In an earlier posting, I suggested that the only way to guarantee
a long-term profit on IT investments is either:
(1) hold a franchise in government-sanctioned intellectual-
property monopolies (de facto or de jure)
or
(2) gamble and win big in the financial markets
Strategy (2) guarantees lots of big losers as well as big winners. Clearly
not sustainable, as the scale of the disaster mounts, and the losers get
more of a voice in settling things.
Strategy (1), if well-played, means you can soak micropayments out of
the entire national population one way or another -- almost innocuously.
(Imagine if the concept of "sales tax" were a business model that
you could license to the government. You'd be rich indeed.)
If my theory is correct, you should be able to see strategy #1being
leveraged whereever you see money being made by service providers
(not infrastructure and tools providers, and especially not consultancies)
in the wireless space.
Let's say you're a profitable official site. Am I seriously suggesting
that you're a beneficiary of a government-sanctioned IP monopoly?
Yes. i-mode couldn't have been big without NTT behind it. NTT is
big. And NTT is virtually government-owned.
Bigness can work, for those areas where increasing-returns-to-scale
operate, as they tend to do with IT standards. And no enterprise
in any real nation is anywhere near as big as the national government.
It only requires adequate incentives, practicality in application, and
political will to put across a standard, and profit from it.
(TCP/IP had all three; OSI lacked the second two.)
In NTT's case, the incentive was quite clear: survival in mobile
telephony after a market-entry barrier was pushed down.
Practicality came in the form of reducing their network upgrade
costs by keeping PDC while offering a lower-bandwidth
substitute service that this network could cheaply host:
i-mode. And political will? See "survival".
But where did the capital come from for even this relatively
modest investment? (I say "relatively" compared to the
king's ransom's paid out for spectrum and infrastructure
in Europe, in per capita terms).
Well, landlines in this country can now, finally, be had for
something like $250 US in some cases. Used be more
like $600. Time-billed local calls? I had culture shock
about this when I first arrived, about 7 years ago. I grew
up with free local calls.
How could they charge so much, in a country where
by virtue of population density the infrastructure is, if
anything, cheaper to install than in most of the developed
world?
Easy. Virtual monopoly control of telecoms, sanctioned by
the government, and, really a source of revenue for the
government. (Until recent years, NTT was majority-
owned by the Japanese government.)
OK, what about these other providers, you may ask.
Well, they live on the sufferance of a government
that weakly enforces anti-trust, and very often only
in reaction to international pressure. In short, enduring
the ignominy of competition is simply part of NTT's
costs of doing business in a world that doesn't share
the belief that One Big Phone Company is the
right way to go.
Downside risks? As we've seen in the Phillipines,
(where SMS was free until the telcos realized they
weren't making any money, because people were
substituting SMS for voice); and now in China,(where
ARPU has crashed by more than 30% even as
celphone penetration increased), providing a cheap
alternative to voice is risky indeed. This is a great
argument for why i-mode-like services didn't
happen earlier.
But what if you're essentially part of the govern-
ment? You have a lot less to worry about.
The Japanese model works. But, as Joseph
Schumpeter pointed out, so does socialism
(and he was no socialist.) The questions are:
how much of it do you want, who really
benefits when you subtract all the costs,
and what are the risks, political as well as
economic?
-michael turner
leap@gol.com
----- Original Message -----
From: "Graham Brown" <gbrown@wirelessworldforum.com>
To: <keitai-l@appelsiini.net>
Sent: Thursday, September 20, 2001 6:37 PM
Subject: (keitai-l) Re: DoCoCaCo etc etc
> Drew,
>
> You're not making many friends on this list ! :-)
>
> Ramming home the anti-DoCoMo/Japanese message in every post may seem
> plausible from a European perspective - as a
> European (living and working in EU) I'm only prepared to listen to the
> companies that have *successfully*
> capitalised on the wireless internet . You won't find many in Europe. Most
> of them are in Japan - ie some of those on this list and the likes of
> DoCoMo. I'm sorry to say that excludes most of the world's carriers *and*
> handset manufacturers .
> As a European I believe we've got it wrong, very wrong in this space. Time
> to exorcise the "telecomms way of thinking" Natsuno so often criticises.
> Time to bite our tongues and learn...
>
> Graham
>
> Drew wrote >>
> Have a look at www.freedompay.com This is just one example of a
> non-Japanese... etc
>
>
> [ Need archives? How to unsubscribe? http://www.appelsiini.net/keitai-l/ ]
>
>
[ Need archives? How to unsubscribe? http://www.appelsiini.net/keitai-l/ ]
Received on Thu Sep 20 13:59:49 2001