Feeds

3G bankruptcy fears are ‘ludicrous’

Mobile data no cash cow, but no dead donkey either

  • alert
  • submit to reddit

Maximizing your infrastructure through virtualization

3G pessimism may have reached its slough of despair, argue three Spectrum Strategy analysts in an analysis published this week.

"The idea that the expenditure will 'bankrupt' operators is ludicrous," reckon William Bratton, Justin Jameson and Stephen Pentland in an interesting analysis published here. The three acknowledge that many 3G concerns are justified, the carriers' huge investment in 3G infrastructure and licenses should be recouped by higher ARPU (Average Revenue Per Subscriber) by 2012.

At the root of the calculation is the premise that subscribers will spend $25 a month on data, up from the $2 a month that's spent right now. The figures are based on a network that's invested $10 billion and has 9 million subscribers.

The threesome argue that this is a conservative estimate, and that there's "plenty of upside" in that calculation. We're not so sure about the 'plenty' but it's close enough to be interesting, so let's have a look.

What makes or breaks such calculations is the take-up of data with world+dog, and not just a small number of high-spending technology cognoscenti. If the adoption of the sit-down Internet in the mid-90s was a precedent, many of us were willing to bear huge dial-up phone bills for the benefits. Many, for sure, but nothing like a majority. Will the mobile Internet be any different?

At current British SMS tariffs, that $25 equates to about 150 text messages sent a month. Per subscriber. Smartphones and communicators will make it much easier to send text messages, and a pervasive always-on network will make it easier to participate in group text chat rooms. But that's still an awful lot of texting for many subscribers.

More encouragingly for the telcos, it gives a baseline figure for all-you-can eat tariffs: it's pretty close to the tenner-a-month which helped popularise the dial-up Net here. However the telcos in their infinite wisdom seem to be extremely reluctant to adopt such pricing models.

We don't think the Spectrum analysts have chased the clouds away, but they have demonstrated that making money from 3G should not be impossible. So the next time you hear the major carriers raising the prospect that unless they receive corporate welfare in the form of a 3G license rebate, they'll be bust, remember these sums. Much of the 'despair' about mobile data is plainly self-serving. For if the telcos can't recoup their investments, they really shouldn't be in the business. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
VVOL update: Are any vendors NOT leaping into bed with VMware?
It's not yet been released but everyone thinks it's the dog's danglies
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.