To: Wyätt Gwyön who wrote (8537 ) 12/13/2000 10:30:37 PM From: EJhonsa Read Replies (1) | Respond to I've read some fairly good articles that casted a critical eye on the "irrational exuberance" that's occasionally floated around different parts of the IT industry over the past couple of years. This piece, however, was crap of the Alan Abelson/Sanford Bernstein variety.But it was important because much of the world's banking system is in hock to telecommunications companies, and the phone operators have bet the ranch on 3G being about the biggest thing since the invention of the automobile. What the Swiss auction told us was that most of the assumptions and calculations made by telecoms operators and their bankers are disastrously wrong. Britain kick-started the process, raising $32.5 billion for its 3G licences. In Germany, the licences went for an even more impressive $44.9 billion, while in Italy the government collected $12.3 billion. In those three countries alone, the telecoms operators paid only slightly under $90 billion just for the right to be in business. These 3G phones would let your mobile make a high-speed connection to the Internet. In the euphoria of the moment, a 3G license looked like a modern day El Dorado, a fountain of never-ending wealth. Everyone had to have one. (as well as in Poland, where the auction had to be canceled last week after nobody showed up) In the annals of commercial history, the 3G license auctions are likely to go down as one of the greatest blunders of all time: a moment of collective dementia, when otherwise sane and sensible executives lost touch with the earth's orbit, and decamped to some other planet where everyone kept their mobile switched on all day, downloading films and records, buying shares and houses, and reading Henry James novels in text messages, and didn't mind paying several thousand dollars a week for the privilege. Message 14871661 $500/pop for 20 years. That is roughly $25/pop per year. If the average penetration of 3G services is 50 percent over the twenty period, it is about $50/year per paying subscriber. $4/month. That is worth about 200-400 impressions a month of advertising. The wireless provider can recover it by just its brand-building capabilities. Mobiles are great for talking to people, and not much else. But, as the world has discovered in the last few months, nothing on the Internet makes money.
