3G is either dead or owned by Microsoft, that's the deal
Posted on 30/08/2002 at 18:48
There been a lot of fuss recently about 3G. Yep, it's dead again. There's no way consumers will pay what mobile companies want to charge so they can recoup the ludicrous licence prices.
Throw in a couple of analysts and panicking board members who drop 3G investments to shore up this year's renumeration, and we have a dodo.
And, off course, following the media's headless chicken approach to the mobile phone market, we've now got the perverse fake-wise articles that say everyone else is wrong and 3G is sure to be a winner for the mobile companies.
Both camps are, as ever, talking bollocks.
The problem is that mobile companies owe lots and lots of money. The one thing everyone can agree on is that there is no way people are going to pay as much as companies are currently trying to charge for the next-gen phone features like MMS. It's just not worth it.
So, is there anyway they can get back some of the billions they spent on licences? Not in the UK, they won't. Gordon Brown has already made massive play of the fact he's paid off a big chunk of national debt with the proceeds. You'd have more chance of getting an intelligent comment out of Geri Halliwell than a penny out of Gordon.
Unfortunately for one Professor Ken Binmore, this means a rough ride.
Prof Binmore was the patsy that "designed" the auction system for the licences. No doubt he thought that by giving a blatant money-grabbing scheme some academic backing he would be richly rewarded by government further down the line.
That could still happen if he keeps it together and takes the fall. But the mobile companies for one would love to hear how the government has set it up wrongly.
So: mobile companies won't see that money and consumers won't pay enough to cover their losses. According to some panicking idiots - especially now everyone and his dog has discovered that wireless access is rather nice - this means 3G is dead.
No it's not. We're talking about debts not technology. The mobile companies will be forced to swallow their losses and their share prices will not recover.
Unfortunately, when you're talking billions, and billions more to build the infrastructure, one of two of them are going to get in real trouble. And so what they will do is sell their 3G licences and diversify into other areas if only to keep themselves afloat.
What this means is some huge company will be able to take an objective look at the market, buy the necessary licence, rent someone else's network by appealing to Ofcom over the competition rules, and then come into the market with a cheaper price to consumers because they don't have huge debts hanging over them.
Once this company has stolen a good chunk of the market and revealed the pots of cash it has made, investors will then rush to every remaining mobile company and away we go again.
The question is: what's the company that will buy in late and reap the rewards? Telecoms companies are still in hangover mode, traditional companies too scared of tech firms, most others too weak or disconnected to get enough content on the phone to sell the product.
Phone manufacturers? Possibly, although they tend to prefer sitting it out. Media companies seem the most likely bet. AOL Time Warner would love it, although they have troubles of their own.
Which leaves: Microsoft!
Yep, that is my worthless prediction. Microsoft will walk in, get the market working, screw everyone to get a majority share of the market and then tie us all in to some god-awful terms and conditions.
You heard it here first.