Podcast: CEO Ekholm on connectivity and the new normal of working remote

In March of this year, Ericsson shifted the majority of its staff to a work from home environment – nearly overnight. Today, around 85,000 Ericsson employees, who are running networks, working in R&D and support functions, all regularly working from home. This is the new normal.

In the latest episode of the Ericsson News Podcast, we speak to Ericsson’s President and CEO, Börje Ekholm, about this new social reality and how strong and reliable communication networks are more important than ever.

Ericsson News Podcast: Interview with CEO Börje Ekholm

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Host: Once again, Börje Ekholm, thank you very much for joining this podcast.

Börje: Thank you very much, it’s great to be here.

Host: Obviously, we are still in the middle of a pretty unique situation, and I just want to set the scene for our listeners. Right now, I am speaking to you on a Teams conference call and I am located in a suburb just outside of Stockholm, Sweden.

But where are you calling in from?

Börje: It’s an unprecedented time. Right now, I am sitting in my summer house, about 2 hours outside of New York, working from home, and I’ve been working from home since the beginning of March. Different locations, but now I am at our summer house which actually has the best internet because that’s one of the challenges. Now I have all four kids studying from home, everyone on the Zoom conference using up all bandwidth available. So we need a super strong internet and connectivity and the best one actually happens to be in our summer house.

Host: This gives a pretty good example of kind of the new normal that we have been talking about right now, and if I am not mistaken, at Ericsson we’re around 85,000 staff of a total of around 100,000 employees that are regularly working from home or a virtual office.

So, what did we have to do as a company to make such a dramatic shift in our working environment?

Börje: I would say first of all what we tried to do and always keep as a north star is the health, safety and well-being of our employees, customers, and partners. And of course, with that as a backdrop, we quickly migrated to working from home.

So, as you said, we have about 85,000 today working from home, running Networks, R&D, support functions. So overall, we are migrating every function of the company to home. Of course there are some that cannot work from home like field engineers for example. But otherwise we migrated and it’s really thanks to a very strong IT infrastructure we have. We invested in that already before and now we can leverage that. So, we migrated almost from the old normal to the new normal overnight in the beginning of March.  So 85,000 working remotely just overnight, it’s an unbelievable achievement. I would say the crew we have working on our IT support have done a fabulous job of keeping the company running.

Host: One of the impacts of this situation is that network utilization is up. What have we observed so far?

Börje: What we’ve seen is that the traffic in the networks, just like you said, have increased dramatically. For most networks it’s up more than 25%, some of them even doubling. So we see a very sharp demand on the network and the network quality. This increase has been done without any major service degradation. So it shows the resilience of the networks. I will say it also shows the criticality of the networks and the national, call it the critical national infrastructure, and I want to include communication networks here as well. But what I think is maybe more interesting than just the total increase in traffic is actually the way it has changed traffic patterns.

So what we see today, we see an increase in phone calls and the phone calls are longer, and we see a much faster growth in the uplink compared to the downlink which to me indicate there are more collaboration tools like we are using now which drives on two way communications, voice calls or video conferencing, etc. And that I think is what we need to plan for in the future as we develop future network architectures. I do believe if we are going to see work from home continue for a longer period of time, this will need to be reflected also in the way we build networks going forward and for the architecture of the network.

Host: It’s clear that robust connectivity is key, but you’ve also stressed previously the importance of network quality. Can you share your thoughts with us on this?

Börje: We did a fairly big analysis of some 30 countries where we looked at the performance of the network quality leader versus the network quality lagger. And what we saw was a very strong correlation between, the network leader actually had higher output and/or lower churn. So in financial terms, they were actually outperforming the weak network performers, in network quality. So what we saw was there is already today, the data can show, that the operators that are willing to invest in network quality can actually improve their financial matrix. And this I think is important for us as well. We are providing the network and if we can help our customers to get the best network quality in each country, or each region, we can help them be more profitable, and if they are more profitable, we are also likely to be more successful. So I think this is a virtual cycle for us and we should really talk to our customers about the network quality.

Host: We are at a moment in time which has really placed a spotlight on critical national infrastructure. We talk regularly about things like the capacity of our health care systems, our food supply chains, but also, we talk regularly about the essential nature of connectivity. What impact do you think the pandemic will have on investment and rollouts of mobile networks and here I am thinking also specifically on 5G?

Börje: It’s a great point you are making. You know, what we have seen in this pandemic is really the criticality of connectivity and I was on a call just yesterday with a number of other CEOs of some large multi-nationals. And the interesting thing is six months ago when I brought up connectivity, no one really had any interest, they kind of took it for granted. And now spontaneously, in the meeting, one of them actually said, that there is a renewed love for connectivity, and we are now really realizing how important it is.

So, I do believe it’s going to be front and center of the infrastructure going forward. This is ultimately, it’s hard to talk about something being positive with a pandemic but I do believe this is going to drive growth in mobile infrastructure going forward.

Of course, I do believe that’s gonna include 4G, its gonna include 5G, and we will see networks being gradually built out, where I do think there is concern right now and that is Europe in my mind. Because Europe has not allocated the frequencies yet, they have regulatory environment which is difficult, and they have operators who are not financially strong. Many of them have poor investment climate and poor return on capital employed and that of course doesn’t stimulate investment. So they are naturally going to be more cautious and I think there is a risk here that Europe would fall behind in the deployment of 5G due to the pandemic and we have seen some countries actually delaying auctions. I believe one should do the opposite. We should actually accelerate auctions and not try to optimize or maximize tax revenues before the deployment of 5G, but here I worry a bit about Europe.

Speaker: So much uncertainty as we have gone through this situation. The uncertainty about when to open up the economy again, what the right national response has been, or the uncertainty about when a vaccine might be available. Do you think it’s possible to plan for this time after the pandemic and if so, what learnings do you take with you that would contribute to those plans?

Börje: As always, it’s very easy to make predictions. The hard thing is to be right in your predictions. So that’s why I think it’s better not to forecast how the pandemic will pan out and how it will look like, but I do think that we need to plan for that this ends. It will end, and our ambition is to be in a stronger competitive position once we come out of the pandemic. This means of course that we need to be flexible, we need to adjust. We need to be agile in the way we work, in the way we serve our customers, and here I do think that what we have shown by migrating 85,000 colleagues to work from home shows a great stamina in the company, and it makes me enormously proud to work in a company that can actually achieve this overnight.

Speaker: Börje I want to thank you very much for taking the time to speak with us today, it’s been a pleasure.

Börje: Thank you. It was very good being with you.