From Briefing.com . . .
biz.yahoo.com
10:22AM AT&T (T) and Nippon Telegraph & Telephone (NTT) ATT: 26.80 (-0.19) (-0.70%) NTT: 18.00 (+0.15) (+0.84%) DoCoMo and AT&T will start 3G service in 2004 is the headline on this morning's press release. This one clearly falls into the "so what" category. The only reason we mention it is that there are still people who occasionally email us with the "telecom will be rescued by 3G" message. The truth is 3G came in with a whimper, not a roar. It is almost reminiscent of the sixties anti-war phrase: "what if they gave a 3G war, and nobody came?"
The promise of 3G service is "broadband meets cell phones." The 3G idea helped push the bubble valuations for telecoms and network equipment manufacturers because everyone was willing to believe that the world-wide internet infrastructure was inadequate for the explosion of video transmission. (It probably did have inadequate capacity for the internet citizenship to send photos and movies to each other. But the net has far more than enough for the text based data transmissions.)
Now, DoCoMo (which is Nippon Telegraph & Telephone) (00C) says they will roll out 3G capabilities in four US cities (San Francisco, San Diego, Seattle, and Dallas) by the end of 2004. That is 24 months from now. Two years. It bears repeating. TWO YEARS for the initial rollout in the US.
You have probably seen the ads here for transmission of still-photos over a cell phone. It feels like something new here in the US, but in Japan, where they love techno-gadgets of all kinds, they already have video cell-to-cell capability. Yet the 3G business in Japan has floundered, with the causes usually attributed to high prices, short transmission ranges, and huge battery demands. Apparently, after you talk to someone on the video-based transmission, your battery needs charging. We think the real reason is demand. Do you really want to look at the person you are talking to on a cell phone? You have to move the handset from your ear to do it. And how many Ivory Toads of Shanghai are there anyways?
There are still some investors who expect the eventual broadband revolution to bring a revival to the entire technology sector. Today's press release from DoCoMo could almost be viewed as an earnings warning or a lowering of guidance for those investors. The message is pretty clear: "Don't expect 3G business to explode anytime soon." If you read Briefing.com frequently, you know we have been arguing against that since April 2001, when the tech markets stopped growing. But now you have it from the vendors themselves: wait two years. Extra revenues for telecom companies, and equipment sales by the vendors, based on 3G services are long way off, with no clue to the scale. - Robert V. Green
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