A Fistful of Euros: 3G Update

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June 24, 2004

One of the choicest paragraphs, from a choice review of Bill Clinton's autobiography: "That somehow a long, dense book by the world's premier policy wonk should be worth that much money is amusing, and brings us back to Clinton's long coyote-and-roadrunner race with the press. The very press that wanted to discredit him and perhaps even run him out of town instead made him a celebrity, a far more expensive thing than a mere president. Clinton's now up there with Madonna, in the highlands that are even above talent. In fact, he and Madonna may, just at the moment, be the only ones way up there, problems having arisen with so many lesser reputations." If the Times link has expired, try here.

June 22, 2004

At the risk of turning this column into 'what Henry Farrell's written recently', he has a good piece on CT about the role of the European Parliament in international affairs.

June 19, 2004

Amongst all the other decisions made at the summit, Croatia is now an official EU candidate state. Talks are scheduled to begin next year with an aim of the Croats joining alongside Romania and Bulgaria in 2007.

June 18, 2004

Over at Crooked Timber, Henry Farrell assesses the candidates for President of the European Commission

June 13, 2004

The 2004 European Football Championship has kicked off with a shock in the opening game as the hosts Portugal were beaten 2-1 by Greece. Elsewhere, Spain began the tournament with a 1-0 win against Russia.

Estonia and History Interpreted

I've been following the news from Estonia with some interest, particularly since it has joined the European Union. I've a long-standing interest in Estonia, in fact, part of my general fascination with small plucky nations, I suppose. Regardless of this interest's origins, I was interested to come across the Baltic...

Higher Gardening

Daniel Spoerri has a garden in Tuscany which one can visit. It's 80 km south of Siena, at the foot of Monte Amiata. Actually, it's more like a park. Full of work by him and by other contemporary artists--landscape art, installations, sculptures. If you're not going to wander around Tuscany...

Glaciers in the Greenhouse

“Glaciers in the Greenhouse” is a photographic trip through time looking at how well Alpine glaciers are withstanding the “greenhouse effect.” Using over 50 historical postcards and photographs from around 1900 and comparing them with contemporary photographs, this exhibit documents the retreat of the Alpine glaciers in Switzerland, Austria, France,...

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May 10, 2004

3G Update

by Edward

Well following my post last week about Vodaphone and 3G in Europe there seems to be more news today that backs-up the argument questioning the economic viability of the thing.

Firtsly shares of NTT DoCoMo, the world’s No. 2 mobile-phone and the leading 3G operator, just had their biggest one-day drop ever after the company said operating profit may drop 25 percent and sales may fall (by 2.5%) this year on more competition in Japan.

Meantime Investment bank Nomura are predicting that Hutchison Whampoa could walk away from its loss-making 3G mobile business by end 2006. Their analyst reckons HW could rack-up operating losses of about $2.7 billion this year simply on the 3G operation alone.

Normura failed to see how Hutchison 3G (H3G) can achieve an economic return on capital and value the company at a negative HK$63 billion. “Our Hutchison Whampoa estimates include an assumption that the company walks away from its 3G ventures by the end of the full year of 2006,” James said.

The survival of 3 Italia was also called into question despite signing up the highest number of 3G subscribers among Hutchison’s 3G business. The company announced in March that it had 453,000 customers in Italy.

Obviously the DoCoMo situation is not all down to 3G, and in some ways it could be declared a success: DoCoMo had 3.05 million 3G users at the end of March 2004 compared to 330,000 a year earlier. However finding a realistic pricing model to extract revenue seems to be a problem, and they have now announced that they will be offering unlimited mobile internet on their 3G FOMA service for a monthly flat fee of 3,900 yen. At current rates that is about a manageable 29 euros a month. Which would be fine for a lot of users, but then you have to subtract the downside: all those ADSL customers who may decide to switch over. As I said, great idea, but the economics are far from clear.

“If we don’t succeed, we run the risk of failure.”
J Danforth Quayle

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Comments

Isn’t the loss of adsl custom somebody else’s problem?

Posted by: Jack at May 10, 2004 07:36 PM

It certainly seems that way to me. If the 3G nets can turn an operating profit selling permanent broadband at ASDL prices I’d say that the future of the technology is secured. And yhea! for that, it’s really to nifty to loose -
That just leaves the question if they can also pay of the capital costs of the licences. Does anybody know the operating costs so we can take a wild stab at how much money they can make selling broadband to everybody and their sister at 30 Euros/month?
Certainly this seems to be a buisness model that should work really well in the third world (and other largely barefield enviorments) if they can get the licences cheap/free. Phone and data-service in one neat package.

Posted by: Thomas Jørgensen at May 10, 2004 11:29 PM

“Isn’t the loss of adsl custom somebody else’s problem?”

Not in the case of the National Champion Telecoms it isn’t. Of course for Vodaphone….

“if they can also pay of the capital costs of the licences.”

This is where the Euro Tunnel example comes in. Potentially profitable, but not if they’re hamstrung with debt from the start.

“a buisness model that should work really well in the third world”

Of course, I suspect that many parts of the third world are going to be much bigger beneficiaries of some of the new technologies much more quickly than people imagine. For the simple reason they often don’t have such huge ’vested interest’ incumbents to get out of the way first.

Again they don’t have to bother with gsm compatability problems if they didn’t have gsm in the first place.

Posted by: Edward at May 11, 2004 11:37 AM

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