U.S. operators hold 3G advantage - analyst
By Elizabeth Biddlecombe, Total Telecom
20 June 2001
U.S. wireless operators could fair better than their European counterparts in a 3G
market, according to David Cleevely, managing director of Cambridge, U.K.-based
Analysys Consulting.
Speaking at a Palo Alto, California briefing, Cleevely pointed out that at around
US$4.2 per MHz per head, U.S. mobile carriers had paid (in recent auctions) an
equivalent average price for spectrum to that paid for Europe's most expensive 3G
licenses. Prices paid in the U.K. and Germany were around $3.8 and $4.4 per MHz
per head respectively.
These prices were paid despite average mobile penetration levels in the U.S. of
around 40%, which are on a par with some countries in Eastern Europe. And many
observers predict that the penetration level will settle at about 60% come 2004 or
2005. Penetration in Western Europe is currently around 70%.
But Cleevely believes U.S. operators will make more from their customer base
because business users predominate in the U.S. market. "The U.S. is more
data-centric and business-focused," he said. "I'm not sure that European business
users are as switched on as they are in the U.S." Noting that e-mail will be a
popular service with this user base, he added that, "the U.S. is in a better position
than people recognise [and operators are] in a better position to sustain costs."
On the topic of minimising costs through the sharing of networks, he warned that
operators will not find the practicalities of such arrangements very straightforward.
"You need to accept assumptions about co-operating with someone else. Also, the
logical handovers [as the user roams from owned cells to shared cells to the
competitor's cell and back to the home network, for instance] are quite
complicated." This is in addition to the regulatory issues.
As for the role of national regulators in ensuring that 3G is not a disaster that
results in operator bankruptcy, Cleevely stated that in his view, "auctions are an
abdication of responsibility. Regulators can't say that auctions are the best way to
deal with [spectrum allocation] and then offload it onto the market," he said. "They
have a duty of care to think about how the market will develop".
He drew a parallel with copyright, which "shapes industries even though it is just a
legal device for the protection of intellectual property. Regulators are shaping how
the market develops, like it or not."
The FCC was not available for comment in time for this article.
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