23 September 2002 Telecoms operators will almost certainly never recover the money they have paid out for their third generation (3G) mobile operator’s licences and most of them will eventually abandon their plans to build or operate 3G networks.
This was the view of a series of heavyweight analysts, specialist authors and economists who lined up at the IDC European IT Forum in Monaco last week to condemn almost every aspect of 3G – including the technology, the costs, the billing models and the politics surrounding the distribution of the licences.
The most outspoken of the critics was Nicholas Negroponte, author of the highly influential 1990s book “Being Digital” and a one time technology advisor to government policy makers in North America and Europe.
He was joined in his comments by Don Tapscott, author of a series of books on the emergence of the digital economy; Peter Cochrane, former chief technologist for British Telecom; and Lester Thurow, Professor of Economics at Massachusetts Institute of Technology (MIT).
Negroponte has been arguing since early 2000 that the biggest problem with 3G is that it is simply the wrong technology and that it will be, and is being, superseded by emerging systems such as 802.11b wireless local area networks. “3G has no major advantage [over other technologies such as GPRS, which is already available]. It is kind of Mickey-Mouse, little change,” he said.
Negroponte went on to argue that telecoms companies are “misguided” in their belief that revenues can continue to be profitably billed by “minutes, miles and bits” and that revenues can be endlessly increased through growing the “average revenues per user”. Instead, he suggested the mobile companies, for example, should put pre-paid cards “all over the place” – such as in tags for pets or in fire extinguishers.
Don Tapscott, author of “The Digital Economy”, agreed. “The billing model is dead. Get over it,” he said. Tapscott offered a simple solution to the 3G problem: “Governments around the world should give the money back. It was a form of extortion. They said ‘You have to pay the money to stay in business'”.
Former BT chief technologist Peter Cochrane, now head of ConceptLabs, a consultancy, agreed that radical solutions are needed: “The industry has been raped of €120 billion. For the most part, all [the consumer] will get is a 64 kilobit connection,” said Cochrane. He suggested that operators close down their local loops, give 3G services away free, mine the plastic in the ground and rent out space in their ducts.
Even economist Lester Thurow of MIT attacked the way that licences had been sold off in Europe. “Europeans spent $150 billion on 3G that never will never be used”. He compared 3G in Europe to the enormous investment in fibre optics in the US, but where between 95% and 98% of the capacity has never been used. “In Europe, its worse. In the US, we at least got a network. In Europe, all you got were pieces of paper … an obligation to build networks that will never be built,” he said.