Milking the discussion, perhaps, but.....
Me:
> >Are your numbers just for network infrastructure, or total cost of
> >customer acquisition (which, in Japan, can include substantial
> >subsidies for the handsets themselves)?
Benedict Evans <inherent@hotmail.com>
> 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.
"capex" = "capital expenditure"? Pardon me, I'm feeling linguistically
challenged for this discussion. I can't read a sentence using a noun
phrase like "the spend" without finding it vaguely redolent of
Victorian erotica. So sexy - but so previous-century, too.
> 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.
"SAC" = "subscriber acquisition cost(s)"? (Not, I hope, "Strategic
Air Command" - though that one has definite ad copy possibilities.)
> 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.
So here's what I really don't get - that 3G is justified in terms of needing
extra bandwidth for more calls, despite the fact that mobile penetration is
nearer saturation in Europe than in Japan? That's true if and only if 3G
cannibalizes landline operations, though, right? Is this good or bad for
incumbents saddled heavily with landline operations? (Bad, I suspect,
at least to the extent that the landline infrastructure hasn't been
fully paid for yet. If so, are they being compensated in any way?)
> 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)
I never said it was 3G capex (is that "CAP-ex" or "KAY-pex"?). I said it
was the investment per customer - which includes everything from installing
base stations to checking the customer's application form in the storefront,
and everything in between (advertising, handset subsidies, whatever.)
My point being: if Euro operators are said to be so strapped and debt-laden
after the license auctions that there's some question about their being
able to afford 3G infrastructure, how are they even able to think about
financing everything else they'll need to stay in business? I can accept
that my $750/customer is double what it would be elsewhere - call it
the Japan Premium. Doesn't that still leave a big gap?
> 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?
Well, since this is Japan, and both FOMA and PDC are NTT technologies,
the real question is: how will NTT make the most money? (This just in:
FOMA rollout will take 3 years or so to cover the country. Shaky,
circular reasoning was offered: "People won't buy FOMA unless it covers
the country, so we'll have to take a long time covering the country."
Unscrewing the inscrutable: sounds like NTT is up to its old PDC-
investment-recovery tricks.)
> >>** 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?
I don't know. Neither do you!
If you'd asked me in the early 90's, when the U.S. was in a
recession and I was on an embryonic e-commerce
initiative at a national laboratory, whether the technologies I
was looking at would be part of some investment bubble that
would rival the hideously stupid one in Japan that had just
burst, I would have laughed. I probably would have said that,
if anything, the b2b/g2b e-commerce stuff we were working
on would help lead that lousy economy into a deflationary
spiral, with high unemployment, for the rest of the decade.
(Maybe I was right - just 10 years ahead of my time?)
I think sometime back then I actually looked at
a web browser, or something like one, and thought - "Cool,
but so what? How many people are going to have
Internet access and a Sun workstation?" (No stupider
than Jim Clark in that - he, who sat around in Palo Alto
restaurants for months with Marc Andreesen, trying to
figure out how to get an interactive television startup
going....and finally settling for just doing something
with that web browser stuff Marc worked on for
$6.50/hour, goldbricking in some government job.)
All I know is that corporate debt rating services seem to be
handing out a lot of lower-case b's to telecom companies.
They study this kind of stuff all day. I'm not sure I want
to second-guess them.
> You sem rather unhappy about the idea that huge costs can be made back in
> volume, yet this is a basic principle of business.
Assuming you are sure you can make any money off each customer, I'm
totally OK with it. Isn't this what we're arguing about, though?
> 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 ;)
Yes, I've been thinking of trying it, someday. However, Henry Ford
had his own workers as a dependable customer base - they helped
make some of his economies of scale possible.
Cf. the mobile telecom business: layoffs every day, despite established
economies of scale. A few thousand workers here, a few thousand
workers there, pretty soon you're talking about a lot of people -
maybe even people sharing landlines in crowded apartments, and
letting their mobile subscription drop to make ends meet. Mobile
telecom-related companies aren't the only ones having layoffs,
after all.
-m
leap@gol.com
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Received on Thu May 24 16:16:09 2001