4 Capturing the Direct and the Serendipitous Spillovers:
4.4 Digital Mobile Telephony: A Swedish World Success
4.4.3 The Critical Technology Elements of the Early
The development of a cellular mobile telephone system requires specialized com-petencies within at least 14 technology areas and systems, listed in Table 7. At the time at least four of them had a clear military origin. The specialist competences are one thing, the art of integrating them into a functioning system another. Systems integration is an additional competence where military aircraft industry has long excelled (see Sect. 5.3).
Mobile telephony requires a systems integration competence, and not only a number of individual specialist competences. All component systems have to be integrated and made functional as one single system. This is an art rather than a specialty that can only be developed within the right industrial culture where many specialist teams have developed the art of working together with a view to a common whole.25 Saab was the early developer and user of that competence and in the begin-ning Ericsson recruited engineers with that experience from Saab (Gustafsson and Lindvall 1978). It has gradually become a specialty of some of the Swedish manu-facturing firms and the competences in integrated production developed in those firms have diffused to other industries as people embodying those competences have moved between jobs (see Case 3 in Sect. 4.3.2 above). I am not only talking about the competence to organize distributed and integrated production, but also, and not less important, about the capacity of subcontractor firms to understand the role they play in the larger complex they participate in, and adjust their behavior accordingly. This is also why we have compared the Swedish aircraft industry, and notably Saab, with a unique and very advanced technical university that not only
represents top of the line specialties in a number of technical areas, but also, and distinguishing itself favorably from the academic universities, the art of integrating those technologies in the design of a very complex product that functions and even can be sold in international markets.
The development of mobile telephony was, and is dependent on a small group of talented engineers who had been placed to head strategic teams within Ericsson.
Their task was to work together with an eye to the functioning of the system as a whole (systems integration).
Cellular mobile telephony is based on the partition of the geography into cells within which communication between a stationary station and a mobile station can be maintained through relatively weak radio transmitters. The system of base sta-tions constantly stays in contact with all turned on mobile terminals within the cell.
When a terminal (for instance, in a car) leaves the cell, the system searches to find the terminal in a new cell. This technology of searching is called roaming (item 8 in Table 7).
Both the earlier analog and the current digital mobile telephony with a cellular organization and low-effect (weak) communication within the cell were originally developed and patented by Bell during the 1940s. Since the remaining specialized technologies needed to establish a cellular mobile system were lacking nobody saw any use of the Bell patent. The technology was forgotten to emerge again during the 1970s when the development of a mobile telephony system was being discussed in both the Nordic countries and in the USA.
Hand-off technology (item 9 in Table 7) is critical within mobile telephony.
When the quality of an ongoing telephone conversation has been reduced too much the telephone conversation has to be automatically moved on to a new base station. Hand-off technology does that. To choose a better base station the system has to continuously measure both the signal level of ongoing telephone conversa-tions and the signal level of adjacent base staconversa-tions. When the signal level of the ongo-ing conversation sinks below that of another station the system immediately moves the conversation to the new station without any audible disruption.
There is also the possibility that a better quality can be obtained through a change of frequency which can only be achieved in digital mobile systems through a synchronized frequency jump (item 10). The conversation can then be switched during an ongoing conversation, again without an audible disruption. With this tech-nology it is not necessary to stay on a “bad frequency,” which is a problem in bad radio environments, for instance in the center of cities.
Besides the roaming, hand-off and synchronized frequency-jumping technologies there are 11 more listed in Table 7.
Specialized and miniaturized integrated circuits (item 1, so-called ASIC) allowed Ericsson engineers to get the physical size of both land-based equipment and termi-nals down. Special circuit design (item 2) and program code (item 3) were needed.
Modulation (item 5) technologies were roughly the same in military and civilian radio communications. In both applications, it was important to filter out the message from the noise. Since advanced radio telephony began to be developed for the military the direction of contributions was from the military to later civilian applications.
106 4 Capturing the Direct and the Serendipitous Spillovers
Encryption (item 14), which is almost impossible in analog radio communication pushed the early introduction of digital radio communications for military use (see Sectra on digital technology and digital encryption in Sect. 4.8). The need for rapid digital signal analysis (item 4) and error correction (item 13) constituted strong early incentives to digitize military communications. The rapid development of process capacity of computers soon made digital technology totally superior to analog communication. This was apparent already in the 1970s (Eliasson 1980: 253ff, 1981).
The mid-1990s saw the revolutionary introduction of the Internet age. In 1994 Mosaic Corporation (called Netscape from 1995) introduced the first graphic browser. As computer capacity increased and computing process costs decreased, civilian applications based on military technology to handle complex systems soon entered the market, for instance within Internet communications, secure payment systems, etc. In retrospect, those links are obvious. The interesting thing is that when I wrote the earlier book on this theme (Eliasson 1995) there appeared to exist no understanding at that time of the potential future economic significance of the Internet neither in the business community or in the professional media following the developments.26 The Internet is perhaps the single most important military-related spillover creation when it comes to macroeconomic consequences. Even though a single ingenious innovation (a browser that was simple to use) started it all off in 1994, this was only possible because of a sequence of earlier instances of military (mostly) and civilian public procurement.
Error correction is particularly interesting. The introduction of digital technology was held back by a slow development of the use of digital signal analysis for error correction. Without error correction the loss of signals is too large. Speech is very redundant. Analog noise can therefore be corrected for, if not otherwise by the question: “What did you say?”
A loss of bits above 10% is however difficult to correct for in digital telephony.
This digital error correction was originally developed for military use, for instance satellite photography and to correct for radar echoes. Cosmic noise is however easy to correct for compared to variation in the radiation fields on earth, where moun-tains and buildings block communications in an erratic, nonstochastic way. Signals then often reach the minimum level where they cannot be heard. This is called fading.
A number of difficult mathematical techniques to correct for fading to achieve an even signal quality has been developed. Error correction techniques have also been developed rapidly in pace with the development of computer technology and the emergence of fast computers with large capacities. While this technique has a mili-tary origin, today both the milimili-tary and the civilian application areas are large and rapidly growing, not least when it comes to graphic communications and image recognition. In fact, the development of guided weapons by Sabb Bofors Dynamics for the Gripen has created a separate competence bloc in signal analysis, microwave communication and the design of very compact and robust systems that has generated a flow of sophisticated civilian spillovers.27
An interesting illustration of military to civilian production spillovers from the end of the cold war is the lay off in California of thousands of IT engineers from military industry. These engineers moved into Hollywood, and have been
instrumental in revolutionizing the movie industry (animation) and to the automo-tive industry where they have helped the car manufacturers to develop advanced virtual design technology.
The military use of high frequencies came in usefully again in the mid-1980s when Ericsson was about to enter the Japanese mobile telephony market. Here Erieye technology (see below) came in usefully with individually (electrically) directed antennae (Eliasson 1995:108). The Japanese used high frequencies. The advantage with high frequencies is that signals can be compacted more densely.
Ericsson therefore developed the complete digital mobile telephony system based on TDMA (Time Division Multiple Access) technology on which GSM was based for both the Japanese and the European markets already at the beginning of the 1990s. Ericsson had by that time already modified its system for the US market and therefore was able to offer a complete TDMA product also there. Hence, Ericsson was the only firm in the world at that time that could offer complete digital mobile systems ready to use for the three large markets: the USA, Europe, and Japan.