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Technology Stocks : Vodafone-Airtouch (NYSE: VOD)
VOD 13.35+1.1%Jan 2 3:59 PM EST
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To: Jules Shear who wrote (2980)10/4/2000 12:34:17 PM
From: MrGreenJeans  Read Replies (1) of 3175
 
Lex Column - FT



To investors still digesting the enormous sums spent by mobile phone operators on spectrum for third generation services, news that researchers are starting work on fourth generation technology sounds rather alarming. In truth, it is not. Ericsson
says it will take a decade before 4G becomes a reality. And most technologies described as such are complimentary to 3G - for instance ultra
high-speed mobile local area networks. When fourth generation arrives it will probably coexist with enhanced 3G for some time and companies with strong 3G businesses should be able to migrate customers to 4G.

Moreover, companies are buying spectrum - the raw material of mobile telephony - which could be reused under new technologies. Several operators, such as Vodafone, needed more just to cope with demand for voice and messaging. Demand for spectrum should explode as bandwidth-hungry mobile devices proliferate (for instance, with communications systems in cars). Indeed 4G may be required to find ways of exploiting more spectrum. Buying spectrum, then, is not simply a punt on 3G.

But there is risk - albeit small - that 4G could employ spectrum so efficiently that operators would need less to do business. Given the expected
technology cycles, investors should be uncomfortable with 3G business plans that take much more than a decade to earn an adequate return.
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