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

To: S100 who wrote (3314)	8/13/2001 4:20:48 PM
From: S100	Respond to of 12231

Editorial comment: Ring of despair Published: August 12 2001 18:59GMT \| Last Updated: August 12 2001 19:00GMT The problems of European telecommunications companies are difficult to overstate. In the past year, the telecoms sector's market capitalisation in the FTSE Eurotop 300 index has more than halved, falling from a shade under E1,000bn to E470bn. Last week it shed another E50bn. Former shining knights of European industry seem vulnerable. How did the telecoms sector get into this mess so quickly? Part of the reason is the deflating of the technology bubble since March 2000. But much has to do with their wildly optimistic hopes for third-generation mobile phone technology. The companies spent E110bn buying European 3G licences and estimated at the time that they would spend up to another E180bn building the necessary 3G infrastructure. Though there is nothing the companies can do about the sunk costs of the licence fees, the logic of further investment is looking ever more tenuous. First, a rapid roll-out of 3G services would vastly increase the capacity of mobile phone networks, forcing the price of services lower. Second, increased competition will put further downward pressure on prices and revenues in many markets. Third, the technology is facing delays and teething troubles. In Japan, Forma, NTT DoCoMo's pioneering 3G phone service, has been dogged by problems such as low connection rates, screen-freezing, short battery life and a lack of content. Lastly, demand for mobile internet services was exaggerated. Consumers have not taken to the interim wireless application protocol services in Europe, yet industry forecasts still tend to assume that total telecoms revenues will continue to grow as a share of national income. It is these sort of concerns that led Sonera, the Finnish telecoms operator, to walk away from its Norwegian 3G licence last week. Others may follow but many many will be tempted to press ahead, potentially throwing good money after bad. It is for shareholders to consider whether this is in their interests. European governments should not panic. Any bail-out of telecoms shareholders would clearly be against the public interest. Further moves to ease the investment burden by allowing more sharing of 3G networks among operators may be justified if competition in service quality can be maintained. But this option must not be a smokescreen for a European 3G cartel, in which consumers pay for corporate error. Even if the companies fail, their fixed-line businesses will remain viable, as recent bids for the local network of British Telecommunications demonstrate. news.ft.com