<I'm trying to get a "big picture" view. If that view does not include 3G adoption relatively quickly, then perhaps the short term optimism for Q* share price rebound is misplaced. You seem very well attuned to the "harmonization" efforts so I wanted to run this possibility by you. From what you are seeing, could 3G deployment be significantly delayed, if for no other reason, because it costs too much in the short term?>
Pierre, a reasonable comparison can be made between ADSL and dial-up lines for Internet access and the rollout prospects of 3G services. ADSL is comparable to a high speed 1xEV [HDR] access. ADSL costs US$40 per month in New Zealand. telecom.co.nz
It runs at something like 4 megabits per second [up to 6 Mbps] compared with a dial up line at 56 kilobits per second. The 56 kbps service providers charge about US$10 a month ihug.co.nz but people also need a phone line which costs about US$16 a month and they can't use their phone while they are on-line.
ADSL is always on, with no connection time required. It is very convenient. It is very fast.
Not many people will pay the extra US$14 from US$26 to US$40 a month to get it if the initial high-priced ADSL demand is a guide. Jetstream has recently cut their prices, so I expect that demand will rapidly improve. Until recently, the ADSL price was more like US$50 a month with a high-priced modem [router]. While ADSL was 'high-priced', demand was so slow that only a few thousand people signed up. It did surprise me how few either knew about it or were prepared to pay at the higher prices.
It is reminiscent of Globalstar, which is a great service but not selling a great deal. Globalstar should watch what happens with the new, cheap, ADSL in New Zealand to see what might happen with a reasonable price. I expect Telecom will take the market by storm. But ADSL has been slow until now.
My point is that, as you suggest, 3G demand might be a lot slower than expected if the prices are not low enough. Greedy service providers could cause it to be a very limited product.
It is surprising how resistant to new technology people are. Even when the price is only a bit higher and the extra benefits are huge.
Incidentally, Nokia is going to make a fortune from the cute little ADSL router I have sitting on top of my puter. It's a Nokia MW1122 ADSL/WLAN Router T66520. They will sell hundreds of millions of these. It is a black box, with 3 green lights, about 20cm x 20cm x 5cm. There doesn't seem to be anything inside it, but I suppose there is an ASIC or something. The back right corner is raised in a little gesture of flamboyance, but of no functionality. It looks silly, though I admit it does add a little character which perhaps separates it from just being a little electronic nondescript box.
This router replaced a bigger Nokia ADSL gadget. It must cost something like US$5 for Nokia to manufacture. The monthly rental of US$12 for the router means somebody [Telecom or Nokia or both] is making a fortune!
So, people are reluctant to pay not much more for a really good service. Therefore you might be right that 3G subscribers might gasp at the price and stick with sluggish GPRS. We'll see. Of course, 3G can be made really cheaply, even with the high spectrum prices, so if the service providers wish to make a lot of money, they can do so. But if they are greedy and adopt the high-priced Globalstar model because they paid a lot for spectrum, then they could well lose $$billions and CDMA could take a longgggg time to take off in Europe.
I expect competition will drive prices down and CDMA will happen really fast. Jetstream is only 18 months old and now that they have the bugs out of it, the prices are dropping and I suppose demand will go crazy. I'll watch with interest.
The US$1 billion Southern Cross 6-strand fibre from USA and Australia came ashore in Auckland a couple of days ago and service starts today. That means BIG bandwidth is sitting behind my screen. Telecom [a 50% owner] expects demand to grow really fast, so they might need to put in another cable or find some way of expanding data down the Southern Cross cable sooner than they think.
Don't forget Pierre, we are NOT burned on Globalstar until we sell or are compulsorily bought out or go broke. If margined we can be burned by margin calls and being booted out by the broker.
Globalstar is a great service and similar to ADSL. When the price and performance hits the sweet spot, it will take off like crazy. Especially if they enable good internet links.
Mqurice |
