Move over, Neville Chamberlain.
Mobile-phone carriers in Great Britain and Germany last week struck a deal out of desperation, an arrangement with obvious policy implications that may or may not do the trick for third-generation wireless deployment in Europe.
Indeed, the British Telecommunications plc-Deutsche Telekom arrangement actually could hurt the cause by masking real 3G challenges: marketability and pricing. Engineers will get high-speed Internet mobile phones to work eventually. But big questions remain: Do consumers want new wireless data services and what are they willing to pay for them?
Besides consulting psychologists for advice on 3G, Euro mobile-phone carriers may want to check out a recent Gartner Inc. survey that found business users are unlikely to pay much extra for wireless data services. This is neither good news nor the last word on the subject. On the other hand, it cannot be ignored
Euro nations are unwilling to bail out highly leveraged mobile-phone firms, but apparently are not averse to cozy corporate relationships that raise antitrust questions at a minimum. Keeping in mind the grand design for a pan-European 3G system with W-CDMA technology championed by Finland’s Nokia Inc. and Sweden’s L.M. Ericsson, one wonders whether the network-sharing remedy is yet another clumsy expression of European unification. Where do Ireland and Denmark stand, given their suspicion of Brussels?
Without new revenue streams to supplement voice traffic-whose profitability appears to be leveling off-Euro mobile-phone firms will have trouble getting a fair return on the more than $100 billion paid for 3G licenses and the $100 billion required for network buildout. 3G jitters are playing out in erratic stock prices of phone makers Nokia, Ericsson, Motorola Inc., Qualcomm Inc. and perhaps are most pronounced in the travails of service provider AT&T Wireless Services Group.
All of this suggests again the United States-despite its spectrum problems-is not as far behind Europe or Japan for that matter on the 3G front. It would be interesting to see what the Justice Department would do if U.S. mobile-phone firms resorted to network sharing as a 3G financial fix. On the other hand, a repeal of the spectrum cap-and ensuing consolidation that no doubt would follow-would have the same effect.
There’s a strange and perverted irony in all of this. The 1996 telecom act was supposed to promote local competition in part through shared use of network elements controlled by the Baby Bells. Instead the Bells merged with each other and would-be competition withers away in bankruptcy court. Times have changed. Now the game is to let companies in the most competitive telecom sector jointly build shared 3G networks. If the trend takes hold on this side of the Atlantic or the spectrum cap is overturned, kiss the Great Experiment goodbye.
