Telefonaktiebolaget LM Ericsson (publ) (ERICB) Earnings Call Transcript & Summary

[Audio Gap] Edition of Ericsson Mobility Report, November 2022 edition. It is the second edition this year and the 23rd since start in 2011. So I'm Peter Jonsson, and I am the Executive Editor of the Mobility Report. And with me today, I have some esteemed colleagues, Richard Möller, who is our Chief Forecast Analyst. But especially warm welcome to our external guests, Timo Lehtimäki, CEO of Erillisverkot Group in Finland; and Jarmo Vinkvist, COO of Erillisverkot Group Finland. I will explain very soon what Erillisverkot do and what they will present. So let's jump in and see what we have today then. So it is a new forecast period for us today. We go up to 2028 in our updated forecast, both, of course, for the global and the regional forecast. And then we have a very special article in this edition. It is about building Finland's next-generation public safety network. And that article will be presented by our esteemed colleagues then, Timo and Jarmo. Erillisverkot Group, that is a Finnish state-owned special-purpose company that is responsible for serving organizations, responsible for safety and functioning of the society in the fields of communication, mission control and securing critical infrastructure in Finland. So they will go into a bit deeper about how to build the public safety network in Finland. And apart from that deep dive into private networks, where we also have 2 feature articles in this edition that is geared towards discussions around how to reach net zero. One is co-written together with e&, the former Etisalat Group in the UAE. And it's about how network modernization is a very important tool for communications service providers to be able to cut down on their greenhouse gas emissions with more [ technology driven ] data, simultaneously break in the energy curve. So that is going into that subject. And of course, it's not just the [ CST ] but also those that [ sees the certs ] like consumers and the enterprises that need to take steps to cut down on the GST emissions. So in this article, the second article is about that. We're talking about digitalization, how it enables enterprises to reach net zero. That article is based on industry lab research where we have gone out and asked the executives and front runners in terms of digitalization and the materialization on what they see in terms of how ICT can support their targets of reaching net zero in not so many years ahead. So great feature articles that is complementing the forecast section in this edition. Let's start and look at what we see actually in our updated forecast on global subscriptions. And actually, we do still see a strong 5G mobile subscription uptake despite the macroeconomic challenges. That means that we still foresee that we will reach about 1 billion 5G subscriptions at the end of this year. And Richard, what I would like to ask you here, why is it so that despite the challenges in the world right now with the inflation and the unrest in some parts of the world, we still see a strong growth here? We have practically doubling subscriptions from 2021 in most regions and on a global level as well. What is your view on that?

Well, it is a very strong growth indeed. And as we'll see later, considerably faster than earlier generations. Of course, if we hadn't had the economic and supply issues that we have, the curve would have been even steeper. But there's still a large amount of phones sold in the world, and most smartphones today or advanced smartphones will include 5G. So when subscribers update, they get the 5G subscription and a 5G phone, so we get this strong uptake despite the fact that the smartphone sales are down 10% this year, still a very strong -- so basically churning the smartphones every 3 years will drive this uptake.

Yes. And it's not only 5G. I mean we also see 4G is growing strong in some regions. I think we had some 90 million subscriptions on 4G added in Southeast Asia - Oceania region this year, and it is actually peaking now in terms of number of subscriptions. So we're reaching about 5.2 billion 4G subscriptions this year. And that's a bit interesting because if you look at the numbers and the years it took them, now we're in 2022, it took them 13 years to reach 5 billion. And if you look at our forecast, it will take 10 years to reach 5 billion with 5G subscriptions at the end of the subscription period in 2028 then. And in 2028, the 5G will be the main subscription type, reaching 5 billion subscription at that time then. But of course, there are regional differences. And if we look at the -- our forecast and what we see in terms of penetration, it is so now, of course, that after India has deployed 5G and released services on their networks in October, we have now 5G live in all regions, in all our forecast regions. And it is still so, of course, that region-specific factors are impacting the adoption patterns and the uptake. Northeast Asia and North America are the most penetrated regions with around 35% now of 5G subscriptions out of the total stock. But if we look at the forecast overall that we have done some changes also in other regions pertaining to not 5G, but to 2G and 3G, actually. And what does that mean, Richard? And why have we done that if we look at the sub-Saharan Africa region and the Middle East and North Africa region? What is your take on that?

Well, what we've done is we need to further adjust the balance between 2G and 3G in those regions. We have, over time, kind of taken down the 3G forecasts at the expense of 2G. And this year, in this edition here, we take significant cut, so to say, to that forecast. And that's based on the realization that 2G handsets are still the most inexpensive, the most -- the ones with the longest battery life and so on and have a place for quite a long time in these regions. Whereas the 3G mobiles are not really that attractive, and the upgrade is more going straight from 2G to 4G when there is an upgrade. So that will affect. And then this effect is to some degree visible in most regions. But in many other regions, the longer life for 2G is driven more by IoT devices and the installed base that's difficult to upgrade. But in -- particularly in Sub-Saharan Africa, it's really the price points of the handsets are the driving factor.

Yes, that's interesting. And that's why we see a rebalance of 2G, 3G both at the current time then. And when we look at 2020 time frame when 3G share is miniscule, you would say, in those regions compared to the previous forecast. So people are going from 2G to 4G directly instead, getting a very good Internet connection then, of course. So that's an interesting feature, of course, in terms of what we have updated and what we see in those regions. And if we go further then and talk a bit about subscriptions uptake. I mean those of you who have been on this call before, you know that we are -- have said that before, and it is so that it is the uptake of global 5G subscriptions are 2 years faster than 4G. But there are, of course, different regional differences in -- depending on where you look at in the world then. So on this chart here, you see 4 different regions. It's North America, Western Europe, Northeast Asia, and Southeast Asia and Oceania. And in some markets then, like North America, the difference is not that big. It's less than 1 year. In Europe, it's about 1 year, while the largest difference then is, of course, that we see in Northeast Asia, which were for [indiscernible] at the beginning of the whole uptake. But we also see Southeast Asia being 1, 1.5 years ahead than the curve of the 4G then. And the key drivers for these are, as you see in the near year chart here with 2.5 years, it's China's large early deployment of 5G. That is, of course, one of the reasons for that. We also have a wider range and larger volume of smartphones from several vendors with 5G capabilities out in the market. And we also have definitely a better device price point at an earlier point of time as well, which, of course, affect the uptake of 5G. And to complement that, we also see that there are more data plan options for the subscribers. One, of course, being that some operators enable 5G, as you can say, a feature on the 4G plan. So when you buy a 5G phone, you have your 4G subscription turning into 5G automatically, so to speak. But also that there are different types of offerings that are enticing customers to migrate from 4G to 5G because there are more larger data buckets or better bundles and so forth. So these are the main reasons, I would say, for the coverage. But please say there, Richard, is there any other factors we have behind this? Or are these the main ones?

I think these are the main ones. And I mean overall, the really -- the determining factors here are we -- the fact that the handset transition from 3G to 4G was a larger transition for the device manufacturers, I mean from a technical and commercial point of view compared to the transition from 4G to 5G. And that, combined with the fact that China is among the leading countries on deploying 5G as compared to being slightly late in 4G, that makes all the difference.

Yes. And I mean this is just another reflection on how 5G is gaining faster than 4G did with the whole ecosystem as well. And so that's -- you can see a KPI for that as well now. But it's not just about uptake and so forth in terms of 5G and 4G. If we look at the population coverage, I mean now we foresee that the 5G population coverage would be almost the same as 4G coverage is right now, actually, but then in time frame 2028 then. And as you all know, of course, 5G has a lot of different frequency band from low, mid to high band. So it's spread out over more frequency bands with different characteristics in terms of coverage. So when we talk about 5G population coverage totally, then we are talking about all bands, of course, where the low band is the most reaching one. So if we look at the upper part here on the upper curve here, we see that 5G population coverage in the U.S. and in Europe is around -- well, they are different, 95% then in the U.S. depending much, of course, that they have had an extensive low-band coverage built out, which is influencing this as well, while Europe has more relied on 5G NSA and 4G spectrum sharing. So that's why there's less coverage in terms of population if you compare in all bands. And of course, the world figure we are at right now is 30%, which is then considering all regions in those regions or those markets in regions that have not launched 5G, of course. But if we look at -- I mean look at the specific band and specifically here with the mid-band, the 3.5 gigahertz band, TDD band, that is, of course, a sweet spot for delivering 5G services because it provides good capacity combined with a good coverage as well, then it's quite different in different regions. And here again, we have had a very rapid mid-band coverage built out in the U.S. market in that region. While for in Europe, it is actually much less. So it's only about 15% coverage depending, of course, of different -- there are more countries in Europe than in North America in total. So it's more fragmented. Some markets are relying on spectrum sharing, like Germany. And those that are leading in Europe are more -- those are the markets that are -- have coverage obligations like Germany and Switzerland -- no, sorry, France and Switzerland, while there are some markets that are still waiting for 5G mid-band and so it is not a total unified picture on the coverage built out in -- depending on what region you look into. So that is, of course, different focus in different countries on how to continue to build out the network to satisfy the requirements from the consumers and from the regulators. So another forecast that we have adjusted is the fixed wireless access connection forecast. We now -- we have increased the forecast in the outer years and also in the midyear, so we will say. And much of this is due to the announced plans of large-scale of 5G FWA in India. But it's not only that. We also see that 40% of all the 5G FWA deployments in the last 12 months has been in populous markets like Mexico and Nigeria and Philippines and so forth. So we see also a growth potential in those countries. So Richard, what would you say is driving this change? You have the 2027 forecast that we released in June, and now we have an updated one on the right-hand side with a different mix as well. What is your comment about that?

I mean that's the life of a forecast, you have to change the forecast sometimes when things happen. And as you said, what happened here, the really big thing, so to say, is the plan in India of significant rollouts. That will, of course, drive subscriptions in India but it would also likely contribute to driving down the price points of 5G CPEs in the box you have in your home to receive the fixed wireless access connection. And that will benefit the entire world market. So we see that as positive. And as you say, the development we see is very positive. From a historical point of view, one, it's good to keep in mind that fixed wireless access has been talked about with for the last couple of cellular generations that now this new generation could support fixed wireless access. But so far, it's turned out to not really be that big of a thing, mostly used in special situations. With 5G and the advanced 4G that we have now, the operators can actually offer the capacity needed to compete [ long form and ] technologies. And then we see this kind of potential for the technology.

And when we talk about 300 million, it's not 300 million users. There are more users behind that figure, so to speak.

Absolutely. We have 3 to 5 persons per household depending on region. So it's more towards, say, 500 million or 1 billion people supported by this technology.

So strong momentum then for the 5G FWA use case then. And we also see pricing-wise that there, of course, with the higher speeds possible, it's -- we also see that there are more possibilities for 5G FWA to differentiate with different speed plans compared to what 4G were able to support them in terms of different types of speeds and different data plans that you purchase then. So it's a more versatile offering than possible for 5G FWA. So that means that we will reach -- we expect to reach the 200 million 5G -- of 200 million FWA subscriptions market a year earlier than we anticipated before. We are at 100 million now. And the mix, as you see here with the yellow or the orange represented in the 5G part is then stronger geared towards 5G then in the coming years then. So reflecting what Richard said just about the drivers for that. So -- and we also actually have -- we have a seller IT forecast as always, and we also have updated that forecast based on market drivers. We don't see total growth in cellular IoT connected devices in the outer years. We are still on the same estimate, isn't it so, Richard, in terms of total numbers? But we have a different mix here. What is your take on that?

Yes. The change in the mix is really that we see more of the LTE cat 1 device, the kind of simplest LTE version complementing the narrow band IoT and Cat-M, talking massive, IoT technologies and the less demanding IoT applications. So that's why we see a change in the graph or the broadband IoT and critical IoT share is increasing in the forecast. So that, combined with the fact that traction is not really as strong as we [ ploys ], we're still talking about strong growth. We're talking about 2 billion, 3 billion connections here, but it's not going that far. So this -- it's also good to know here that this is a market which is very, very much about China. So half of this market is China. And so development there is largely -- it takes the change in the forecast.

Yes, that's, of course, influencing the change in mix and so forth. And as Richard said, we also see that massive IoT have had a strong growth in 2022 and also in 2021. But going forward then, the vectors are pointing towards LTE 1 to then also have a stronger increase, then covering a lot of different type of use cases like telematics and [ digital ] surveillance and health care devices and so forth that can utilize the voice and video streaming capabilities of LTE CAT 1 devices then that is differentiating from the massive IoT technologies. And those devices also support global roaming. So it is part of the explanations for them taking off then, I would say. So as you might recall, we have -- we are looking to 306 different operators of [indiscernible]. I think it's almost always every 6 months to see how their offerings are evolving every 6 months in terms of packaging, in here as well, looking at what is actually cooking. And you can see that what we talked about in the previous edition about service [indiscernible] on the service offering. So you can utilize data-intense applications like video streaming or navigation or it could be gaming and so forth. You buy -- for an extra fee, you actually buy either time or gigabytes or so to not influence your normal dot data bucket actually. That is increasing still, and almost 60% of the service providers are innovating with different types of packages to add on them. Another thing that we are looking into is, of course, who are charging a premium above compared to the 4G plans. And about 25% of those service providers that have launched 5G now, which is 174 in this sample here, they are charging a premium over 4G plans now. Well, there's a lot of details more in the report about this topic here. So please go in and have a look after the presentation here. We talked in the beginning here, Richard, about 5G device shipments and the resilience of that, and that we still see 5G subscriptions being on the rise and doubling almost this year. And here is, of course, we have over 700 5G smartphone models that have been launched now with more than 200 just in 2022, which is then fueling this uptake and is one reason why we have this strong growth in the market. And the ecosystem is evolving, of course, and there's a lot of features and functionality and better capacity being introduced in the chipsets and so forth. So we will foresee them in 2023 that the 5G devices are expected to evolve with more capabilities and better power efficiency and low latency capabilities. So it's a constant evolvement of the most advanced phones then. So that is, of course, scaling very fast as well. So how about traffic then? This is the historical up to Q3 mobile network traffic measurements based data that we are looking into. And even though the numbers are, in terms of growth, is diminishing, you can say, I mean we are now looking at 38% on year-over-year growth. That doesn't mean, of course, that the absolute growth is going down, Richard. So please guide us through the magic of absolute figures and the percentages because this is telling a story, of course.

Yes. This historical curve is quite interesting. We see, of course, a steady growth, and the added traffic each year is larger than the added traffic the previous year over time. And again, we double almost every 2 years. And if we look at the black line, which is the year-on-year growth, you can see almost 3 distinct bumps, or the first 1 is kind of disappearing. But these are reflecting major events in the market. The first one is the U.S. boom with T-Mobile starting the Binge On service and other operators responding with larger buckets and higher traffic. And in those days, that affected the world traffic volume. The second bump is the LTE launch in India, which was huge in terms of numbers, very large country and very aggressive offerings. And the third bump is the Chinese, very strong growth a couple of years ago when we had 200% or 300% growth a year in China. Again, the effect of some changed regulations, roaming fees removed and a significant price war in terms of offering increased traffic for the same or lower cost. But the overall trend is, of course, slightly decreasing. As with all phenomenon, we cannot have an increasing percentage growth every year, we will have a slightly decreasing growth. But now we are around 40% year-on-year growth. And then as the smartphone market matures fully -- we are not fully mature yet, but the smartphone growth is, of course, slowing as we have so many subscriptions compared to the population of the world, then we expect this to slightly continue downwards. And then we get into the next picture.

Exactly, which is looking at mobile, the traffic growth. So given what Richard is saying here, we see a quadrupling of traffic up to [ 2021 ] in terms of total numbers here. At the present time, actually, the 5G networks in the world, on average, are carrying around 70% of the mobile data traffic. And video is very much the strong driver still then of accounting them for 70% of the mobile data traffic. But we also actually in this edition of the Mobility Report has a special article, you can say, about AR and 5G where we actually look into the dynamics of AR and how that might affect our forecast because, Richard, you are the chief analyst here, there are some assumptions about moderate uptake of XR within this frame. But this is definitely an upside here that could be even more if XR happens and when it happen actually. So Richard, what is your take on that?

Well, definitely, the thing is that it's still a little bit early to make a well-founded forecast of the XR, or AR in particular, area when it comes to wide area networks, how that traffic. So we are more working with scenarios, and here, we are talking about forecast. So in this forecast, there is kind of a modest or conservative assumption of AR uptake. And in particular, we're looking at the period up to 2028, which is kind of around when we think that we might have a still more strong mass market uptake. So the effect will be stronger in the following years that we're not covering in this forecast. But definitely, if we get a strong mass market uptake, which is very possible, then we will have to redo the forecast a bit. And in particular, we will have stronger growth in the uplink traffic than we are considering now. Right now, we have some 8% to 12% uplink traffic as a percentage of the total, depending on region.

Yes. So it's definitely so that there could be a lot of more traffic then up to 2028 when AR is happening, when XR services is coming out there. So we are, of course, following this very thoroughly and looking at the indicators to substantiate when there is data to substantiate on that definitely. So talking about video then. In this addition, we took actually a look into how -- I mean if you look at the share of videos actually in some sample networks. And on this bar graph here to the left, you can see 100% is done in the total video traffic in these service providers' networks then. It's a bit interesting to see how the social media platforms, of course, generated video and the global streaming video on-demand platforms, or very much dominating the video traffic on the total. While there, of course, are some local streaming services with some operators and [ operate utility ] and so forth. But if we compare this to a couple of years back ago then, it was primarily YouTube who was dominating in terms of generating video consumption among the consumers, where have -- and Netflix was more or less coming up then at 3, 4 years ag, to become one of them with on-demand platforms that were reaching consumers more and more. But now we see it's domination of the social media platform-generated videos, with more players then, Tik Tok, [indiscernible] Facebook as well that can generate about 40% up to even 95% of the total data traffic in the network. Depending, of course, on the region specific and different types of data plans and user behavior. So -- but it's definitely so that social media and the video dominates in terms of the type of traffic in the networks. So in this edition, we also have a -- as we did in the previous edition, we had more detail a closer look into 5G in India. And now we are looking to Southeast Asia and Oceania. And here we saw a double growth in 2022, and we also had a strong growth in 4G subscription in this region, about 90 million subscriptions this year and with the continued growth also of 4G in the region. But the whole region is, of course, different markets and different types of specific conditions in different markets. But there are really advanced markets and there are some markets that hasn't launched 5G yet. But it's still so that they have a very much high on the agenda in the situation of Southeast Asian nation organization that 5G will play an important role for the digitalization and the transformation of society and enterprises in the future. So this article is looking into that specific then and what might come in the coming years. So please have a look at our regional deep dive there. So now with that, we finished the forecast session and now looking into one of our feature article together with Jarmo Vinkvist and Ari Toivonen from Erillisverkot Group. So great to have you here, Jarmo and -- no, sorry, Ari -- it's not. Jarmo and Timo it is this time. Great to have you with us here. And please tell us more about how you're building Finland's next-generation public safety network.

Thank you very much, and thank you for inviting us. I'm Timo, the CEO of Erillisverkot now starting and then Jarmo will continue. Let's stay on this slide for a while. I will start a little bit from the history. So I'm going back 25 years, or more than 20 years anyway. So in 1990s it was in Finland kind of a revolution in critical communications. That was a time when we had several, let's say, dozens of analog networks, which were combined or which were replaced by one common digital network, which were called [indiscernible] TETRA-based technology at that time, and it was also the starting point of this company. And since that, it has been the, let's say, the flagship service from our company, and it has been a success story in Finland and also actually in other countries where we have represented it. And why is that? It was that one of the key things was that we were building security together. And this one common network combined all the security players authorities to the same network and having the same situation awareness, possibilities, and you can [indiscernible] for example, as an everyday life example for everyone, so if you want to walk somewhere, just put your closed shut -- your eyes shut and try to do it. So it is quite difficult. And now for these authorities, this digital service was kind of an eye opener, so the first feeling that it's now a possibility to do cooperation and collaboration with one common tool. Anyway, now we are having a situation that this, let's say, the involvement evolutions of the TETRA technology has not been very big, and there are, of course, lots of reasons for that. For example, that's quite a narrow frequency area required, a result of that. And the needs for the modern society are totally different. And of course, now that critical communication is also big, of course, because of the security situation overall in the world also. But the needs for the customers we have are, of course, requiring the same as all the companies and citizens. They do not want only the narrowband communications, they want to have this broadband communication. And that has been now leading us to tell, let's say, once again, now after 20 or 25 years to have second revolution where we are replacing finally this existing TETRA-based era to a new broadband network. And this platform work we are doing together with Ericsson. So one thing which remains is that this critical communications that is still the lifeline of those players. So that is totally a critical and important matter. But what is needed is, for example, video sending and pictures, images, that kind of things which are not possible or not easily done with existing technology. And additionally, we want to have the technology so that it is useable. So it will have this evolution according to the same steps as any other mobile technologies going on. So this will be -- and this means, in practice, 4G, 5G, XT and so on. But we are starting with 4G technology because that is the first one to offer the services and the requirements which these security operators need. So it means priority and that kind of things for the network. So this future-proof solution is offering the capability and capacity for the customers to do something which we actually do not even know yet. Definitely, there will be video file communication. But what will be there is something we are not worried too much at the moment because it is basically really a platform which we are gearing up. I will turn to the next slide. So this is showing [ deliver to in a way ] in a nutshell. So it is a next-generation public protection and disaster relief network initiative, which is quite far going on at the moment. We have good proceedings with Ericsson. And now it is bringing the voice and broadband data services together in the same one network. And it, of course, gives lots of flexibility. It can be very narrow bunch data, for example, IoT type of data which is needed, but it can be, for example, a drone, which is giving you video stream from the network, and that should be everything working in a mission critical basis so that, for example, the crowding or the other crowd or other users in the public network are not disturbing the communication of the authorities. And last thing in this slide is that why 3GPP is that, of course, this ecosystem should be cost efficient and also support different type of innovations in a standardized way so that we are not the only one in the world. And we are, let's say, wanting to take the benefits of the global research and development work. So the big thing here is that we are not -- or we are utilizing the same networks as the commercial mobile network operators and utilizing the public networks with the focus of this needs for the critical communication users and, of course, getting better coverage and network hiring, which means, for example, different type of our supply requirements, which are heavier than for the commercial use. Now our [ sweet COO ], Jarmo, will continue a little bit.

Yes. Thank you. Jarmo Vinkvist from Erillisverkot. If I start from the picture, the picture is a real picture from Finland and the authorities are cooperating very well in the picture. So this picture is from a real case and taken from police vehicle, and we can see there are ambulance, there is a [ porta car ] helicopter, and there is a task behind. Something has happened, and these authorities are cooperating very well together. So if looking the ecosystem itself, so technically, if we build up the next-generation network, it's easier than to build up the whole ecosystem for the society. So technical topics can be more easily solved and it's mainly a question about the resources, how much persons and how much money do we have to do those parts. But the ecosystem itself, it's linked so that there are -- if you look at the legal framework, for example, so that do we find any kind of obstacles from the legal framework from laws that which are not enabling the cooperation or the work itself. Such a small example could be, for example, that previously, a long time ago, several years ago in Finland, it was said in the law that, for example, the ticket in the traffic, that police has to print that to the A4 size paper, A4 size, the typical office paper. But if everything is done as mobile, so police is taking care of all these tasks on the highways and streets, and sometimes they have vehicles like this in picture, but it can be motorbike or it can be snowmobile in the Lapland in the north or it can be the boat also. As a motorbike example, you don't have possibilities for such a printers to print out A4 size paper. So to find these obstacles from the laws, that's important. One -- another thing can be that how widely the position data is possible to use. It's really critical information. And when we started with this existing TETRA network, we first thought that it's going to be only speech. But rather quickly, we noticed that also with the narrowband network, it's a 4G -- a 2G technology, the existing network, the radio communication TETRA network so that the data is needed. And we have used the text message or short data messages, how to go those, a lot of relating to the location, but also a different type of question asked. But then important topic is that how much do we have trust between the parties, between the organizations and between the individuals. Can we build out the cooperation together so that these authorities are trusting on each other? And that's a long way to build up the trust, but it's needed there behind so that to achieve a fruitful cooperation and results. Police has developed in Finland this ICT system. They call it [ field comm ] system so that every vehicle is having a screen, their insight and they can have access to all the critical information. It can be information to the vehicles, automatic raise their [ plate VINs ]. It can be some -- police has given that system to other authorities so that they can work together. So fire rescue knows also what is going on. Some of the police cases are more secret, but for example, traffic control cases can be more open, and fire and rescue cases normally are more open, not such a secret cases. So they know of each other's what is going on. And as a result, at this moment in Finland, we have the largest number of police officers in the world -- in the Western world, so that comparing to the population. And in the European Union, it's something like 2.2x more police officers in the average in every European Union countries. So when thinking do we need more police officers, for example, to take care of all the tasks in the country, would be necessary also to look at can we work in the more smarter way of -- and better way to do things more efficiently. So the common ICT system, it was really good that police gave that. Police is not selling their ICT system, but they noticed that it will help us of them if they give a system for auto cars or customs or fire rescue. But then there transparency in the cooperation also that they have to work together to find the needed level how much to change the information. So typically, the geographical coverage was really important. We will build up the next-generation coverage, same level as existing, 97% of the geographical country, which is excellent coverage. And we have -- Elisa has been chosen as a network operator for us to build up this network. Also the electricity backup, they're behind. There's a lot of work to build up so that the network itself is reliable. And then if you go to the next slide. If you look at the future, what it can be in the future, if we thought at the beginning of an existing network, already noticed the data is needed. But now when building up the broadband system, we don't have a so clear picture how much or in which way the data will be used, but there will be demand that there will be excellent indications to use that. There are some examples of the actions what it will be, for example, for firefighters to have the [indiscernible] helmet screen, what is going on there? This picture is also in terms in vehicle has come on the right side, police officer and fire rescue officer operating very closely together of what is going on. [ Grooms ] to give the situational picture, it's really important topic also that, that will help or change the game also in the future how much information will be available. Of course, it will be the balance with a lot how much information or how much information of certain individuals or citizens can be used. But there are possibilities for such level. So the future, how much we will find that we will see. Not yet everything is ready, as we are one of the first countries to build up the system. So U.S.A., U.K., France, Korea are building up also these systems and we will work closely together with these other countries also to find a common ways and to use these findings, what they have found about their networks. So this, as a short summary of our presentation in Finland where we are and how we are building up this next-generation broadband system with Ericsson.

Thanks a lot, Jarmo and Timo. This was really an interesting deep dive and holistic view on the challenges and opportunities with a private safety network based on [ PGPD ] technologies. And my takeaway are that there are, of course, a lot of cooperation and ecosystem interaction that needs to come in place apart from having a network platform, so to speak. And also that the geographical coverage is, of course -- we talked about population coverage, but geographical coverage is, of course, a very important aspect if you want to provide safety services throughout the whole geographic borders of a country or where you have your operations then. So thanks a lot for that. A question there, Jarmo and Timo. What do you see -- you mentioned the ecosystem challenges and the cooperation and alignment with ICT systems and so forth. Are these quick fixes? Or is it a long-term plan for getting those different organizations to sort of come together?

It's a long-term process. And as I said, the laws there are behind and the trust there are behind. So it will take some time before those are built. But through cooperation, the results are excellent. We are sure about that. And more efficiency will be achieved also for the state or for the country. So if we compare that number of the police officer, so that's like an example that we have to have in Finland an excellent IT system and communication system for the police vehicles so that they can do everything there on mobile, so everything on street or highway. And this is a rather big country, but a low number of population. So the northern part of the country is almost empty and which means that they don't have authorities have time to visit any kind of office or to reach the office technology. So it has to be solved on the street.

I would also like to answer that this is some kind of a never-ending journey, which is, of course, now getting a big help from the technology which is having evolutions under their operations continuously so that we are not needed to do this kind of, let's say, huge steps in the future. It is continuous development.

Great. Great reflections. And thanks a lot for that. We have a question here, and to Jarmo and Timo, what is the technology on the public safety system? Is it 4G, 5G or a hybrid at the moment?

We are starting with the 4G, but we -- according to the contracts, we have the possibility to turn to the 5G whenever it's possible. But as we know that we are building up the rather large geographical coverage to the country. So at the starting point, we are utilizing the 4G.

And of course, there will be some time overlapping so that this old technology will be as a basis until the new one is good enough, and then the old TETRA technology will be shut down.

Great. And thanks for that. And I'm talking about old technology. Richard, I have a question here from the audience about what use cases is keeping the GSM 2G technology active up to 2028. You mentioned IoT is one.

Yes, definitely IoT is one. And the second, depending on market and operator, it's still the lowest cost option for many subscribers.

So there will still be a market for 2G connectivity with voice in some of the regions in the world. Is that what you're saying then?

To a certain degree, yes.

And in the last edition, we had also sort of a look into the 3G, 2G sunset or close down kind of plans for different operators, and there are different in different regions if 2G or 3G has closed down, depending on these factors with IoT or voice services that are needed in the market. And so it's a mixed picture, I would say. But if you look at the other end of the spectrum, so to speak, we have another question here regarding, when do we expect to see 6G emerging? Just a short reflection, if we go back in time, I mean GSM was launched in 1992 and 3G in 2001 or 2000 maybe and LTE in 2009 and 5G in 2018. So it's like 8 to 9 years between different generations, typically, but what about 6G, Richard?

Well, kind of remains to be seen exactly. But on the order of 10 years, sometime in the early 2030s, we will see large deployments, we think. So it will probably follow the similar time scale.

And it's also, of course, much dependent on the regulation and the market pressure. 5G was supposed to be launched in 2020, but it actually were launched in 2018 because the standardization was -- efforts were increased, and hence, it was earlier than expected in those years. So it's hard to tell exactly, I guess.

Yes, both standardization and then we will need new frequencies allocated and new devices developed. So it's a big test then to be put in place.

We have an FWA question here. How much CPE is needed to each FWA subscriber?

Well, one -- normally one CPE, or consumer premises equipment, is needed in each home or office that's connected to the fixed wire access system. But that device can then either be a stand-alone box that you basically put on a shelf in a room or it can be a box that you put close to a window. Or if you want to maximize the signal strength and the reach of the system, it would be an outdoor unit with an outdoor antenna, also amplification, that then connected to a router within the premises. For those interested, we have much more information on fixed wireless access in our fixed wireless access handbook, which is available on the Ericsson net.

Yes, I think it's been updated right as we're speaking. So it will be a very fresh one as well about the FWA then. I have another question here, which I think I don't like -- it's a question. It's unlimited waste of resources. I assume that the question is about unlimited data plans. And if so, I can answer that -- if you look at the 5G subscribers' average data consumption today, I mean we have something like 25%, 30%, in some markets up to 60%, 70%, 80%, in some other markets, 4G, 5G subscribers, specifically, on unlimited data plans. And of course, that's an average, so there's a spread of different consumption rates. But depending on the market dynamics and what kind of offerings, it's not so that it's even though I have an unlimited data plan, I don't -- I consume unlimited, of course. And if we look at the offerings that the operators out there, we have very few operators that have only an unlimited data plan, but many operators now have an unlimited data plan as part of their data plan offerings as a very premium one, where they typically bundle with other services and so on. So it is -- from that point of view, it is, of course, a market strategy, I think, on how you segment your market and what the consumption release in your specific case then. Richard, what is your reflection on data consumption in that sense?

I get that's mystique. I haven't really considered it from that point of view. But in general, I'd say that a lot of the data consumption is still -- if we're talking about environmental impact, et cetera, it's still a fairly low impact and the possibility of generating significant other savings. Then, of course, we can always have a debate about which applications that are gold in a sense or useful [indiscernible]

Yes. Looking at some more questions coming in here. Hello, is 5G limited up to 6 gigahertz bandwidth? And that is not the case of -- there's a lot of -- there's other frequency bands that are higher on 28 and even higher on the microwave as well. So it's not just 6 gigahertz. It's actually going from under 1 gigahertz to over 28 gigahertz depending on the market specifics. So there are 3 major bands then, you can say. What about network slicing then, Richard? Do we see any network slicing offering, so to speak, has been deployed by the operators yet? The technology is here, but has it been deployed?

And technology is here, but I'm not sure about how many offerings there are. But we have a growing number of operators that are deploying stand-alone 5G systems. And as you referred to earlier, we kind of speeded up to 5G standardization, which led to the non-standalone systems, which doesn't support the slicing. So we need to get the stand-alone systems out there to get slicing everywhere. Right now, it's still a growing system, but it's not everywhere yet. And it's not -- so we're still -- still remains to see those offerings in the market. But then we will get the critical IoT, the controlled latencies and other features that will be the kind of the next wave in a way of 5G services after as enhanced mobile broadband.

Yes. And that was a question as well here about do we know which application is slicing forecasted to be more popular suitable. And I guess there's -- I mean there are candidates, of course, for those kind of applications that even need a secure -- a security mechanism or those that need a low latency mechanism and so forth, another or high capacity and so forth that could be for have a specific slicing. But I guess it's hard to forecast exactly that type of application that will grow most at this time, Richard, or from a slicing...

It's still early. And I mean as you saw, that's not just a technical question, it's also a commercial question. But for sure, we will see those offerings.

So a final question, what are the projections for private 5G networks? Well, in this Mobility Report, there's a lot of consumer enterprise focus. We haven't looked into the -- we haven't any specific on 5G private networks, but we know from the work we are doing with GSA, the Global Supplier Association, that there are some 800 private networks launched, deployed in the world, if I am not mistaken, depending on how you define 5G private networks as well. But there are different types of industries, then manufacturing, I think, is one of the major ones that have deployed private networks then. But this 800 is not 5G. It's 4G, 5G combined or 4G and 5G. So we don't have a forecast on private network at the moment, Richard. That's how it is.

Yes, unfortunately.

But we might look into that a little bit more in the next edition actually, so spare with us. Okay. Now we have reached the full hour. A lot of good questions coming in. Let's see if we can answer them separately to those who have posted questions. I would like to thank you, Richard Möller, and specifically, Timo and Jarmo from Finland, who has presented about building a safer Finland with private networks. And well, the full edition is out there. So go out and read the details, and see you in 6 months again. Thank you very much.

Thank you.

Thank you.