>Are your numbers just for network infrastructure, or total cost of
>customer acquisition (which, in Japan, can include substantial
>subsidies for the handsets themselves)?
Eu 3-5 bn on capex for UK, france or Germany: equipment costs. New entrants
will spend more than existing operators, but that's the range.
SACs are now being replaced by subscriber retention costs in Europe, since
there aren't very many customers left to acquire and those that are are the
lowest value customers anyway. Hence the recent rise in pre-pay handset
costs (= cut in subsidies). Penetration in Japan is 10-30% below what it is
in Western Europe, so the dynamics aren't always the same.
>>I haven't looked at DoCoMo's 3G capex estimates. $750 per current Japanese
>>mobile subscriber would work out at $46.5 Billion.
>>There's no way on earth that's the right number.
>Why? Because it's so high? NTT paid $9 billion for a mere 16%
>share of AT&T Wireless, to get i-mode going in the U.S. Tens of
>billions here, tens of billions there, pretty soon you're talking
>about a lot of money.
I find it hard to believe that the cost of building a 3G network in Japan
could be *ten times* the cost of building one in Gemany or France. Hence,
either the $750 per user number is wrong, or it assumes a vey low number of
subscribers - about 7m (or it includes SACs, in which case it isn't a number
for 3G capex)
If you believe that 3G is driven by capacity problems - which after all is
that the operators say - then it at least probably that 3G tariffs will be
substantially lower than 2G tariffs. This is in fact far more probable in
Japan, given that current Japanese tariffs are so much higher than they are
in Europe. If a FOMA call costs, say, half a PDC call, what happens to
take-up?
>>** Business case
>>In the UK, licence fees per sub per month are equal to 13.5% of fixed
>>revenues per sub per line.
>
>You're missing a time unit, which I believe is "per decade." Think of
> >what happens in technology in a decade.
What's your point? What will happen in a decade?
Sigh. 3G networks require huge up-front expenditure in terms both of licence
fees (in some European countries) and capex. However, the marginal,
operating cost of those networks is much lower than that of existing
networks. Hence, if you can fill the capacity that you've built, then you
don't have a problem. If you can't - if you don't have any customers, then
you do.
You sem rather unhappy about the idea that huge costs can be made back in
volume, yet this is a basic principle of business. Sure, idiot dotcoms said
'we'll make it back on volume'. But so did Henry Ford. There's nothing
inherently wrong with investment, you know ;)
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Received on Sun May 20 18:15:48 2001