The deal is a boost for Ericsson as it will work with one of the largest telecom players in the world, while Nokia’s shares fell after the announcement.
AT&T has chosen Ericsson to help upgrade its network infrastructure, in a deal that could be worth up to $14bn over five years.
The telecoms giant said it aims to have 70pc of its wireless network traffic flow across open-capable platforms by late 2026.
AT&T expects to have fully integrated open radio access network (Open RAN) sites operating from 2024, in collaboration with Ericsson and Fujitsu.
Open RAN differs from traditional radio access networks by allowing different parts of the network’s infrastructure to be built by different vendors. Supporters claim these networks will break down barriers to entry in the telecoms sector, increasing the amount of competition and lowering costs as a result.
AT&T said it plans to scale up its Open RAN environment throughout its wireless network in 2025 with the help of multiple suppliers, including Dell Technologies, Ericsson, Fujitsu and Intel.
“This move to an open, agile, programmable wireless network positions AT&T to quickly capitalise on the next generation of wireless technology and spectrum when it becomes available,” the company said.
“These innovative technologies will enable lower power, sustainable networks with higher performance to deliver enhanced user experiences.
“Ericsson’s open architecture will provide a foundation and springboard for developers driving innovation through open and programmable networks and bringing new suppliers into the industry. This will foster modernisation and competition in the US wireless equipment market.”
Ericsson plans to use its 5G Smart Factory in Texas to manufacture the necessary equipment for this contract. Its president and CEO Börje Ekholm said high-performance and differentiated networks will be “the foundation for the next step in digitalisation”.
“I am excited about this future and happy to see our long-term partner, AT&T, choosing Ericsson for this strategic industry shift – moving to open, cloud-based and programmable networks,” Ekholm said.
“Through this shift, and with open interfaces and open APIs, the industry will see new performance-based business models, creating new ways for operators to monetise the network.”
Meanwhile, AT&T’s decision to choose Ericsson for this deal has been seen as a blow to Nokia’s presence in the US. Nokia’s shares fell by 8pc after the announcement while Ericsson’s rose by 9pc, Reuters reports.
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