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Technology Stocks : Nokia (NOK)
NOK 6.970+2.0%3:59 PM EST
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To: Wyätt Gwyön who wrote (6796)8/2/2000 2:52:58 PM
From: tero kuittinen  Read Replies (4) of 34857
 
It is a surprise - the discussion was about the slow-down in sales growth, not about negative growth in subscriber base. I'm forced to bring up Finland here, even though it's really annoying to many people. Stop reading now, chaz - you know what's coming.

Healthy mobile telecom policy is built on non-subsidized handsets. Consumers pay a price that reflects the production costs of the phones. Countries can try to jack up their sub growth and support domestic companies by allowing the "ten dollar phone" racket - but that's not viable in the long term. The Korean success story was built on a deliberate distortion of free market competition.

Now when the consumers are for the first time facing the real cost of mobile phones, they are suffering sticker shock. In comparison, Finnish phone shipments went up by 22% during the first half of the year - and the average price went *up*. Even though the Finnish phone penetration is now 70%.

Some look at Korea and say that this is the result of 60% phone market penetration - a sickening plunge when a saturation point is reached. But the real point is that this is a result of what subsidies do to any market; they distort it and make adjusting to real world prices a very painful process.

There is no reason why the average phone price can't start rising in other high-penetration markets as well, now that people move to more sophisticated models. As long as countries try to keep the phone subsidies from running out of control. Places like Germany have subsidies, but at least they are under some kind of check - the high-end models are pretty pricey, so consumers are used to the fact that you pay for a phone.

Tero
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