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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Markets / Industries / Telecom
Friday, May 09, 2008
Ericsson ready for HSPA and LTE deployment in 2.6GHz spectrum
Comtex
STOCKHOLM, SWEDEN, May 09, 2008 (MARKET WIRE via COMTEX News Network) ----Winners of Sweden's 2.6GHz spectrum auction can now look to rapid deployment of advanced mobile networks, with Ericsson (NASDAQ: ERIC) poised to deliver end-to-end HSPA and LTE technology. The auction is the first held in the world to license according to the harmonized band arrangement decision by the European Conference of Postal and Telecommunications Administrations (CEPT).
Ulf Ewaldsson, Vice President and Head of Product Area Radio at Ericsson, says: "All the pieces of the puzzle are now in place, with harmonized spectrum and licensing all backed by Ericsson products and solutions that support HSPA and LTE on the 2.6GHz band."
As a front runner in allocating the 2.6GHz frequency band, the regulator Swedish Post and Telecom Agency has adopted a harmonized spectrum allocation as defined by CEPT. The allocation will facilitate economies of scale for operators and secure the availability of standardized terminals, allowing roaming between countries for users. Auctions of the 2.6GHz band in Austria, Netherlands, Italy and the UK are scheduled for 2008.
LTE and HSPA, the preferred technologies for the 2.6GHz band, enable a superior, mass-market user experience, enhancing demanding applications such as mobile video, blogging, advanced games, rich multimedia telephony and professional services.
Ericsson's solutions help operators leverage their network investments by providing optimal voice communication and mobile broadband services. Ericsson employs scalable architecture and allows seamless network expansion, providing an efficient migration path to broadband, regardless of the legacy technology in place.
"As the leader in mobile communications technology, Ericsson is committed to innovation and standardization. Operators, authorities and end-users can be confident that the CEPT band plan is the most attractive route to future mobile broadband capability," Ewaldsson says.
Ericsson's offerings for the 2.6GHz band are based on its multi-standard RBS 3000 and RBS 6000 series. These energy efficient base stations support WCDMA/HSPA/LTE and GSM/EDGE/WCDMA/HSPA/LTE respectively. Ericsson's RBS suite offers the smallest base stations on the market and facilitates low-cost migration and easy network integration. HSPA is already commercially deployed in more than 185 networks in 80 countries, with more than 600 devices launched.
Notes for editors: For more information about CEPT, visit: www.cept.org Press backgrounder - HSPA LTE and beyond: www.ericsson.com/ericsson/press/facts_figures/doc/hspa_lte.pdf
Ericsson is the world's leading provider of technology and services to telecom operators. The market leader in 2G and 3G mobile technologies, Ericsson supplies communications services and manages networks that serve more than 185 million subscribers. The company's portfolio comprises mobile and fixed network infrastructure, and broadband and multimedia solutions for operators, enterprises and developers. The Sony Ericsson joint venture provides consumers with feature-rich personal mobile devices.
Ericsson is advancing its vision of 'communication for all' through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 70,000 employees generated revenue of USD 27.9 billion (SEK 188 billion) in 2007. Founded in 1876 and headquartered in Stockholm, Sweden, Ericsson is listed on the Stockholm and NASDAQ stock exchanges.
For more information, visit www.ericsson.com or www.ericsson.mobi.
FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Media Relations Phone: +46 8 719 69 92 E-mail: press.relations@ericsson.com
About Ericsson's HSPA solution
An inherent advantage of HSPA is that the technology is a natural extension of existing WCDMA/GSM networks, or about 85 percent of the world's existing wireless networks. HSPA reaches a large number of wireless users and has created a mass market for mobile broadband. By 2010, 71 percent of mobile broadband connections are projected to be HSPA based.
Ericsson's HSPA mobile broadband solution, part of Ericsson's Full Service Broadband offering, today enables download speeds of up to 14.4Mbps and upload speeds of 1.4Mbps. The advanced technology lets operators more than double their system capacity and cuts response times for interactive services. On average, users will be able to download 20 times faster than with a GSM/GPRS connection. Future evolution steps will increase the HSPA download speed to 42Mbps and the upload speed to 12Mbps. Ericsson offers HSPA support on many frequency bands ranging from 850MHz to 2.6GHz.
About LTE
LTE is the next evolution in mobile network standards defined by 3GPP (Third Generation Partnership Project) and supports operations in both the paired spectrum and unpaired spectrum. It enables efficient spectrum utilization for both legacy and future wireless frequency bands. Channel bandwidths of 1.4-20MHz are supported. The wide industry support for LTE ensures economies of scale, providing cost-efficient solutions. The first commercial devices will support speeds of up to 150Mbps.
About the 2.6GHz band
The 2.50-2.69GHz band is expected to be the largest new spectrum resource for mobile broadband services in the foreseeable future. It is large enough to allow multiple operators to deploy technologies utilizing wide channels, such as the 2x20MHz channels preferred for LTE.
The CEPT band plan was included in CEPT Decision (05)05, agreed by consensus in 2005 by its 48 member countries. It includes a commitment to make the band available from 2008 depending on market demands. The plan comprises 2x70MHz of paired FDD spectrum separated by 50MHz of unpaired spectrum for FDD downlink or TDD. Sweden has implemented the Decision and is the first country to auction the 2.6GHz band in accordance with the CEPT band plan.
Copyright Copyright Hugin AS 2008. All rights reserved.
SOURCE: Ericsson
Copyright 2008 Market Wire, All rights reserved.
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