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Pastimes : The New Qualcomm - write what you like thread. -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (1807)	6/28/2000 4:33:00 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 12231

Eric, Ihug is hoping to be given some spectrum in a beauty contest by the look of it. They are using faulty logic. A couple of years ago, before the spectrum auction was delayed, I set up shop with a view to bidding for 3G spectrum. There was 600MHz going to be sold which is heaps of bandwidth. It seemed to me that the price could be anywhere from $100,000 to $10m for 5MHz chunks. Now of course, it is zooming up as people have realized 3G will be very, very big time. So no freebie for me! I was hoping for a lucky break. We considered the possibility that Telecom and Vodafone might grab all the spectrum for themselves, but decided it wouldn't make sense for them to try. That's because it would only take 10 MHz to be bought by an interloper and Telecom or Vodafone or whoever tried to corner the market would end up without a monopoly but would pay the monopoly prices for the other 590MHz while the 10MHz would be enough to vastly undercut their prices. So each company will only bid for what they can use. If they buy more spectrum than they need and plan to leave it fallow, they'll be at a cost disadvantage to their competitors. Since it would take only 1 chunk of spectrum to get away, they'd fail. It's a bit like cutting prices to keep a new competitor out of a market. That means cutting prices to ALL customers, but the new competitor might only get 1% of the customers, so the incumbent or hopeful monopolist has to cut prices to the other 99% to avoid losing the 1%. That's expensive and doesn't work if barriers to entry, such as needing 10% market share to be economic, aren't too high. Anyway, what it means is that there will soon be some serious competition in NZ where it's a highly deregulated and free market in telecommunications. The New Zealand apartheid system where privileged Maoris have tribal enclaves is a distortion, but other than that, it's pretty much free market in telecoms. Sort of. Anyway, next year there will be CDMA, analogue, TDMA, GSM, ADSL, GEO WWeb, fibre etc all competing for customers. Globalstar will be coming in a year or two too. This is an early-adopter market. Meanwhile, if Ihug and Lucent want to get some business, they'll just have to get their money out and bid top price for some spectrum. Every $ which goes to the government is a $ which they don't get to pop in their own pocket. It seems to me the government should collect the profits of shortage of spectrum, not a beauty contest winner and those they bribe. Spectrum will retail to subscribers for what the market will bear, whether it's given to a supplier for $1 or sold for $5bn to the highest bidder. Serious commentators seem unable to grasp that concept. I suspect because they are on the gravy-train. Mqurice