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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Jack Bridges who wrote (31751)	1/26/2003 2:47:24 PM
From: John Biddle	Read Replies (1) \| Respond to of 197253

Auctions were indeed the best way to move to 3G, in Europe and elsewhere. The fact that Telecom firms are having trouble there is not an indication that auctions were a bad idea, but more that the technology choice has so far let them down. Alternatives to auctions give regulators too much power to determine who gets valuable scarce resources. If something would sell for more at auction that it would otherwise in, say, a beauty contest, that implies that the beauty contest winner is getting a large incremental value for free. Much like awarding the Olympics, where you can't just openly bid for the rights, you have to buy the regulators instead. Another problem not mentioned is that in the EU the game was rigged in a way that a free market would not be. That is, the only way to do 3G in the EU was to do it in the new spectrum. Two big problems here, both caused by regulation. One, you have to have new spectrum to compete in the new market, artificially increasing the value of the spectrum by government fiat (notice this is not inconsistent with the fact that the money is going to the govt's!). Two, the technology selected has reduced range as compared to the 2G version being replaced, necessitating incremental investment in additional base stns, towers, etc. The statement "The sector is best served by letting the market drive the process ahead." is indeed a good one, the problem is that they don't actually mean it.