator still faces some stiff competition in the region, from the likes of former incumbents TeliaSonera and TDC, along with global players such as Telenor and Tele2. In Denmark, the EU has recently put pressure on the Danish regulator to equalise differences in mobile termination rates (MTRs) between the Nordic incumbent operators and 3 Denmark (see Denmark: 1 September 2009: EU Calls on Denmark to Lower Termination Rates for Hi3G), and this, coupled with recent Europe-wide cuts in roaming rates and the global economic slowdown, means 3 Scandinavia must keep up with its rivals if it hopes to prosper.

• Demand for Super-Fast Mobile Broadband in the Nordics Increases: 3 Scandinavia, along with its Nordic neighbours, is pushing ahead with network upgrades to cope with the huge demand for mobile broadband and data services in the region. Sweden saw astronomical mobile broadband growth of 133% in 2008, making it the second most popular form of Internet access, and by June 2009 mobile broadband accounted for 27.2% of all broadband subscriptions in the country. Telenor recently signed a deal with Nokia Siemens Networks (NSN) for an upgrade of its entire 3G network to provide 21Mbps HSPA+ services (see Sweden: 30 November 2009: Telenor Taps NSN for 21-Mbps HSPA+ Swedish Network Upgrade), and the majority of the country's operators are now offering mobile broadband at close to this speed. In Denmark, expansive HSDPA coverage from saw mobile broadband subscriptions grow to 419,000 by June 2009, representing a penetration rate of 7.7%, while mobile broadband subscriptions accounted for 5.7% of all mobile subscriptions and 17% of all broadband subscriptions. TDC was aiming for 99% population coverage when it launched its HSDPA network over two years ago (see Denmark: 9 January 2008: TDC Launches Danish HSDPA Network), and key rival Telenor has recently signed up NSN to provide a similar network upgrade to it's Swedish 21 Mbps launch (see Denmark: 18 November 2009: Telenor Denmark Picks NSN for HSPA+/EDGE Network Upgrade). Once again, the Nordics are leading the way, as high demand pushes investment and the region moves towards mobile-only broadband solutions.

• Another Win for Ericsson as Vendor Competition Increases: The award of the upgrade deal to Ericsson will be a boost for the Swedish giant, which has seen extreme competition in the vendor sector from European rivals NSN and Alcatel-Lucent, and Chinese players Huawei and ZTE of late. Ericsson was recently humiliated by the loss of a key LTE contract in its home Nordic region to Huawei, but has since bounced back, securing key 4G deals from TeliaSonera in Sweden and Finland (see Sweden: 13 January 2010: Ericsson, NSN Win Key 4G LTE Deals with TeliaSonera in Scandinavia). As competition in the network vendor sector reaches breaking point, NSN's prediction that there will be casualties looks like coming true and IHS Global Insight expects to see some significant consolidation with the next year.