Ericsson, Nokia offer contrasting timelines for 5G network upgrades

By Eric Auchard

BARCELONA, Feb 22 (Reuters) - Ericsson (LSE: 0O86.L - news) , the world's top supplier of wireless equipment, said on Monday it expects 150 million users to be on next-generation 5G networks five years from now, steering clear of an industry debate over whether network upgrades could start far earlier.

By contrast, rival mobile equipment maker Nokia (Milan: 23568.MI - news) said on Sunday the shift to "5G-ready" wireless networks could begin to ramp up as early as 2017, well ahead of any final agreement on formal 5G standards.

"5G will happen faster than expected. This may surprise some of you," Nokia Chief Executive Rajeev Suri told an audience ahead of the Mobile World Congress in Barcelona.

The differing timeframes seen by Ericsson and Nokia in part reflect a semantic debate over what exactly 5G means and whether a lot of equipment necessary to operate new networks will be needed well ahead of standards being formalised.

Yet the comments are significant because Nokia is taking an aggressive line on when next big growth cycle will begin, while Ericsson may be taking a more conservative approach.

The remarks also come as many analysts cast doubt on whether operators are prepared to commit to massive capital spending until a stronger business justification exists for 5G.

"5G will have no impact whatsoever for consumers in the next five years," said Forrester Research (NasdaqGS: FORR - news) analyst Thomas Husson. "The history of 3G and 4G networks tells us it will take years before we reach any critical mass after commercial launches at the end of this decade."

INTERNET OF THINGS (CDNX: ITT.V - news)

Ericsson is more optimistic. "We believe in 2021 there will 150 million subscribers for 5G," Chief Executive Hans Vestberg told a news conference. "We are going to see pre-commercial (5G) networks before that."

Current 4G networks are designed to provide reliable video delivery to mobile phones. No one can say with any certainty what 5G will mean and experts only agree it will mean a lot of different things, in particular the demand for wireless connections in a wide variety of devices beyond phones and computers.

This shift will provide connections for devices from autonomous cars to washing machines, dubbed the "Internet of Things."

Vestberg said fourth-generation networks still have a lot of running room as only 1 billion subscribers are using 4G to date, five years after these networks went mainstream. That's less than one-third of the world's mobile users, who otherwise rely on older standards.

Still, the industry is struggling to satisfy demand for watching video on phones and tablets, driving a need for huge increases in data-handling capacity. Network (BSE: NETWORK.BO - news) operators must keep a lid on costs because customers have proven unwilling to pay more for data even as their appetites increase.

"The whole thing is we want to reuse and have an evolution from 4G to 5G," Vestberg said.

Both Ericsson and Nokia's top executives agree that broad commercial network upgrades will only begin around 2020. (Editing by David Holmes)